Auto News Roundup Mid Week Edition
Auto Central July 11, 2023; Here is the Midweek Auto News Roundup a roundup from Cox Automotive and perspectives from its analysts and experts on topics dominating the automotive industry.
We are back in your inbox on an “off” week to catch everyone up on what might have been missed over the holiday. We will resume a biweekly cadence that coincides with Cox Automotive Chief Economist Jonathan Smoke’s Auto Market Report videos starting Tuesday, July 18.
Ahead of tomorrow’s consumer price index (CPI) release, the most widely used measure of inflation, we published data on new-vehicle pricing from Kelley Blue Book. The average transaction price of a new vehicle in the U.S. rose modestly in June to $48,808, now up only 1.6% year over year. A year ago, prices at this point were up 12% year over year. Also, for the first time in more than a decade, prices are DOWN nearly 2% from January. In many ways, this makes 2023 a unicorn year.
In this newsletter, we highlight access to auto credit, which improved in June after hitting a two-year low in May, according to the Dealertrack Credit Availability Index, and the Manheim Used Vehicle Value Index (MUVVI), which shows wholesale values down 4.2% in June from May and down 10.3% from a year ago. Chris Frey, senior manager of Economic and Industry Insights for Cox Automotive, notes: “Buyers at auction look to have taken an early summer break, and while used retail inventory has been improving over the last several weeks, we are expecting less volatility in wholesale price movements through year-end.” Watch the replay of the quarterly MUVVI call held yesterday.
Worth a Read: Check out the latest commentary from Cox Automotive Senior Director of New-Vehicle Solutions Brian Finkelmeyer: First Half Finish: Dealers Face Rapidly Changing Market While Visiting a Place Where Time Stands Still
ICYMI: Watch the 2023 Mid-Year Review replay to see a deep dive into the economy and how the U.S. auto industry performed in the first half, including the new, used and wholesale markets.
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. Bookmark the Auto Market Snapshot, a one-stop dashboard for the data our team is tracking.
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WHOLESALE USED-VEHICLE PRICES EXPECTED TO NORMALIZE
Cox Automotive Chief Economist Jonathan Smoke, Chris Frey, senior manager of Economic and Industry Insights, and Jeremy Robb, senior director of Economic and Industry Insights, hosted the Q2 2023 Manheim Used Vehicle Value Index call on Monday, July 10, and discussed the latest Manheim Used Vehicle Value Index and the major economic and industry trends that shaped the quarter. Joe Kichler, vice president of Logistics, joined as a special guest to share his insights on the current state of automotive logistics.
“The wholesale market story for the first half of 2023 can be summed up in one word: volatile,” Smoke said. “The result, however, is not unexpected. Larger upswings during the first quarter and a downward trajectory that began in the second half of March have brought us to roughly where we expected to be at this point in the year. The good news is that the worst of this is likely behind us. Used retail sales held steady in June and are showing signs of strengthening – inventory levels are generally balanced between supply and demand.”
Watch the event replay, download the presentation and read the press release for additional details.
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AVERAGE NEW-VEHICLE TRANSACTION PRICE IN JUNE POSTS SMALLEST ANNUAL GAIN IN NEARLY 4 YEARS
The average price Americans paid for a new vehicle in June 2023 experienced the smallest year-over-year price increase since the start of the global pandemic. According to Kelley Blue Book, a Cox Automotive company, the average transaction price (ATP) of a new vehicle is now up only 1.6% year over year ($774). The June ATP was $48,808, a month-over-month increase of 0.3% ($150) from an upwardly revised May reading of $48,658.
“The fact that average transaction prices are up a meager 1.6% year over year in June is notable,” said Michelle Krebs, executive analyst at Cox Automotive. “A year ago, the industry was looking at transaction prices that were consistently up 10-12% year over year. With no inventory in place, it was inflation gone wild. Now, as inventory has been consistently building and supply and demand are finding a balance, the price gains seem to be well under control. In fact, average transaction prices are down from the start of the year. That’s good news for shoppers.”
Also worth noting: EV prices are down a remarkable 20% from their recent peak in June 2022. This price drop can largely be attributed to Tesla’s price cuts and improved sales of more affordable models (looking at you, Chevy Bolt). In June, the average price paid for a new EV was $53,438, down from more than $61,000 in January. Additionally, higher inventory levels on many dealers’ lots are helping lead EV incentives higher.
Check out the Data Point published today for the details.
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AUTO CREDIT AVAILABILITY IMPROVED IN JUNE
Access to auto credit improved in June after hitting a two-year low in May, according to the Dealertrack Credit Availability Index for all types of auto loans. Following tightening that occurred this spring during the banking crisis, June marked an important turning point that saw credit access improve across all channels and all lender types. However, credit access remains tighter than a year ago and is tighter than before the pandemic for many channels. The All-Loans Index increased 0.8% to 97.2 in June, which was the highest reading since March and reflected that auto credit was easier to get than in April and May. With the increase in June, access was tighter by 7.1% year over year, and compared to February 2020, access was tighter by 2.0%.
Read the Data Point to learn what factors impacted credit availability in June.
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FIRST HALF FINISH: DEALERS FACE RAPIDLY CHANGING MARKET WHILE VISITING A PLACE WHERE TIME STANDS STILL
Attending the Virginia, Maryland, Kentucky, and West Virginia Auto Dealers at their annual summer convention prompted an article from Brian Finkelmeyer, senior director of New Car Solutions at Cox Automotive. While The Greenbriar, where the conference was held, makes guests feel as though time has stood still, Finkelmeyer says that is not the case with the dealers he spoke to at the event. He writes: “The current state of the new-car maker has them running.”
Read more from Finkelmeyer about how dealers are adjusting to the current market dynamics, including high auto loan rates and very expensive inventories holding back sales, and what their future holds with EVs.
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Looking ahead: Later this week, Cox Automotive will publish an analysis of electric vehicle sales for Q2 and the first half, as well as inventory reports on the new and used markets. We will report the Cox Automotive/Moody’s Analytics Vehicle Affordability Index for June.
Next week, estimated used-vehicle sales and certified pre-owned sales will be published. We will also report the mid-month Manheim Used Vehicle Value Index.
Don’t hesitate to contact us if you have questions or want to connect with the Cox Automotive Corporate Communications team.
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AUTO QUOTE
“The 4.2% drop is among the largest declines in MUVVI history and the largest decline since the start of the pandemic in April 2020 when the index plunged 11.4%. The year-over-year decline was also large, another 2.7% drop from May’s annualized 7.6% decline, but as mentioned last month, auction prices were lower in the fall last year, and we expect these increasing year-over-year moves to shrink in the months ahead as the market normalizes.”
Chris Frey, senior manager of Economic and Industry Insights for Cox Automotive.
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