Auto Sales Puttering Along: Cox Report

Cox Automotive sees signs that car sales have softened slightly from October to November, but remain relatively solid.

Cox Automotive reported Monday that it expects that new cars and light trucks sold at a seasonally adjusted annual rate (SAAR) of 14.3 million vehicles in November, up 9.1% from a year earlier but down 4% from October.

Charles Chesbrough, senior economist at Cox Automotive, said new vehicle inventory continues to improve, likely supporting sales in November.

“Vehicle shoppers may not have been gobbling up new cars and trucks this Thanksgiving, but the improving supply situation is likely something dealers and consumers alike are thankful for this year,” Chesbrough said.

A year ago, the micro-chip shortage choked production, leaving dealers scrambling for inventory and cutting into sales. Chesbrough said the supply situation has modestly improved this year, and inventory levels are much higher across the country.

“Incentives have been significantly lower during the past two years, but that situation is beginning to change for some brands as the post-COVID supply chain recovery continues,” Chesbrough said.

Cox’s Manheim Market Insights report released Nov. 21 found signs of a downturn, but not a recession.

New vehicle inventory was still tight, but expanding rapidly, and used car sales were “softening, but still solid.” Used sales have been running at a rate of about 1.4 million vehicles a week since June.

Average used vehicle prices were running at or just above $28,000 from April through October, but fell below that mark in November. They are now about 2% higher than a year ago.

According to Edmunds data, the average transaction prices for new and used vehicles are softening but are still elevated year-over-year.

The average transaction price (ATP) for a new vehicle dipped to $46,991 in October 2022 compared to a peak of $47,222 in June 2022, but still represents a 3.1% year-over-year increase compared to October 2021. The ATP for a used vehicle dipped to $30,045 in October 2022 compared to a peak of $31,095 in April 2022, but still represents a 4.7% year-over-year increase compared to October 2021.

Interest rates for new and used vehicles are skyrocketing.

Edmunds reported the average annual percentage rate (APR) for a financed new vehicle purchase climbed to 6.3% in October 2022 compared to 4.2% in October 2021, and is the highest new vehicle APR since April 2019. The average APR for a used vehicle purchase climbed to 9.6% in October 2022 compared to 7.4% in October 2021, which is the highest since February 2010.

Data published by CUNA shows average rates charged by credit unions for a 48-month new car loan were 3.9% in September, up from 3.1% in December 2021 and 3.5% in June. Average used car rates were 4.6% in September, up from a low of 3.8% in March and 4% in June.

In an effort to lower monthly payments, more buyers are extending terms. Edmunds data shows that 34% of financed new car purchases had an average loan term of at least 73 months in October 2022, compared to 27% in October 2017.