From Their Automotive Newsroom

COX AUTOMOTIVE FORECAST: FEBRUARY NEW-VEHICLE SALES EXPECTED TO INCREASE YEAR OVER YEAR, THANKS TO IMPROVING INVENTORY, FLEET SALES GAINS

New-vehicle sales in February are forecast to show a modest gain when announced tomorrow, an improvement over last February’s supply-constrained market. Sales are expected to increase nearly 4% from last year and last month – a true volume gain by comparison since there are 24 selling days in each month. However, the February 2023 auto sales pace, or seasonally adjusted annual rate (SAAR), is expected to reach 14.4 million, a decline from January’s surprisingly strong 15.7 million level. With elevated auto loan rates and persistent inflation, a sales pace decline from January was expected.   
 
Affordability is a growing headwind for vehicle buyers but is impacting new and used sales differently as the spring season approaches. According to Charlie Chesbrough, senior economist at Cox Automotive: “We have diverging markets today. New-vehicle prices remain high while used retail prices are now in decline. New inventory is slowly stabilizing while used supply is falling. However, I wouldn’t be surprised to see this situation change later in the spring.”
 
Read the press release for details on how the segments are expected to perform, and check back for additional commentary once the major automakers have reported February sales.

IT'S TAX TIME!

The 2023 tax refund season is well ahead of last year, Cox Automotive Chief Economist Jonathan Smoke reports in today’s Auto Market Report. With statistics through the week ending February 17, more than $87 billion in refunds have been issued, 12% more than last year. However, the average refund at $3,140 is 11% lower year over year.
 
Tax refund season traditionally provides a boost for used-vehicle sales. This year is a bit different. Smoke notes that affordability is likely driving the softening in retail demand that we are observing as interest rates continue to move higher. Retail used-vehicle prices will inevitably increase, too, following eight weeks of wholesale price increases.

Read the Auto Market Weekly Summary and watch the Auto Market Report video for more data and insights from Smoke on new and used retail sales and inventory, auto financing and Cox Automotive leading indicators.

VOLUME IS FOR VANITY, PROFIT IS FOR SANITY
 
In an article published yesterday, Brian Finkelmeyer, senior director of new-vehicle solutions at Cox Automotive, explores the different business strategies Hyundai Motor Group and Stellantis are taking in light of improving inventory and lower sales.
 
Stellantis is focusing on the most profitable segments as opposed to sales volume and market share. Meanwhile, Hyundai Motor Group is following a more traditional path, outselling Stellantis in four of the past six months and growing market share.
 
Read the article from Finkelmeyer on how these different approaches are impacting the bottom line and how they could potentially affect future revenue.

SEISMIC SHIFT: THE U.S. NEW-VEHICLE MARKET IS BECOMING A LUXURY MARKET
 
With the average manufacturer’s suggested retail price (MSRP) now close to $50,000, affordability continues to be one of the greatest challenges facing vehicle buyers. How fast has the market changed? Quite fast, particularly for new-vehicle shoppers entering the market again after, say, a three-to-five-year hiatus.
 
To illustrate the point, the Cox Automotive Industry Insights team analyzed vehicles priced under $25,000 – generally regarded as affordable – and vehicles priced over $60,000, above the annual income of the average American. The team took a snapshot of total new-vehicle sales in December 2017 (1.6 million vehicles sold) and, five years on, December 2022 (1.3 million sold) and considered three key measures: Number of models available at each price point, volume sold, and share of total sales.
 
Check out the Data Point published last week to see the remarkable market shift that’s occurred over the past five years.

AUTO MARKET’S ROLLER COASTER RIDE CONTINUES IN 2023
 
Two months in, inventory levels and pricing have the U.S. auto market on a roller coaster. In the latest analysis of vAuto data, the Cox Automotive Industry Insights team found that the new and used markets are moving in different directions.
 
The available inventory of new vehicles edged lower in January. While new-vehicle supply remains higher than last year, it is still low by historical standards. Meanwhile, the average listing price for a new vehicle rose to a record high of $47,743. Toyota, Kia and Honda had the lowest inventories of the non-luxury brands, with days’ supply under 30.
 
In the used market, both inventory levels and listing prices were down in January. And many dealers are heading back into the wholesale auction lanes to restock, which has pushed wholesale prices higher. Used retail prices are expected to rise as well. Toyota-branded vehicles had the lowest supply at 30 days, followed by Acura, Honda, Mazda, Lexus and Nissan at 45 days.
 
Read the Data Points to see the details on inventory levels and prices for new vehicles and used vehicles based on a Cox Automotive analysis of vAuto Available Inventory data.

WHOLESALE USED-VEHICLE PRICES SEE LARGE INCREASE IN FIRST HALF OF FEBRUARY
 
Wholesale used-vehicle prices increased by 4.1% from January in the first 15 days of February. This was the largest February increase since 2009’s full-month 4.4% gain. The mid-month Manheim Used Vehicle Value Index (MUVVI) rose to 234.0, which was down 7.3% from the full month of February 2022. The seasonal adjustment drove a small part of the gains. The non-adjusted price change in the first half of February was an increase of 3.4% compared to January, while the unadjusted price was down 5.9% year over year.
 
See the mid-month Manheim Used Vehicle Value Index and watch the latest Manheim Market Insights video. Check back on Tuesday, March 7, when the full month is reported. To hear about the latest MUVVI and trends that shaped the quarter, register to attend the Q1 2023 Manheim Used Vehicle Value Index Call on Friday, April 7.