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From The Auto Newsroom August 16, 2022


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

Analysis of July data reveals some recurring themes – record-high new-vehicle prices, still-low new-vehicle inventory, a normal level of used-vehicle inventory with rising prices, and, no surprise, worsening vehicle affordability. We can also add auto credit availability tightening across all types of loans to the mix. One thing is certain, there is no shortage of tea leaves in the market right now and plenty of opinions on how to read them.

In the Auto Market Report video posted this morning, Cox Automotive Chief Economist Jonathan Smoke notes affordability as a concern but says: “The consumer is not throwing in the towel, and we are seeing improving consumer sentiment with each week of declining gas prices.”
 
Also in this newsletter, we highlight the Q2 2022 Kelley Blue Book Brand Watch reports for
non-luxury and luxury segments. A report on the electrified segment will be published later this week.

Bonus content: In an article titled
Connect Data: The Engine That Powers Better Results, Senior Vice President of Cox Automotive Data Solutions Ben Flusberg explains how highly valuable data is the foundation for DRiVEQ, the dynamic data intelligence engine that produces unparalleled insights and powers Cox Automotive’s solutions. 


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.


NEW-VEHICLE PRICES SET RECORD IN JULY, ACCORDING TO KELLEY BLUE BOOK, AS INVENTORY IMPROVES YEAR OVER YEAR AND LUXURY SHARE REMAINS ELEVATED

The average price paid for a new vehicle in the U.S. in July topped June’s record and kept the average transaction price (ATP) solidly above the $48,000 mark, according to data released last week by Kelley Blue Book, a Cox Automotive brand. The Kelley Blue Book new-vehicle ATP increased 0.3% ($139) to $48,182 in July and is up 11.9% ($5,126) compared to July 2021.
 
New-vehicle inventory days’ supply held steady in the mid-30s in July, but in fact, was 27% higher than it was at the same time in 2021 when inventory volume was slightly lower and the sales pace was hotter.
 
Luxury vehicle share remains historically high, pushing the overall industry ATP higher, but decreased to 17.8% of total sales in July from 18.2% in June.

 
Check out the Data Point for more details, including the average price paid for a new electric vehicle and the average incentive spend as a percent of ATP. Read the press release to find pricing by manufacturer, make and category.


COX AUTOMOTIVE LEADING INDICATORS STABLE TO IMPROVING

The Back-to-Normal Index has stalled as inflation has surged. However, even with activity stalled, there are no warning signs that the consumer is substantially pulling back, according to Chief Economist Jonathan Smoke in the Auto Market Report published this morning. In fact, the Index of Consumer Sentiment from Morning Consult increased 3.3% in July and is up 4.9% in August as of Monday.

All Cox Automotive leading indicators, including leads, credit applications and service trends, are stable to improving.


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, 0% financing offers and depreciation patterns.


ALL LISTING PRICES INCREASE IN JULY WHILE NEW INVENTORY REMAINS LOW AND USED SUPPLY HOLDS STEADY

The average listing price – or the asking price – for both new and used vehicles increased in July, according to the Cox Automotive analysis of vAuto Available Inventory data.
 
End-of-July new-vehicle available supply stood at 1.09 million units, down slightly from the revised end-of-June available supply of 1.12 million. New-vehicle inventory at the end of July was higher than it was a year ago when the global computer chip shortage began hurting production. Still, supply remains low compared with pre-pandemic times.
 
In the used market, inventory held steady at a normal level month over month, with 2.46 million used vehicles on dealer lots at the close of July.
 
Find out more in the recent Data Points on
new-vehicle and used-vehicle inventory and pricing.


Q2 2022 KELLEY BLUE BOOK BRAND WATCH REPORTS: TOYOTA STAYS NO. 1 IN NON-LUXURY, BMW TOPS IN LUXURY

Findings from the most recent Kelley Blue Book Brand Watch™ Reports on the non-luxury and luxury segments reflect how high gas prices impacted consumer shopping consideration in the second quarter.
 
Shoppers of non-luxury vehicles considered traditional cars at a level not seen since before the pandemic. Toyota remained the most-shopped brand, widening the gap with No. 2 Ford.
 
Meanwhile, in the luxury segment, BMW remained the most-shopped brand for the second consecutive quarter on increased interest in its sedans, likely also due to high gas prices.
 
The Kelley Blue Book Brand Watch Report is a consumer perception survey that also weaves in shopping behavior to determine how a brand or model stacks up with its segment competitors on a dozen factors key to a consumer’s buying decision.
 
Read the findings for the
non-luxury and luxury segments and check back in the Newsroom for the Brand Watch report on the electrified segment.


NEW-VEHICLE AFFORDABILITY WORSENS IN JULY WHILE AUTO CREDIT AVAILABILITY TIGHTENS ACROSS ALL CHANNELS AND LENDERS

Vehicle affordability worsened in July, and auto credit tightened, according to two indices recently published by Cox Automotive.
 
According to the
 Cox Automotive/Moody’s Analytics Vehicle Affordability Index, new-vehicle affordability worsened again in July, with increases in interest rates and new-vehicle prices reaching a record high. The number of median weeks of income needed to purchase an average new vehicle increased to 42.2 weeks in July. The estimated typical monthly payment rose to $733, a record high.

Meanwhile, access to auto credit declined across the board in July, according to the 
Dealertrack Credit Availability Index for all types of auto loans, reflecting that auto credit was harder to get compared to June. The index has declined for three consecutive months, but access was looser by 5.3% year over year.

AUTO LOANS DEFAULTS ARE INCREASING, BUT WE ARE NOT HEADING INTO A REPO CRISIS

With high inflation in the U.S. economy impacting lower-income households the most, there are a lot of headlines about an increase in auto loan defaults and a potential flood of repossessions. Chief Economist Jonathan Smoke looked at loan default data and Manheim repossession volume trends to address this misperception.
 
Read Smoke’s perspective to learn why auto loan defaults and repossessions will likely remain well below historical norms.

WHOLESALE USED-VEHICLE PRICES DECREASE MINIMALLY IN JULY FROM SEASONAL ADJUSTMENT

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) decreased 0.1% in July from June. The Manheim Used Vehicle Value Index (MUVVI) declined to 219.6, up 12.5% from a year ago. The non-adjusted price change in July decreased 3.2% compared to June, leaving the unadjusted average price up 10.2% year over year.
 
All major market segments once again saw seasonally adjusted prices that were higher year over year in July.

 
Read the Data Point for details on how buyers had more bargaining power for this time of year. The mid-month MUVVI will be published at 9 a.m. EDT on Wednesday, August 17.

Looking ahead: Check back in the Newsroom on Wednesday, August 17, for a mid-month look at the Manheim Used Vehicle Value Index. The electrified version of the Q2 Kelley Blue Book Brand Watch Report will be published this week.
 
Next week, we will report Xtime metrics for service revenue and volume at franchised dealerships. The Cox Automotive U.S. auto sales forecast for August will be published in the Newsroom on Thursday, August 25.


If you have questions or want to connect with the Cox Automotive PR team in the meantime, feel free to contact us.
AUTO QUOTES

“It’s still a seller’s market. New-vehicle inventory levels are better than a year ago but remain historically low, and that’s keeping new-vehicle prices elevated. Still, even though average prices are at a record level, there are affordable vehicles out there. Compact cars and SUVs and subcompact models typically transact for 30% to 40% below the industry average.”
– Rebecca Rydzewski, research manager of economic and industry insights for Cox Automotive
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