Auto Market Weekly Summary

Key Highlights:

• Retail new-vehicle sales rose 6% year over year in June, even as total sales volume declined due to fewer selling days.
• Used-vehicle prices climbed on a seasonally adjusted basis, with the Manheim Used Vehicle Value Index reaching 208.5, up 6.3% year over year.
• Auto loan performance weakened in June, with both delinquencies and defaults rising, while credit access improved across most channels, according to the Dealertrack Credit Availability Index.

New-Vehicle Sales and Pricing

The new-vehicle seasonally adjusted annual rate (SAAR) declined in June, but the retail SAAR increased and was higher than a year ago. Consumers are price-sensitive, so incentives are increasing again, and discounting is on the rise to keep retail sales moving. Prices were up modestly in June.

• The overall SAAR fell to 15.3 million, down from 15.6 million in May but up from 15.0 million a year ago.
• Retail SAAR rose to 12.9 million, up from 12.2 million last year and 12.7 million in May.
• Fleet sales declined 3.8% year over year, with commercial and government fleet sales down sharply.
• The average transaction price (ATP) for new vehicles rose 0.4% month over month to $48,907, up 1.2% year over year. [Check the Newsroom for the full ATP report.]
• Incentives increased 2.6% month over month to $3,396, up 8.5% year over year, reaching 6.9% of ATP and was higher than the 6.5% level one year ago. It was 9.7% in March 2019.
• Discounting also increased, with the average price relative to MSRP falling to 95.7%.

Used-Vehicle Market Trends

Used vehicle sales declined modestly in June but remained up year over year. Wholesale used prices increased on a seasonally adjusted basis in June but declined on an unadjusted basis. Prices are up year over year.

• Used retail sales volumes fell 1.5% month over month but were up 2% year over year.
• Certified pre-owned (CPO) sales dropped 12.8% month over month and 4.0% year over year.
• The Manheim Used Vehicle Value Index rose to 208.5, up 1.6% month over month and 6.3% year over year.
• On an unadjusted basis, wholesale prices declined 1.1% month over month but remained 5.1% higher than a year ago.

Consumer Credit and Auto Loan Performance

Consumer credit growth is slowing, with declines in credit cards. Access to auto credit improved in June across most channels, but trends by lender type were mixed, according to the Dealertrack Credit Availability Index.

• Total consumer credit rose by $5.10 billion in May, down sharply from April’s $16.87 billion gain.
• Revolving credit (credit cards) declined by $3.47 billion, while nonrevolving credit rose by $8.58 billion.
• Auto credit access improved in June, with higher approval rates, increased subprime share, longer terms, and smaller down payments.
• Credit access loosened most for used loans through independent dealers but tightened slightly for CPO loans.
• Non-captive lenders showed the most improvement in new loan access, while banks tightened the most in June.
• Compared to a year ago, credit access was looser across most lender types, with banks showing the most improvement and captives tightening.

Auto loan performance deteriorated in June, as both delinquencies and defaults increased.

• 60-day+ delinquencies rose 1.9% month over month and 1.6% year over year.
• The severe delinquency rate rose to 1.87%, up from 1.84% in May and 1.81% a year ago.
• Subprime severe delinquencies increased to 6.92%, up from 6.81% in May but slightly below last year’s 6.94%.
• Defaults rose 17.2% month over month and 3.7% year over year.
• Subprime defaults increased 21.4% month over month but were flat year over year.
• The annualized default rate reached 3.07%, which was 45 basis points (BPs) higher than May, 15 BPs higher than last year, and 59 BPs higher than May 2019.

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.