Auto News From Cox March 17, 2023

COX AUTOMOTIVE DEALER SENTIMENT INDEX: STRONG U.S. AUTO MARKET PERFORMANCE EXPECTED IN Q2

U.S. auto dealer sentiment in the first quarter of 2023 changed little from Q4 2022. It remained at the lowest level since the height of the global COVID-19 pandemic, according to the Cox Automotive Dealer Sentiment Index (CADSI). At 43, the current market index is below the threshold of 50, indicating more dealers view the current auto market as weak. The index remained stable quarter over quarter and down 14 points year over year.
 
On a positive note, the 3-month, forward-looking market outlook index rose sharply in the first quarter to 52, up from 41 in Q4 2022. In spite of factors holding back their business, a majority of dealers are heading into Q2 with expectations for the auto market to be strong. The increase in Q1 breaks a trend of three consecutive quarters with a declining market outlook.
 
“Despite high interest rates and stubborn inflation, the U.S. consumer continues to prop up the economy,” said Cox Automotive Chief Economist Jonathan Smoke. “Auto sales are slow by historical standards, but the sales pace has been improving in early 2023, giving dealers reason to feel somewhat optimistic about the year ahead.”
 
Read the press release for more details on the Dealer Sentiment Index and download the full results.

TAX REFUND SEASON FAILS TO DELIVER WHILE PRICES AND INTEREST RATES EDGE HIGHER

Tax refund season is failing to deliver the lift in sales we usually see in used-vehicle sales. Both the average amount and total dollars dispersed are down year over year. 

Meanwhile, used-vehicle prices are moving higher in both the wholesale and retail markets so far in March, which is bound to impact demand soon, according to Chief Economist Jonathan Smoke in his Auto Market Report video posted this morning. Plus, interest rates for both new and used vehicles increased last week compared to the volume-weighted average interest rates for February seen in Dealertrack.

According to the Dealertrack Credit Availability Index for all types of auto loans, access to auto credit improved modestly in February. All loan types saw loosening in February, with used loans loosening the least and new loans loosening the most.
 
Read the Auto Market Weekly Summary and watch the Auto Market Report video for more data and insights from Smoke on new and used retail sales and inventory, auto financing and Cox Automotive leading indicators.

NEW-VEHICLE TRANSACTION PRICES TREND DOWNWARD AS INCENTIVES RISE, ACCORDING TO KELLEY BLUE BOOK

The monthly CPI report was released by the government today, and it showed inflation is still up significantly year over year. In the auto markets, last month saw the average transaction price (ATP) of a new vehicle in the United States decline to $48,763, a decrease of 1.4% ($705) from an upwardly revised January reading of $49,468. Transaction prices last month were up 5.3% ($2,466) from year-ago levels, according to data released last week by Kelley Blue Book, a Cox Automotive company. Meanwhile, incentive spend rose to 3.0%, averaging $1,474, a level not seen since March 2022.
 
In February 2023, the average price paid was just $95 more than the average sticker, as prices continued to trend downward relative to sticker price. A year ago, the average ATP was nearly $1,000 over MSRP.
 
“After nearly a year of incentives below 3% of ATP, it will be interesting to see if this upward trend continues as inventory improves,” said Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive.
 
Check out the Data Point published last week for specific data on average prices and average incentive spend as a percent of ATP for non-luxury, luxury and electric vehicles.

WHOLESALE USED-VEHICLE PRICES SEE LARGE INCREASE IN FEBRUARY

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) increased 4.3% in February from January. This was the largest increase for the full month of February since 2009’s 4.4% rise. The Manheim Used Vehicle Value Index (MUVVI) rose to 234.5, down 7.0% from a year ago. February’s increase was driven partially by the seasonal adjustment. The non-adjusted price change in February was an increase of 3.7% compared to January, moving the unadjusted average price down 5.6% year over year.
 
See the Manheim Used Vehicle Value Index for additional details, and register to attend the Q1 2023 Manheim Used Vehicle Value Index Call on Friday, April 7, to hear about the latest MUVVI and trends that shaped the quarter. If you are observing the Good Friday holiday, a recording of the call will be available in the Newsroom on Monday, April 10.

REGISTER NOW TO ATTEND THE Q1 INDUSTRY INSIGHTS AND SALES FORECAST CALL

The Cox Automotive Q1 Industry Insights and Forecast Call will be held on Monday, March 27, 11 a.m. EDT, shortly before the auto industry closes the book on the first quarter.
 
Our experts and analysts, led by Chief Economist Jonathan Smoke, will provide insights and data on how the auto industry performed in the first quarter and how the team sees the industry progressing through the first half of the year, including an update on our forecasts and predictions.