New Car Sales Are Strong

Our friend Brian Finkelmeyer, Senior Director, New Car Solutions with Cox Automotive, released a new commentary last week that is worth a complete look. But here are some notes in case you have cookies in the oven.

Resilient Market: Even with many households feeling the pinch, new car sales and profits persist.

At the start of the year, predictions fell short – we've seen sales volumes rise nearly 4% year-over-year, with average new car payments increasing by 13.5%.

🧐🤨🤔What's Driving Sales? 🤷‍♀️🤷🤷‍♂️

• 💰 Refinancing Boom: Many homeowners have extra cash due to refinancing. A refinance can mean an additional $700 a month for some!
• 👩‍🏭 Wage Growth: Households are bringing in more income. A family earning $100k annually now has about $854 more every month.
• ⚖️ New vs. Used: The price difference between new and 1-year-old cars has shrunk, making new cars a tempting choice.
• ⏳ Pent-Up Demand: Past years had limited vehicle availability, but inventory is up 68% from last September with supply chain issues resolving.
• 🤑 Affluent Buyers: Wealthy households are driving sales. Those earning over $250k now make up 15% of vehicle sales.

Of course, new challenges are on the horizon, like the UAW strike, which will affect supply.

In closing, Brian reminds us that once automakers and the Union come to terms, it will be another speed bump in the rearview mirror, like the 2008 crisis, COVID-19, and more. Dealers have emerged resilient and will do so again!  

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