From Our Friends At Cox Automotive

Welcome to From the Newsroom, a roundup of news from Cox Automotive and perspectives from its analysts and experts on topics dominating the automotive industry.

As Chief Economist Jonathan Smoke notes in his video report this week, the industry continues to face incredible inventory challenges. The number of new vehicles available on dealer lots across the U.S. shrank again in July, reaching a record low. While new-vehicle inventory continues to drop, Days' Supply improved slightly, driven by a slower sales pace. 
 
In this newsletter issue, we report on several metrics influenced by the lack of new-vehicle inventory. We take a look at new-vehicle transaction prices in July and provide an update on new-vehicle affordability. Both remind us that nothing is cheap out there. We also provide a mid-month reading of wholesale values and report that sales of certified pre-owned vehicles, a great alternative to new, are on a record pace for the year. 

We hope you find this selection of stories and information interesting and useful. Visit the Cox Automotive Newsroom for the latest on the industry’s most important topics, and bookmark the Auto Market Snapshot, a one-stop dashboard for the data our team is tracking.

JOIN US LIVE: Register for the Cox Automotive Q3 Forecast Call scheduled for Thursday, September 30 at 10 a.m. EDT, and for the Q3 Manheim Used Vehicle Value Index Call scheduled for Thursday, Oct. 7, at 11 a.m. EDT. 
 

ANOTHER RECORD FOR NEW-VEHICLE TRANSACTION PRICES  New-vehicle inventory was well below normal in July and that helped push new-vehicle transaction prices even higher, as purchase incentives continued to fall. Our analysts at Kelley Blue Book published their July average transaction price (ATP) data for new vehicles this morning and added a look at incentive levels as well.   The ATP for a new automobile in July 2021 hit a record high in the United States at $42,736. Transaction prices were up $3,223 (8.2%) from July 2020 and increased $402 (0.9%) from just last month.  New-vehicle transaction prices have increased – and set new records – for four straight months.

THE JULY AUTO MARKET COMES INTO VIEW With market dynamics leading to record prices and historically low incentives, new-vehicle affordability declined this spring and has hit a record low in July, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. The number of median weeks of income needed to purchase the average new vehicle in July increased to 37.4 weeks, or equal to more than 18 entire paychecks for the average biweekly earner.   New-vehicle supply improved slightly in the latter part of July, but remains well below a healthy level. And meanwhile, new-vehicle incentives and average transaction prices hit records at the opposite ends of the spectrum for July, according to Cox Automotive and Kelley Blue Book data. Access to auto credit changed only slightly after two months of modest moves. Our Dealertrack Auto Credit Availability Index measured auto credit as looser by 5.1% year over year in July but was 1.1% tighter compared to February 2020 before the pandemic began.   Read more in the Auto Market Weekly Summary, and watch the Auto Market Report video published this morning to find out the latest from Smoke on the economic and how the auto industry continues to struggle with incredible new-vehicle inventory shortages.

DECLINING WHOLESALE USED-VEHICLE PRICE TREND CONTINUES After declining 2.6% month over month in July, wholesale used-vehicle prices decreased again according to our mid-month report published today, covering the first 15 days of August. The Manheim Used Vehicle Value Index now stands at 193.7, a 18% decrease from July’s full month measure.   “We are going to likely see above-average depreciation in wholesale values during the back half of the year,” said Jonathan Smoke, chief economist, Cox Automotive. “We peaked at roughly a 25% gain on average in the first half of the year. We are expecting to lose about 9% in the back half of the year, which would put values up 16% over 2020, which also saw a double-digit increase year over year. It is not a dramatic change that we would call a correction.”   Find out more in the mid-month Manheim Used Vehicle Value Index Data Point.

CPO SALES INCREASE IN JULY, CONTINUE TO OUTPACE PRE-PANDEMIC LEVEL Certified pre-owned (CPO) sales reached 248,749 units in July, reflecting a 4% month-over-month increase but a 2% year-over-year decrease when strong July 2020 CPO sales were part of the used-vehicle market recovery. A much more relevant comparison is to July 2019: CPO sales last month were up 5% compared to that more normal period.   Moving into the second half of 2021, the CPO market is more than 218,000 units above 2020 and 72,000 units above the 2019 level, which marked an all-time record for CPO sales.    Read the recent Data Point to find out which non-luxury and luxury automakers’ CPO sales performed best in July.

FLEET SALES DROP IN JULY, REMAIN WELL BELOW 2019 LEVEL In July, fleet sales hit 115,976, a 16% month-over-month decrease compared to June but an 11% increase from July 2020. The good news: Sales into rental increased 248% year over year in July and are now up 3% compared to the same time last year. The year-to-date total of combined large rental, commercial, and government purchases of new vehicles stood at 1.09 million units at start of August, a 6% increase from the same timeframe in 2020, but a sizeable 40% decrease from the same time in 2019 when 1.81 million units had been sold. The fleet market continues to lag behind the retail-market recovery.   Read the recent Data Point for more details.

KELLEY BLUE BOOK BRAND WATCH: TRUCK SHOPPING PICKS UP Inventory-constrained Toyota held on to the top spot for shopping consideration, but hot new products from Ford helped the Blue Oval narrow the gap in the second quarter despite its own supply challenges, according to the Q2 2021 Kelley Blue Book Brand Watch report for non-luxury brands.   Ford was one of the few brands that had higher shopping consideration in the second quarter than in the first, thanks in part of headline-driving new products including the Bronco, Mustang Mach-E and Maverick. Of non-luxury shoppers, 31% considered a Ford in Q2, up from 29% in Q1.    Check out the Q2 Kelley Blue Book Brand Watch report on the non-luxury segment. Brand Watch reports on the luxury and electrified segments are coming soon.

Looking ahead: Cox Automotive will publish new content related to the used-vehicle market including a look at the seasonally adjusted average rate of used-vehicle sales and volume as well as used-vehicle inventory.    The Cox Automotive U.S. auto sales forecast for August will be reported next, as well as the Q2 Kelley Blue Book Brand Watch reports on the luxury and electrified segments. Remember to RSVP: Cox Automotive Q3 Forecast Call on Thursday, September 30 at 10 a.m. EDT, and Q3 Manheim Used Vehicle Value Index Call on Thursday, Oct. 7, at 11 a.m. EDT.  As always, if you have questions or want to connect with the Cox Automotive PR team, feel free to contact us.

AUTO QUOTES “The new-vehicle market is starting to show signs of stabilization around inventory levels. The sales pace has been falling as supply is constrained and consumers wait for improvement. While the days’ supply is stabilizing – and, in fact, it rose slightly at the end of July – inventories remain tight and are far from normal.” – Charlie Chesbrough, senior economist, Cox Automotive     Search, Explore, and Discover!