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Smoke on Cars

Auto Market Weekly Summary: September 12


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Average new-vehicle prices hit a new record in August. Pricing power remains strong for manufacturers and dealers.

Used-vehicle sales increased in August from July. Used supply is a bit higher than normal in retail and in wholesale, and as a result, wholesale prices in August declined more than normal for the time of year. Supply came down in August and ended the month closer to normal.

Initial jobless claims have declined in recent weeks. Seasonally adjusted continuing claims are at the highest level in 21 weeks but remain low by historical standards.

Consumer sentiment has improved since June, but sentiment is down so far in September.

Prices climb, incentives fall: The average transaction price of a new vehicle in August exceeded the average MSRP for the fifteenth month in a row. The average price at $48,301 was a new record, up 11.7% from a year ago.

With the average incentive spend declining to $1,087 in August, incentives as a percentage of average transaction price fell to 2.3%, which tied the 20-year low recorded in June.

Used sales rise: We estimate that used retail sales increased 11% in August from July, and sales were down 9% from a year ago. Compared to 2019, sales were down 19%, which was an improvement from July.

Certified pre-owned sales were down 5% in August compared with a year ago but increased 5% from July. CPO sales were also down 19% in August compared to August 2019.

Using estimates of used retail days’ supply based on vAuto data, August ended at 47 days of supply, down from 53 days at the end of July but higher than how August ended in 2021 at 38 days. Leveraging Manheim sales and inventory data, wholesale supply is estimated to have ended August at 27 days, higher than how August 2021 ended at 21 days but lower than how July ended at 31 days.

Wholesale values dip: Wholesale used vehicle values, according to the Manheim Used Vehicle Value Index, declined 4.0% in August on a seasonally adjusted basis. The decline left the Index at 210.8, which was up 8.4% from a year ago. The non-adjusted price change in August was a decline of 2.6% compared to July, leaving the unadjusted average price up 5.9% from a year ago.

In August, Manheim Market Report (MMR) values saw larger-than-normal declines that were consistent over the month. Over the last four weeks, the Three-Year-Old Index decreased a net 2.5%. All major market segments saw seasonally adjusted prices that were higher year-over-year in August. Compared to July, all major segments’ performance was down. Sports cars lost nearly 5%, while compact and midsize cars declined 3.5% and 3.0%, respectively. SUVs were down 4.3%, and vans were down 2.9%.

Jobless claims dip: Seasonally adjusted initial jobless claims declined by 6,000 to 222,000 for the week ending September 3. Non-seasonally adjusted claims increased by 2,000. Both measures had been increasing this summer but are now declining again. The nonseasonal number remains lower than it was in the beginning of 2020 before the pandemic began.

Continuing claims, which represent people who previously filed and remain on traditional unemployment compensation increased by 36,000 from the week earlier, bringing the total up to 1.47 million as of the week ending August 27. That level of continuing claims was the highest in 21 weeks but was 290,000 lower than it was prior to the pandemic.

The broadest measure of continuing claims declined by 23,000 to 1.41 million in the latest data, which lags the traditional number and is not seasonally adjusted. That total measure is down 64,000 over the last four weeks and is 688,000 lower than the pre-pandemic level.

Consumer sentiment slips: The index of consumer sentiment from Morning Consult declined 1.1% from the week before as of last Friday. It increased 3.3% in July and 4.6% in August but is down 1.0% so far in September. As of last Friday, the index is down 12.4% from a year ago and down 29.7% from February 29, 2020.

Sentiment has been negatively impacted by stock market declines and inflation, but gas prices have been declining over the last 12 weeks, and the stock market saw improvement over the last three days of last week. The average price for unleaded was down 1.9% as of last Thursday compared with the prior week to $3.74 and down 25.5% from a June peak of $5.02.

JOIN US: The Q3 Cox Automotive Industry Insights and Forecast Call will be held on Wednesday, September 28. Jonathan Smoke and the Industry Insights team will host a conference call to review industry performance in the third quarter and what is expected for the remainder of the year. RSVP to attend.

Jonathan Smoke is chief economist at Cox Automotive.

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