Mid-week Auto News Summary

REPLAY AVAILABLE: Q3 INDUSTRY INSIGHTS AND SALES FORECAST CALL

The Cox Automotive Q3 Industry Insights and Sales Forecast call was hosted earlier today, Sept. 26. During this webinar, our experts and analysts reviewed how the auto industry performed in the third quarter and how the Cox Automotive team sees the industry progressing for the remainder of the year. Download the event presentation and check out the 2023 forecast updates.

NEW-VEHICLE MARKET SHRUGS OFF HIGH LOAN RATES, UAW STRIKE, CLOSES Q3 ON A STRONG NOTE

The U.S. auto industry’s robust year-over-year sales recovery continued in the third quarter, according to a forecast released today from Cox Automotive. Despite rising interest rates on new-vehicle loans and a strike by the United Auto Workers against the major domestic automakers, sales volumes in September are forecast to reach nearly 1.3 million, an increase of more than 13% from 2022. Sales in Q3 are expected to surpass 3.9 million, a jump of more than 15% from the same time frame one year ago.
 
“As the first three quarters of 2023 come to a close, ‘pleasantly surprised’ may be the sentiment of many auto analysts,” noted Cox Automotive Senior Economist Charlie Chesbrough. “The market has faced high interest rates, real affordability issues, and ongoing inflation, which could have led to large declines in vehicle sales. However, pent-up demand has been fueling the vehicle market this year. Consumers, and even more so large fleets, have become buyers as inventory improves. Year-over-year sales gains have been surprising indeed.”

Read the press release for details on how specific automakers are expected to perform.

FED HOLDS RATE POLICY STEADY, BUT BOND MARKET ALREADY RAISED ACTUAL RATES

The Federal Reserve maintained its current rates even though there’s ample data suggesting that inflation is still present and higher than the Fed’s desired level. The Fed’s current rates are viewed as restrictive, and out-of-reach auto loans are probably hindering a more vigorous retail sales recovery. The typical interest rate on new auto loans is still above 9%, while used car loans are over 13%. Although there have been recent improvements in new-vehicle affordability, it remains the industry’s most significant obstacle, and the UAW strike is not helping the situation.
 
Read the article published last week for more of Smoke’s thoughts on the Fed’s latest action.

THE NEW-VEHICLE MARKET CONTINUES TO DEFY GRAVITY

In case you missed it with everything else going on, our Senior Director of New Car Solutions Brian Finkelmeyer recently shared his thoughts on one of his favorite topics – the new-vehicle market. He noted: “It’s commonly believed that what goes up must eventually come down; you can only defy gravity for so long. The continued strength of the new-vehicle market in 2023 is calling this widely held belief into question.” 
 
Read more from Finkelmeyer about the five forces that are helping the new-car market defy gravity.

WHOLESALE VEHICLE VALUES REBOUND

Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased by 1.5% in the first 15 days of September compared to August. Assisted by the seasonal adjustment, the midmonth Manheim Used Vehicle Value Index rose to 215.4, which was down 3.5% from the full month of September 2022. 

“It is likely that some of the buying was spurred by concerns about potential UAW action; but thinking back to our supply figures, it’s possible that dealers were stocking up after their lots thinned out a bit anyway,” noted Chris Frey, senior manager of Economic and Industry Insights at Cox Automotive.
 
Watch the Manheim Market Insights video for highlights on the midmonth MUVVI, wholesale inventory, sales conversion, used retail inventory and prices, and the potential UAW strike impact on the used-vehicle market. Register to attend the Q3 Manheim Used Vehicle Value Index call on Friday, Oct. 6, for a deep dive into the whole and used-vehicle markets.