Cox Automotive Indicates 50% Of Would Be New Car Buyers Waiting Out High Pices and Low Inventory
When the new-vehicle market struggles, our focus shifts to used, and the narrative there is not much better. As Chief Economist Jonathan Smoke notes, "The story right now is about used-vehicle demand strengthening. With relatively low inventories leading to tighter conditions, we are witnessing more price inflation."
Two new data sets are worth considering.
First, the mid-month Manheim Used Vehicle Value Index was published on Friday. In that measure of wholesale auction prices during the first 15 days of September, there are clear signs of rising demand for used vehicles. Wholesale prices reversed course and moved up again, after declining through the summer. The sales conversion rate in September also increased relative to August and is at an elevated level for this time of year. These trends suggest wholesale used-vehicle values will likely see further gains in the days ahead.
And what happens in wholesale eventually happens at retail.
Indeed, retail used-vehicle inventory dipped slightly in August and average listing prices set another record, according to the Cox Automotive analysis of vAuto Available Inventory data released yesterday. The average listing price for a used vehicle hit $25,829 at the end of August. That's a jump of 24% compared to the end of August 2020 and 34% higher than the same pre-pandemic period in 2019. The total supply of unsold used vehicles on dealer lots across the U.S. slipped to 2.35 million units at the end of August, down from a revised 2.40 million at the end of July.
Kelley Blue Book Reports Vehicle Shoppers Exiting Market as Inventory Shortages Continue to Plague Auto Industry
In the spring of 2021, Cox Automotive and the Kelley Blue Book team researched consumer awareness of the global microchip shortage and how that shortage was impacting new-vehicle production, inventory and prices. Surprise! Consumers were well aware.
The team went back into the field in late August and updated that research. Key finding: In the spring, approximately 37% of would-be buyers were choosing to drop out of the market for a few months, scared off in part by tight inventory and high prices. By August, that number had swelled to 48%. Indeed, nearly half of the consumers who were considered 'in-market' are now saying they will be stepping back, 80% indicating for three months or more.
The new snapshot research was released this morning. There's a KBB press release and the core findings have been published in this Data Point in the Cox Automotive Newsroom. The press release will be distributed via the PR Newswire at 1 p.m. ET today.