Cox Automotive Auto Market Report: Oct. 29

Cox Automotive’s Auto Market Report video delivers a comprehensive analysis of the current automotive market. Chief Economist Jonathan Smoke leads our effort to translate data and trends into actionable insights. This video covers a wide range of topics, including consumer spending patterns, consumer sentiment, retail vehicle sales, financing rates, supply dynamics, pricing trends and leading indicators from Cox Automotive’s extensive data ecosystem.

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Report Summary – Oct. 29, 2024

Highlights

• Consumer confidence continues to rise, with sentiment indices reaching the highest levels since spring 2021, driven partly by declining gas prices.
• Retail vehicle sales show resilience, with new sales up 10% year over year and used vehicle sales improving 9% against 2023, despite recent disruptions.
• Supply in the vehicle market has stabilized, with new supply holding strong year over year while used supply remains more constrained, impacting price trends.

Consumer Spending Growth Stabilizes Over 4%

Total spending trends were volatile in the second half of June and again in late August and September.

• The average growth in consumer spending has been stabilizing over the 4% mark.

Labor Market Dynamics

Unemployment claims are now reflecting the impact of hurricanes and the Boeing strike.

• More than 3 million new jobs were created last year, and 1.8 million have been created through September this year.
• The job growth slowed substantially this summer before appearing to re-accelerate to a strong level of 254,000 in September.
• Continuing claims are at 1.90 million as of Oct. 12, which was 137,000 above what they were before the pandemic and at the highest level since November 2021.
• The October employment report will be released this Friday and will likely show job losses.

Consumer Sentiment Increases Again in October

Despite the storms, the most accurate measure of consumer sentiment continues trending higher and is at the highest level since spring of 2021.

• The index of consumer sentiment from Morning Consult improved modestly in June, July, August, and September and is up again in October. The index increased 0.2% week over week as of Monday, Oct. 28, leaving it up 4.4% year to date and up 1.4% so far in October after increasing 1.4% in September.
• Gas prices are on the decline again as the average unleaded gas price, according to AAA, declined 1.4% week over week to $3.13 per gallon as of Sunday, Oct. 27, which was down 10% year over year and down 2.3%, so far in October.

Rise in Retail Vehicle Sales Seen Over Two Weeks

Storms disrupted sales trends for new and used cars, but sales have gradually increased for two consecutive weeks.

• New retail sales increased 2% in the latest week of data, and they are now up 10% over last year.
• Sales are currently 4% higher in the used retail vehicle market, with estimated sales increasing by 1% in the most recent week of data and up 9% against 2023.

Low APR Financing Remains Low

Manufacturers are not yet getting aggressive despite the Fed cutting rate.

• The percentage of new vehicle financing transactions with a 0% annual percentage rate has fallen every month this year, except for May and August, when it reached 3.2%. It continued to decline in September, hitting a 12-month low this month.
• In February, rates below 3% APR reached a two-year high but declined from March to May. After fluctuating, they peaked in August before retreating in September and dropping further in October.

Average Auto Loan Rates

There’s been little change in the average auto loan rates since the Federal Reserve cut rates in September.

• The average used rate is at 13.90%, while the new is at 9.35%.

Supply Declines in New and Used Vehicles

Supply metrics have stabilized with recent declines.

• New supply continues to hold higher year over year, while the used supply remains tighter.

Used Price Trends Slowly Converging

The 3YO Weekly Retail Price declined again this past week, falling by two-tenths of a point for the third week in a row, allowing wholesale prices to converge a bit more with retail values. 

• There was a 0.2% decline in the average MY 2021 retail price last week, while wholesale prices fell by 0.5%.
• Wholesale prices are 2.7% higher than last year for the week, and values for 3YO units in 2024 are now down 9.7% since week 1.

Leading Indicators

Leads and service trends are showing mixed results.

• Leads: Leads on Autotrader and Kelley Blue Book are up year over year in October and are up for the month compared to September on KBB.com but down on Autotrader.
• Dealer Metrics: Unique leads per dealer are down year over year in October for new and used vehicles on websites hosted by Dealer.com, but new and used leads are up for the month compared to September. Unique credit applications per dealer on Dealertrack were up 6% year over year last week, with the trend in applications per dealer declining week over week.
• Service Trends: Service trends on Xtime relative to last year were stable last week, with completed appointments up 1.0% year over year.