Auto Market Weekly Summary

The first week of December delivered strong readings related to the job market, consumer sentiment and retail vehicle sales.

Jobs, jobs, jobs: November saw the second-best number of jobs created for the year and dramatically surprised to the upside. The unemployment rate is back down to 3.5%, which is a 50-year low. Wage gains have been the strongest and most consistent in a decade.

Consumers are confident: Consumer sentiment is up again so far in December and is at the highest level since May. Consumers see vehicle buying conditions as better than they have been in more than a year and a half.

Strong retail vehicle sales: Record incentives helped produce the best retail new vehicle SAAR for 2019 in November, but the gains from fleet sales is now fading. The new vehicle market saw a 17.1 million light vehicle SAAR in November, which was up from October but down from last year.

Used market under pressure: Higher incentives on new vehicles have put pressure on used vehicle prices. We saw a second month of year-over-year declines in the Manheim Index. Retail used vehicle sales are also down year over year. Weekly used-vehicle price trends point to more stable prices in December. Lower new vehicle supplies may lead to lower incentives this winter.

Looking ahead: This week, we’ll get November inflation and retail sales data. We have released the fourth quarter Cox Automotive Dealer Sentiment Index. The Fed meets later this week to make their final rate policy decision for 2019. No change in rates is expected.