Auto Market Weekly Summary

Job growth in March accelerated and was stronger than expected. The three-month average for job creation is at the highest level in 11 months, while the unemployment rate declined. Wage growth accelerated modestly in March. The labor market remains strong.

New-vehicle sales slowed in March despite growth in discounting and incentives.

Used-vehicle sales improved in March and delivered stronger growth year over year, but the normal lift in sales from tax refund season did not occur.

Wholesale vehicle values increased on an unadjusted basis but declined on a seasonally adjusted basis as tax refund season did not deliver quite the normal lift in used vehicle values, according to the Manheim Used Vehicle Value Index. The Q1 Manheim Used Vehicle Value Index call was held on Friday, April 5, and a replay is available.

March Job Growth Accelerated More Than Expected

Job growth in March accelerated and was stronger than expected, and prior job numbers were revised up on net. March saw 303,000 jobs created when 214,000 had been expected. The previous two months were revised up for a net increase of 22,000 more jobs than originally estimated.

The private sector created 232,000 jobs in March, while government added 71,000. Manufacturing saw no change in jobs, but February’s loss was revised up to 10,000 jobs lost. Services produced 190,000 new jobs. Education and health care had the largest gain in the private sector, with 88,000 jobs created, an acceleration from 82,000 created in February.

Auto dealers added 4,000 jobs, which left their employment down 17,400, or 1.3%, from the February 2020 level.

Total payrolls now exceed February 2020 payrolls by 5.8 million or 3.8%. The three-month moving average of new jobs increased to 267,000, the fastest pace in eight months.

Unemployment Declined While Labor Participation Increased

The headline unemployment rate declined to 3.8% from 3.9%.

The labor force participation rate increased to 62.7% from 62.5%. Participation is down 0.6 ppts from before the pandemic and represents 1.6 million fewer people in the labor force compared to then despite having added 5.8 million jobs.

The underemployment rate, the broadest measure of unemployment, was steady at 7.3% in March and 0.3 ppts above its level in February 2020.

Monthly average hourly earnings growth accelerated to 0.3% from an upwardly revised 0.2% in February. Earnings growth Year over year declined to 4.1% from 4.3% in February. Earnings growth remains strong by historical standards and may not fall much further, given the monthly pace of growth.

New-Vehicle Sales Rose Again in March

March saw total new light vehicle sales increase 4.6% year over year, with the same number of selling days as March 2023. By volume, new vehicle sales increased 16.1% month over month.

The March seasonally adjusted annual rate (SAAR) was 15.5 million, a 3.7% increase from last year’s 14.9 million but down 1.3% from February’s downwardly revised 15.7 million. The SAAR year to date is 15.4 million. March’s SAAR was weaker than the pace in the second half of last year and represented softening from February’s rebound from weather disruptions in January.

Sales into fleet also weakened. Combined sales into large rental, commercial, and government fleets were down 0.2% Year over year. Sales into large rental fleets were up 6.7% Year over year, while sales into commercial fleets were down 6.8%, and sales into government fleets were down 8.5%.

Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be up 7.1% from last year, leading to an estimated retail SAAR of 13.0 million, which was up 1.0 million from last year’s 12.0 million pace and up from last month’s 12.8 million pace. The estimated fleet share of 17.7% was down compared to last year’s share of 19.6%.

New-Vehicle Average Transaction Prices Declined to Lowest Level Since April 2022

The average transaction price of a new vehicle in March declined 0.9% from February to an initial estimate of $47,255, the lowest average price since April 2022, according to Kelley Blue Book. [Check the Newsroom for more details on Wednesday.]

The average price relative to the average manufacturer’s suggested retail price (MSRP) moved down to 97.6%, the lowest level since April 2021. The average price was down 2.6% year over year. The average MSRP declined 0.8% in March and was down 0.6% year over year.

The average incentive spend from manufacturers increased 11% to $3,120, which was up 102% year over year. Incentives as a percentage of average transaction price increased to 5.9%, the highest level since July 2021.

Retail Used-Vehicle Sales Rose in March

Our used retail sales estimates based on vAuto data indicate that sales volumes were up 6% in March compared to February with volumes up 7% year over year. Certified pre-owned (CPO) sales increased 10% month over month and were up 1% year over year.

Wholesale Used Vehicle Values Lower than Expected in March

According to the Manheim Used Vehicle Value Index, wholesale vehicle values declined 0.4% in March on a seasonally adjusted basis, as the Index decreased to 203.1, down 14.7% from a year ago. The unadjusted price change in March was an increase of 3.1%, leaving the unadjusted average price down 11.4% year over year. March did not deliver the normal tax refund-bounce in used values. The Manheim Used Vehicle Value Index call was held on Friday, April 5, and a replay is available.

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.