Weekly Market Outlook

According to Automotive Advisor’s weekly update, the auto market is finally finding its groove with stability in demand and supply. Here’s the latest:

🔎 Economic Outlook:

• Unemployment Victory Dance: The unemployment rate is down to 3.5%, returning us to pre-pandemic employment levels. The labor force participation rate remains steady at 62.6%.
• Underemployment Under Control: The underemployment rate declined to 6.7% from 6.9% in June.
• Steady Earnings: Monthly average hourly earnings growth remained steady at 0.4%, while earnings growth YOY hovered around 4.4%.

🔎 New Car Market:

• Price Peekaboo: The average price for a new ride in July 2023 was up just 0.4% from last year, the tiniest price jump in a decade. The average transaction price in July was $48,334, a month-over-month decrease of 0.7%.
• Incentive Fever: Automakers increased incentives by 5.5% in July, averaging $2,148 per vehicle (an 83% increase from last year).

🔎 Used Car Market:

• Used Car Revival: Used vehicle sales jumped in July as folks hunted for more affordable wheels. Purchases from retailers shot up 6% from June.
• Price Limbo: Used car prices dropped 1.6% MOM and 11.6% YOY. But here's the twist: line efficiency for 3 and 6-year-old cars went from 40% to almost 60%, meaning cars are bolting off lots.

🔎 Wholesale Market:

• Depreciation Deceleration: Depreciation put on the brakes for 3-year-olds, down just 0.1% to 95.2%. Non-luxury stayed flat, while luxury went down by 0.5%.
• Price Rollercoaster: Sale prices are still below MMR but inching up (-1.43%).

🔎 F&I Market:

• Loan Limbo: Used-vehicle loans in the first quarter averaged 67 months, financed at $26,420, with a 116% loan-to-value ratio.
• Future Forecast: As supply chains improve and production ramps up, prices are expected to decline. Rising interest rates continue to stress customer wallets, and affordability remains one of the largest obstacles for consumers.