Cox Auto News Midweek

The Fed Waits, While Warning Signs Flash in the Credit Market
 

Once again, the Federal Reserve left interest rates and overall monetary policy unchanged for the eighth straight meeting last week. This level of restrictive rates has been in place for a full year, notes Cox Automotive Chief Economist Jonathan Smoke in his latest commentary. The Fed remains focused on achieving a 2% target on core personal consumption expenditures, which was 2.6% in June.

The gap in June compared to the target is attributed to shelter inflation. Maintaining rates at such a restrictive level is unlikely to significantly reduce housing costs, as the primary issue lies in inadequate supply. Construction projects are not economically viable, leading to a decline in residential construction. Meanwhile, the population continues to grow, exacerbating the housing stock shortage.

“Waiting is not the solution, but the Federal Open Market Committee wants to wait,” Smoke wrote.

Read the full commentary for a thorough explanation of how this decision is affecting the current market.

Auto Market Faces Uncertainty Amid Economic Turbulence

In the Auto Market Report published earlier today, Chief Economist Jonathan Smoke said, “Here we are in the dog days of summer, and the economic clouds are darkening,” said Smoke. “It looks like we will have to weather a few storms in the third quarter, if not for the remainder of the year.”

Bond yields have fallen due to the recent turmoil in the stock markets. However, we have yet to see a drop in auto loan rates and probably won’t until the Fed cuts rates and credit performance improves.
 
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, auto financing, and Cox Automotive’s leading indicators.

July New-Vehicle Sales Rebound Despite Market Challenges

The automotive industry experienced a rebound in new-vehicle sales during July, overcoming temporary setbacks. As noted in our forecast, the new-vehicle market continues to wait for a breakout moment. Despite real wage and income gains, low unemployment, and declining inflation, the U.S. auto market continues to perform below its potential. Here are some key points:

1. Sales Rebound: After a slowdown caused by a widespread dealer software outage in June, July saw a recovery in sales. Approximately 1.27 million vehicles were sold, slightly lower than the forecasted 1.29 million by Cox Automotive. The seasonally adjusted annual rate (SAAR) for July is estimated at 15.8 million, below the forecast of 16.0 million.
    
2. Market Context: Indications are the fleet market was soft in July, below expectations, and a drag on the overall market sales pace.
    
3. Segment Performance: Smaller, more affordable vehicles are gaining strength. In the first half of 2024, the Subcompact SUVs segment outperformed, growing over 20% year over year. Compact SUVs and Compact Cars also showed positive growth. In today’s environment, affordability matters.

See the July sales forecast update.

Cox Automotive Combines Sales and Marketing Teams To Drive Business Success

Cox Automotive is combining the sales and marketing teams to drive profitable growth and enhance the customer experience. In addition to his current marketing responsibilities, Executive Vice President and Chief Marketing Officer Ken Kraft will lead the company’s sales organization upon Tim McKinley’s retirement at the end of the year.
 
Since joining Cox Automotive in 2021, Kraft has partnered closely with the sales and product teams to develop effective and impactful marketing strategies, resulting in significant growth and improved customer satisfaction.
 
“There’s no one better to lead this best-in-class marketing and sales organization than Ken Kraft,” said Steve Rowley, president of Cox Automotive. “Ken’s laser focus on putting the customer first and his deep understanding of how marketing and sales can partner together to drive business success have been the hallmarks of his over 35-year career.” 
 
Read the press release.