Auto Market Weekly Summary

Job growth in February accelerated and was stronger than expected, but prior job numbers were revised down substantially. Some metrics indicate weakening – like the downward revisions, slower wage growth, and higher unemployment rate. However, the three-month average for job creation is at the highest pace in eight months.

New-vehicle sales recovered in February from January’s winter storms and delivered growth year over year. Discounting and incentives grew.

Used-vehicle sales also improved in February and delivered growth year over year. Wholesale vehicle values increased on an unadjusted basis as tax refund season started, according to the Manheim Used Vehicle Value Index.

February Job Growth Accelerated More Than Expected

Job growth in February accelerated and was stronger than expected, but prior job numbers were revised down substantially. February saw 275,000 jobs created when 200,000 had been expected.

The prior two months were revised down for a net decline of 167,000 fewer jobs than originally estimated. The private sector created 223,000 jobs in February. Manufacturing saw 4,000 jobs lost. Services produced 204,000 new jobs. Education and health care had the largest gain in the private sector with 85,000 jobs created, which was a deceleration from 107,000 created in January.

Auto dealers shed 3,100 jobs, which left employment at dealers down 3,100 or 1.7% below the February 2020 level.

Total payrolls now exceed February 2020 payrolls by 5.5 million or 3.6%. The three-month moving average of new jobs, a reliable indicator of momentum, is now 265,000, which is the fastest pace in eight months.

Jobless Rate Edged Higher to 3.9%

The headline unemployment rate increased to 3.9% from 3.7%.

The labor force participation rate was steady at 62.5%. Participation is down 0.8 percentage points from before the pandemic and represents 2.1 million fewer people in the labor force compared to then despite having added 5.5 million jobs.

The underemployment rate, which is the broadest measure of unemployment, increased to 7.3% from 7.2% in January and is 0.3 percentage points above where it was in February 2020.

Monthly average hourly earnings growth decelerated to 0.1% from 0.5% in January. Earnings growth year over year declined to 4.3% from a downwardly revised 4.4% in January. Earnings growth remains strong by historical standards and appears to be slowing again.

New-Vehicle Sales Rose Nearly 10% in February

Total new-light-vehicle sales were up 9.6% in February from a year ago, with one more selling day than February 2023. By volume, new-vehicle sales were up 16.6% from January.

The February seasonally adjusted annual rate (SAAR) was 15.8 million, which was a 6.3% increase from last year’s 14.9 million and up 6.0% from January’s downwardly revised 14.9 million. February’s SAAR was slightly stronger than the pace in the second half of last year and represented a rebound from weather disruptions in January.

Sales into fleets also rebounded. Combined sales into large rental, commercial, and government fleets increased 21.4% from last year. Sales into large rental fleets were up 46% from a year ago, while sales into commercial fleets were down 4%, and sales into government fleets were up 1%.

Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be up 8.8% from last year, leading to an estimated retail SAAR of 12.8 million, which was up 0.8 million from last year’s 12.0 million pace and up from last month’s 12.3 million pace. The estimated fleet share of 20.0% was up slightly compared to last year’s fleet market share of 19.4%.

February’s Average Vehicle Transaction Price Slipped; Incentives Rose

The average transaction price of a new vehicle in February declined 0.1% from January to an initial estimate of $47,244, which was the lowest average price since April 2022, according to Kelley Blue Book. [Check the Newsroom for more details later today.]

The average price relative to the average manufacturer’s suggested retail price (MSRP) moved down to 96.9%, which was the lowest level since March 2021. The average price was down 2.2% from a year ago. The average MSRP increased 0.1% in February from January but was down 0.4% year to year.

The average incentive spend from manufacturers increased by 4% to $2,808, which was up 88% from a year ago. Incentives as a percentage of average transaction price increased to 5.9%, the highest level since July 2021.

Retail Used Vehicle Sales Rose in February

Our used retail sales estimates based on vAuto data indicate that sales volumes were up 18% in February compared to January, with volumes up 5% from a year ago. Certified pre-owned (CPO) sales increased 5% from January and were up 2% from a year ago. Wholesale vehicle values, according to the Manheim Used Vehicle Value Index, declined 0.1% in February on a seasonally adjusted basis, as the Index fell to 203.8, which was down 13.1% from a year ago. The unadjusted price change in February was an increase of 1.7%, leaving the unadjusted average price down 11.0% from a year ago. February was the start of tax refund season, coinciding with the start of the spring selling season.

Jonathan Smoke

Chief Economist

Jonathan Smoke leads Cox Automotive’s economic and industry insights team, which tracks key metrics and trends impacting both the wholesale and retail markets for vehicles informed by the proprietary data from the company’s businesses and platforms. For 28 years, Smoke has focused on translating data and trends into relevant actionable insights for the industries that represent the biggest purchases that consumers make in their lifetimes: real estate and automotive. Smoke joined Cox Automotive in 2017.