Auto Market Weekly Summary

Key Highlights

• New light-vehicle sales increased year over year in October.
• Average transaction prices for new vehicles rose slightly, while incentives from manufacturers saw a significant increase.
• Consumer sentiment improved, driven by better future expectations and slight improvements in vehicle buying conditions.

New-Vehicle Sales

The auto industry is experiencing a notable upswing, with new light-vehicle sales up 10.6% year over year in October.

• By volume, sales increased by 13.3% month over month, with the October seasonally adjusted annual rate (SAAR) improving to 16.0 million, up from 15.3 million last year and 15.8 million in September.
• Fleet sales saw a mixed performance, with large rental fleet sales up 52.5% year over year, commercial fleet sales down 7.6%, and government fleet sales up 8.7%. The estimated fleet share of 13.9% was down compared to last year’s share of 15.9%.
• Retail sales were estimated to be up 13.3% from last year, with an estimated retail SAAR of 13.4 million, up from 12.9 million last year and 12.4 million last month.

New-Vehicle Prices

In October, the average transaction price of new vehicles and the average manufacturer’s suggested retail price (MSRP) both saw slight monthly increases, while manufacturer incentives experienced significant growth both monthly and annually.

• The average transaction price (ATP) of a new vehicle in October increased by 0.2% from September, with an initial estimate of $48,398, down 0.4% year over year but up 25.4% since October 2019, according to Kelley Blue Book. [Check back in the Newsroom tomorrow for the full ATP report.]
• The average MSRP increased by 0.2% month over month and 1.1% year over year.
• Manufacturer incentives increased by 6.3% month over month to $3,708, up 60.8% year over year, with incentives as a percentage of the average transaction price rising to 7.7%.

Used-Vehicle Sales

In October, used retail sales volumes showed an upward trend, while certified pre-owned sales experienced mixed changes, and wholesale vehicle values continued to decline.

• Used retail sales estimates based on vAuto data indicate that volumes were up 2% in October compared to September, with volumes up 11% year over year.
• Certified pre-owned (CPO) sales increased 12% month over month but were down 2% year over year.

Used-Vehicle Prices

Wholesale used-vehicle prices were down month over month and year over year in October, according to the Manheim Used Vehicle Index (MUVVI).

• Wholesale vehicle values declined 0.1% in October on a seasonally adjusted basis, as the MUVVI declined to 202.8, down 3.2% from a year ago.
• The unadjusted price change in October was a decline of 1.9%, leaving the unadjusted average price down 3.7% year over year.

Federal Reserve’s Monetary Policy

The Fed stuck to the plan of cutting 25 basis points to continue the process of moving rates from a too-restrictive level that has contributed to retail vehicle demand remaining below potential. Though small, this cut was an important signal that the Fed will be data-driven and recognizes that deterioration in the labor market this year demands focus while inflation continues to moderate. [Read the Smoke on Cars post.]

Auto Loan Credit

Access to auto credit improved in October across all channels and lender types, with approval rates increasing, subprime share rising, and yield spreads narrowing.

• Credit access was tighter than a year ago in all channels, with the most significant tightening for certified pre-owned (CPO) sales and the least for new sales.
• Captive and auto-focused finance companies loosened credit access, while banks tightened substantially, and credit unions tightened slightly.

Consumer Sentiment

• The initial November reading on Consumer Sentiment from the University of Michigan increased by 3.5% to 73.0, driven by improved future expectations.
• Expectations for inflation in one year declined to 2.6% from 2.7%, but expectations for inflation in five years increased to 3.1% from 3.0%.
• Consumers’ views of buying conditions for vehicles improved slightly as views of prices and interest rates both improved.

Jonathan Smoke

Chief Economist

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.