Auto News From COX Automotive
 |
As we roll into the final 50 days of this national election season, our latest measure of dealer sentiment reminds us that political fatigue is likely taking its toll. Sentiment among U.S. automobile dealers stumbled in Q3 as the political climate held back business. The Cox Automotive Dealer Sentiment Index reveals a slight shift in the top factors holding back business, with the economy, interest rates and the political climate taking the lead.
In the first half of September, wholesale used-vehicle prices experienced a slight decline. Despite this normal seasonally adjusted cool-off, we have yet to see the usual depreciation trends within the wholesale industry, according to the mid-month Manheim Used Vehicle Value Index reported this morning.
In his latest Auto Market Report, Cox Automotive Chief Economist Jonathan Smoke stated that the continuing positive momentum in the auto market bodes well for the final quarter of the year, and the Federal Reserve’s decision on Wednesday is expected to initiate a process that will boost vehicle demand before the year ends. [Check back in the Newsroom for commentary from Smoke after the Fed meeting.]
Vehicle affordability in August improved to its best level in 39 months, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. Every factor was aligned in favor of the consumers, and income growth is set to have a more significant impact on the industry than interest rate changes.
The latest Kelley Blue Book average transaction prices report shows that new-vehicle prices continued to tumble in August. With higher inventories pressuring the market, dealers are resorting to higher incentives to attract buyers in an increasingly competitive market.
Join Us: Register to attend the Q3 Cox Automotive Industry Insights and Sales Forecast call on Wednesday, Sept. 25, at 11 a.m. EDT.
Visit the Cox Automotive Newsroom for the latest on the industry’s most important topics. Bookmark the Auto Market Snapshot, a one-stop dashboard for the data our team is tracking. US Automobile Dealer Sentiment Stumbles in Q3 as Political Climate Heats Up
Automobile dealers in the U.S. continue to view the overall auto market as weak, according to the latest Cox Automotive Dealer Sentiment Index (CADSI). The current market sentiment in Q3 was 40, well below the positive threshold of 50. The current market sentiment score was lower than in Q2 and lower than one year ago when the score was 45.
The top three factors holding back dealers shifted slightly in Q3, with the economy ranking first, interest rates second, and the political climate making a significant jump up into the third-place position. When asked, 44% of dealers noted political climate was a factor holding back business, up from 36% in Q2. The 44% in Q3 is the highest percentage recorded for political climate since the factor was added in 2019.
Read the press release and download the full results. Wholesale Used-Vehicle Prices Decrease in First Half of September
Wholesale used-vehicle prices declined 0.2% from August in the first 15 days of September. The mid-month Manheim Used Vehicle Value Index decreased to 203.6, down 5.0% from the full month of September 2023. The seasonal adjustment softened the results.
“It’s normal for seasonally adjusted values to cool a bit in the first half of September as results include the impact from the Labor Day holiday week, which has a lingering effect on the industry over a few weeks,” said Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive. “We typically see non-seasonally adjusted values decline for the full month of September, yet they are currently higher by two-tenths of a point even through the holiday period. This suggests we are currently continuing to see lower than normal depreciation trends in the wholesale industry.”
Check out the mid-month Data Point. Wholesale Used-Vehicle Prices Decrease in First Half of September
Wholesale used-vehicle prices declined 0.2% from August in the first 15 days of September. The mid-month Manheim Used Vehicle Value Index decreased to 203.6, down 5.0% from the full month of September 2023. The seasonal adjustment softened the results.
“It’s normal for seasonally adjusted values to cool a bit in the first half of September as results include the impact from the Labor Day holiday week, which has a lingering effect on the industry over a few weeks,” said Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive. “We typically see non-seasonally adjusted values decline for the full month of September, yet they are currently higher by two-tenths of a point even through the holiday period. This suggests we are currently continuing to see lower than normal depreciation trends in the wholesale industry.”
Check out the mid-month Data Point. Vehicle Affordability Improved in August to Best Level in 39 Months
New-vehicle affordability improved in August to the best level since May 2021 as every factor moved in the consumer’s favor, according to the Cox Automotive/Moody’s Analytics Vehicle Affordability Index. Factors leading to improved new-vehicle affordability include lower prices and interest rates and higher incomes and incentives.
“The affordability story is complex,” said Chief Economist Jonathan Smoke. “When analyzing the data, we observe that affordability is becoming less of a macroeconomic issue and more of an automotive industry issue. Automakers are opting to manufacture higher-priced vehicles, so further declines in interest rates will not significantly reduce payments. Instead, income growth will have a greater impact than interest rate changes in the auto industry.”
Check out the Data Point. New-Vehicle Prices Continue To Tumble in August, Incentives Up Nearly 50% Year Over Year, according to Kelley Blue Book Estimates
For the 11th straight month, the average transaction price (ATP) for a new vehicle in the U.S. was lower year over year, according to data released last week by Kelley Blue Book, as higher inventories continue to add price pressure to the market. At $47,870, the new-vehicle ATP in August was also lower by 0.6% compared to the revised July ATP of $48,166.
See the Data Point for more details. Auto Quote
“In the face of a sluggish sales pace – 15.1 million in August – more dealers are pulling the only lever they have: higher incentives. This shift to a buyers’ market is good news for consumers but certainly impacts dealer profitability.”
Cox Automotive Executive Analyst Erin Keating in the August Kelley Blue Book ATP report