Auto Market Weekly Summary

Highlights:

• July saw the average transaction price of a new vehicle remain almost identical to the previous month, presenting a 0.2% decrease year over year, but seeing a 24.6% increase since 2019.
• Used-car sales increased 5% compared to June, although they were 2% lower year over year, reflecting a changing landscape and a potential renewed interest in used vehicles.
• Access to auto credit has tightened across all channels, causing an uptick in delinquencies and defaults, signaling a more challenging financial landscape for consumers.

New-Vehicle Average Transaction Pricing

Despite slight variations, the average transaction price of a new vehicle remained statistically unchanged from June at approximately $48,401. This reflects a minor dip of 0.2% year over year, but overall, an impressive increase of 24.6% since July 2019. Incentives from manufacturers are also on the rise, gaining 9.1% in July to a total of $3,383, indicating a 59% increase year over year. [Check back in the Newsroom on Tuesday, August 13, for full details.]

Used-Vehicle Sales and Prices

Compared to June, our July estimates based on vAuto data showed a 5% growth in used vehicle sales. However, year-over-year sales saw a slight 2% dip. Certified pre-owned (CPO) sales increased 1% month over month but were down 9%  year over year.

The Manheim Used Vehicle Value Index reported a 2.8% increase in wholesale vehicle values. Wholesale prices rose in July as dealers purchased more inventory from auctions to compensate for declining lease maturities and maintain retail sales volumes. This suggests that the 30-month period of wholesale price correction has ended, restoring the regular relationship between new and used prices.

Auto Loan Credit and Performance

The latest report by the Federal Reserve suggests a slight deceleration in consumer credit growth for June. We also observed shrinking access to auto credit in July across all channels and lender types. The down payment amount and term length remained unchanged, but the approval rate declined and the yield spreads widened. [Check back later today for more details in the Dealertrack Credit Availability Index report.]

Auto credit is likely to remain tight due to the ongoing weak performance of auto loans. This is highlighted by the increase in delinquencies and defaults. July’s increase marks the third consecutive month-over-month increase in 60-day+ delinquencies. Defaults increased 3.4% in total in July and were up 42.3% year over year. Defaults of subprime auto loans increased by 2.5% and were up 35.9% year over year. The annualized default rate for the month of July was 3.02%, which was 10 basis points higher than in June and higher than the 2.92% annualized default rate in July 2019. The year-to-date default rate is 3.06%, which is 16 basis points higher than the default rate in 2019 and closer to the 2010 default rate of 3.22%.

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.