Auto Market Weekly Summary

New daily COVID-19 cases continued to increase last week. Used-vehicle sales slowed to a more normal pace. New jobless claims increased slightly from the prior week, but continuing claims declined. Consumer sentiment improved modestly over the last seven days but remains down so far in July. Consumers opened new credit cards and took out new loans to support the May increase in spending.

Used-vehicle sales slow: Used-vehicle sales slowed in June to a pace consistent with 2019. Retail used demand has slowed considerably from the peak frenzy in April but remains strong.

We initially estimate that used-vehicle sales were down 11.1% from the year-ago June, which was up against one of the two strongest months for used sales during the initial reopening phase of the pandemic last year. Compared to 2019, total used-vehicle sales were down 4.7%. The June used SAAR was 39 million, down from 43.6 million last June and down from May 2021’s 40.0 million rate.

Based on our initial estimates, used retail sales were down 8.9% in June from a year ago. Compared to 2019, retail used vehicle sales were down 0.6%. The June used retail SAAR estimate was 21.3 million, down from 23.1 last year and down from May’s 21.9 million rate. The June 2019 retail SAAR was 21.1 million, so the rate this June was slightly (0.9%) higher, and 2019 was the best full year for used retail sales.

Certified pre-owned (CPO) sales in June slowed similarly to the retail market overall. CPO sales declined 9% from a year ago and were down 11% from May. CPO sales are up 18% year-to-date compared to the same period last year. June CPO sales were down 0.7% compared to June 2019.

Wholesale prices retreat: With the frenzy over, wholesale vehicle values peaked in early June. The Manheim Used Vehicle Value Index (MUVVI) declined 1.3% for the month after setting new records in each of the prior four months. [A replay of the Q2 MUVVI call is available.] Retail used prices will likely peak in July. The decline in June moved the Index down to 200.4, which was 34.3% higher than a year ago. On a year-over-year basis, all major market segments saw seasonally adjusted increases in June, but pickups again outperformed the overall market

Consumer borrowing rises: The Federal Reserve reported that Consumer credit excluding housing-related debt surged in May by $35.3 billion. Revolving credit (credit card balances) increased by $9.2 billion, which was the largest monthly increase since December 2019. Non-revolving debt (auto loans and student loans) increased by $26.1 billion, which was the largest single monthly increase in at least 30 years. Consumers have clearly returned to using credit to fuel the spending frenzy this spring after having deleveraged in 2020.

Consumer sentiment mixed: The daily measure of consumer sentiment from Morning Consult has seen modest improvement over the seven days ended last Friday though sentiment has declined in each of the last two days as of Friday. That put the index up 0.1% for the seven days but down 0.5% so far in July

Job recovery continues: Jobless claims continue trending down as economic activity recovers. Traditional continuing claims declined by 145,000 week-to-week at 3.34 million as of June 26. In the latest data, 14.2 million Americans remain on some form of unemployment benefits including pandemic unemployment assistance, and those numbers declined by 450,000 in the latest data. Initial claims increased by 2,000 to 373,000 in the week ended July 3. The prior week had been the lowest yet for initial claims during the pandemic. New claims continue to be elevated, as weekly claims averaged 212,000 per week in the weeks prior to the pandemic in 2020.

For additional commentary from Chief Economist Jonathan Smoke, watch the July 8 Auto Market Report video.