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Cox Automotive Car News Review


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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.

We’re in a recession. No, we aren’t in a recession. Yes, we are. No, we’re not. That about sums up last week’s news cycle. Cox Automotive Chief Economist Jonathan Smoke maintains there is no evidence of a broad market recession, and in the Auto Market Report video published this morning, he notes: If we do see inflation begin to come down, that should help boost consumer confidence, which will help the U.S. economy avoid recession.
 
For more perspective,
read Smoke’s view on recession odds, inflation, and how the country’s economic gyrations are impacting both the new and used auto markets. And check out Smoke’s thoughts on what the Fed’s decision last week means for auto buyers and how ongoing rate increases will impact the overall market.
 
As anticipated in the
Cox Automotive forecast, July U.S. auto sales appear to be little changed from June’s results, as a lack of supply continues to batter the new-vehicle market. Initial results from some automakers are being published this morning.
 
Also, in this newsletter, we highlight quarterly market performance reports for the major automakers as they announce quarterly earnings, including Hyundai Motor, Ford Motor Company, General Motors, Nissan and Stellantis.
 
Bonus content: In a recent article titled
F&I for an Ecommerce Future, Vice President of Cox Automotive Ecommerce Paulo da Silva explains how advanced automation and artificial intelligence can increase consumer transparency and personalization and improve retailer efficiency. 
 
We hope you find this selection of articles informative and helpful. 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.


JULY U.S. AUTO SALES DROP AS RECOVERY HEADWINDS GROW

Last week, the Cox Automotive July U.S. auto sales forecast was suggesting the market would see very little change from June’s results, as a lack of supply continues to batter the new-vehicle market. The team is expecting the July seasonally adjusted annual rate (SAAR) of new-vehicle sales to rise slightly to 13.2 million, up from last month’s 13.0 million pace but well below last year’s 14.7 million level. Volume is forecast to decline by approximately 13%. 


We will have a full measure of July by the end of the week, but Cox Automotive Senior Economist Charlie Chesbrough notes, “July results will likely be yet another reminder of how the U.S. auto market has been transformed from just a few years ago, before the pandemic. Today’s auto market, running on a consistent 35 days’ supply, simply can’t support the volume so many of us took for granted. The old market, with 70-plus days’ supply, is a fading memory, and returning to near 17 million annual sales will likely take years. This new U.S. auto market is a lean operation, where monthly retail sales of approximately 1 million units is the norm. The challenge now? How to operate profitably in this new environment and be ready to move if and when the market grows.


KEEP CALM AND CARRY ON

Contrary to popular belief, two consecutive quarters of GDP decline is not the official U.S. definition of a recession. Instead, the National Bureau of Economic Research, the non-profit that determines when the U.S. economy has entered into a recession, considers many factors beyond GDP, including real income, employment, industrial production, and consumer spending. Cox Automotive Chief Economist Jonathan Smoke maintains that there are no signs the consumer is pulling back, and the U.S. is not in a broad market recession.

The new-vehicle market remains limited by supply and the associated high prices and low incentives, which keeps sales volume from increasing. However, Smoke notes in the Auto Market Report video published this morning:
In the used-vehicle market, we are seeing much more potential with normal levels of supply and with prices coming down. It should be creating more opportunities and more demand for later this summer and into the fall.
 
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, depreciation patterns and Cox Automotive leading indicators.


JULY DELIVERS HIGHER AUTO RATES WITH THE FED PROMISING MORE AHEAD

The latest news from the Federal Reserve was released last week. Most watchers were anticipating another sizable interest rate increase as Fed Chair Jerome Powell and his team pursue their “whatever it takes” policy to cool rapid price inflation. And that is exactly what we got. The Fed raised the target for the Federal Funds Rate by three-quarters of a percentage point and remains steadfast in its goal to rein in inflation.
 
Read commentary from Jonathan Smoke on what the Fed’s decision means for auto buyers and how the ongoing rate increases will impact the overall market.


THE USED-VEHICLE MARKET IS BEGINNING TO FEEL NORMAL AGAIN, AND THAT IS GOOD NEWS FOR THE INDUSTRY.

During our quarterly Manheim Used Vehicle Value Index (MUVVI) conference call last month, there were many questions related to the health of the U.S. economy, inflation, and the impact used-vehicle prices are having on inflation.
 
Jonathan Smoke noted during the call that the U.S. economy has faced many headwinds so far in 2022, and consumer sentiment indeed is a big concern. Consumer sentiment declined further in the second quarter as Americans dealt with rising prices, a turbulent stock market, and increasing negative politics. It increased 3% in July from a record low in June but remains depressed and will likely not notably improve much as long as more and more experts are very publicly asking, “Are we in a recession?”

 
Read Smoke’s perspective on recession odds, inflation, and the state of the new and used auto markets.


COX AUTOMOTIVE MARKET PERFORMANCE REPORTS: GM AND NISSAN FALL SHORT, OTHER AUTOMAKERS BEAT EXPECTATIONS

It’s earnings season, and the Cox Automotive Industry Insights team is keeping a close eye on the U.S. market performance of the major automakers. So far, Hyundai Motor, Ford Motor Company and Stellantis beat analysts’ expectations, reporting impressive profits on strong sales, particularly of high-margin vehicles.
 
General Motors and Nissan both fell short of expectations due to production issues but see brighter days ahead as supply chain woes improve.
 
See the Data Points on
Hyundai, Ford, GM, Nissan and Stellantis for quarterly market performance reports covering U.S. sales volumes, incentive spending and average transaction prices. Honda and Toyota data will be posted in the coming days. 


F&I FOR AN ECOMMERCE FUTURE

Consumers have grown accustomed to the transparency, speed and convenience of buying online. Cox Automotive research shows that 76% of today’s car buyers are open to purchasing completely online, and 1 in 4 consumers say they prefer an Amazon-like car shopping experience where they would not need to set foot at a dealership. Although not all those buyers will purchase completely online today, they desire the opportunity to complete more of the purchasing steps using digital channels.
 

Read F&I for an Ecommerce Future, an article by Vice President of Cox Automotive Ecommerce Paulo da Silva, to find out how advanced automation and artificial intelligence technology can increase consumer transparency and personalization and improve retailer profitability.

Looking ahead: Check back in the Newsroom on Wednesday, August 3, for a quarterly report on U.S. market performance by Toyota Motor Corporation. The non-luxury version of the Q2 Kelley Blue Book Brand Watch Report will be published on Thursday, August 4. And we will report the July Manheim Used Vehicle Value Index, a key indicator for what is coming in the retail used-vehicle market, on Friday, August 5.
 
Next week, the luxury version of the Q2 Kelley Blue Book Brand Watch Report will be published. We will also post a market performance report on Honda, before earnings are announced on Wednesday, August 10. Check back in the Newsroom for new July content, including the Dealertrack Credit Availability Index, Kelley Blue Book average transaction prices and certified pre-owned sales.