Looking at Cox Automotive data, the big story this week for new vehicles is Supply. It has risen over recent weeks and is now at its highest since June 2021. For used, the big story is Used Vehicle Prices. The annual price growth has finally fallen into the single digits. Seen just below.
This week’s 8.5% inflation rate is back to March’s number and will likely fall further over the next few months. So, a positive week for the market on two significant sales headwinds: supply and inflation.
As discussed last week in my weekly recap video seen HERE, the economy is still showing signs of strength. Consumer Confidence, according to the Conference Board, is up 8.3% in August when a minor increase had been expected. In addition, the underemployment rate, which is the broadest measure of unemployment, also increased to 7.0% from 6.7% in July. That rate is now the same as it was before the pandemic and economist see this as positive sign because we also added 800,000 new job searchers into the equation. That shows in the unemployment rate up .3% but with the new entrants that small increase is another strong sign. And finally, Morning Consult reported that Consumer Sentiment was 3.3% in July and 4.6% in August and is continuing to show a positive trend in September as well.
The outlook is, of course, to brace for a slowdown for the remainder of the year and stick to the fundamentals but also be prepared in late Q4 for a more traditional tax season and spring bounce in 2023. Don’t get fearful and contract. As you can see below, the dealers outlook of the market is moving downward while the consumers outlook above is moving upward. This disconnect highlights the difference between living in the moment and looking at strategic outlooks in the medium and long term. Dealers have to run their business and they must stay in the moment but also have partners who help them see into the future with data into insights that translate into executable strategies.
The guidance is develop your vendor partner relationship. Specifically the responsibilities of building trust in consultancies for mutually beneficial outcomes. Your vendor partners are critical for success in markets like ours today.
The message is forecast to sales rate and then manage the day supply to that rate. The economy is showing it’s might week after week so be prepared in late Q4 for a more wholesale value to rise anticipating a more traditional tax season and spring bounce in 2023. You don’t want to be caught below sales rate on the lot and to rush and fill the lot during Q1.
Happy Selling,
The BEV Guy!
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