Smoke on Cars
Auto Market Weekly Summary
Monday October 14, 2024
Key Highlights
- Inflation and Vehicle Prices: Headline inflation increased more than expected in September, with notable rises in transportation services and vehicle prices.
- Auto Loan Credit and Consumer Sentiment: Access to auto credit improved modestly, but overall credit access remains tighter than a year ago.
- Vehicle Sales and Market Trends: New-vehicle prices saw a slight increase, while used-vehicle prices declined, and wholesale vehicle values continued to drop.
Inflation
Headline inflation, according to the consumer price index (CPI), increased 0.2% in September, which was more than expected.
- Core CPI, excluding Food and Energy, also increased more than expected at 0.3%.
- Transportation services saw a significant acceleration to a 1.4% gain, driven by increases in rental fees, motor vehicle maintenance and repair, and motor vehicle insurance.
- New-vehicle prices increased by 0.2%, and used-vehicle prices increased by 0.3%, following a 1% decline in August.
New-Vehicle Prices and Incentives
New-vehicle prices and incentives showed mixed trends.
- The average transaction price of a new vehicle in September increased 0.8% from August, with an initial estimate of $48,397, according to Kelley Blue Book.
- The average price relative to the average manufacturer’s suggested retail price (MSRP) was steady at 97.2%, with discounting stable for four straight months.
- The average incentive spend from manufacturers increased 2.2% month over month to $3,522, which was up 49.4% year over year.
- Incentives as a percentage of average transaction price increased to 7.3% from 7.2% in August and was at the highest level since April 2021 but remains below Sept. 2019’s 10.2%.
Used-Vehicle and Wholesale Prices
Used retail sales estimates based on vAuto data indicate that volumes were down month over month but up year over year.
- USed retail sales were down 14% in September compared to August and were up 9% compared to the same time in 2023.
- CPO sales declined 23% month over month and were down 21% year over year.
- Wholesale vehicle values declined 0.5% in September on a seasonally adjusted basis, as the Manheim Used Vehicle Value Index declined to 203.0, which was down 5.3% from a year ago.
- The unadjusted price change in September was a decline of 0.1%, leaving the unadjusted average price down 4.9% year over year.
Auto Loan Credit and Loan Performance
Access to auto credit improved modestly in September across most channels and lender types but is likely to remain tight due to weak auto loan performance.
- The subprime share increased, terms lengthened, down payments declined, and the negative equity share increased.
- Credit access in September was tighter than a year ago in all channels, with banks tightening the most year over year.
- For the fifth month in a row, 60-day+ auto loan delinquencies increased.
- In September, 1.97% of auto loans were severely delinquent, up from 1.96% in August.
- The subprime severe delinquency rate was unchanged at 7.41%, 3 BPs higher year over year, while the aggregate was 9 BPs higher.
- The delinquency rate was high throughout 2023 but did not lead to a similar record level of defaults.
- Defaults increased 12% in total in September and were up 12.9% year over year.
- The annualized default rate for September was 3.28%, higher than the 2.87% rate in September 2019.
Jonathan Smoke
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.