Welcome to November and the ever-changing car business. Used car prices continue downward, while automakers report a mixed bag of sales results from last month. There's also a look at how changes to the leasing market will impact dealers. On broader subjects, we cover the fate of once hopeful joint ventures and why battery production is at the heart of EV advancements.
Market At A Glance
When was the last analysis done on your dealership's used cars? That's what automotive retailers should ask as the average transaction price (ATP) for a pre-owned car continues to slide. The CarGurus Index now reports an ATP of $29,698 (as of this writing), a $150 fall from last week. The vehicle types taking the biggest hits are crossovers, SUVs, vans, and minivans.
- Rivian shares slumped after the company announced a big recall - CNBC
- Toyota and SEMA 2022: Larger Space, More Showcase Vehicles and More Performance Fun And Excitement - PR Newswire
- New cars are finally back in stock — but Americans might not be able to afford them - CNBC
- Maryland joins other states in fining Carvana for title delays - WMAR 2News
- All nine car segments decreased last week, with the overall car segment decreasing by -1.47%. - Black Book
- Group 1 Q3 net income rose 14% on record revenue - Auto News
- Vintage cars, dealership damaged in Cheatham County - WKRN
- Car dealers should formalize its vendor relationships - Auto News
- Inflation and the Auto Industry: When Will Car Prices Drop? - J.P. Morgan
- Even After $100 Billion, Self-Driving Cars Are Going Nowhere - Bloomberg
- Will electric vehicles kill the gas station? - EnergyWire
- Texas car dealership opens book on inventory so customers can reserve exactly what they want - Auto News
October OEM Sales Numbers Are In. The Winners Are…
It's a new month, so now's the time for previous-month sales figures. We'll start with good news for the Toyota brand, as the behemoth reported a 33.5% gain in sales for the last month compared to October 2021. That adds up to 165,570 unit sales from its U.S. division. But, not everything is perfect as the company's Lexus brand moved 3.7% fewer cars for a total of 21,797 vehicles in October 2022.
Meanwhile, Subaru of America reported a 31.9% increase in sales for 48,568 vehicles in October 2022 (against 36,817 units sold in October 2021). Hyundai and Kia also boasted a combined October 2022 sales increase of 8%.
But, Honda is still struggling with supply chain issues. The automaker's U.S. operation's October sales declined by 16% compared to October 2021. However, that's a radical improvement from September 2022, when Honda reported an almost 36% sales decline for that month. Honda called October’s sales improvement the "best results in six months."
Auto News reports equally disappointing results for the Blue Oval, as October sales for the Ford brand slid 9.8% and 14% for Lincoln.
How A Changing Car Lease Market Affects Dealers
Dealers that rely on lease turn-ins for CPO vehicles and late-model used offerings will soon feel the effects of a significant change in new-car buying habits. Undoubtedly, many franchised dealers have already noticed the fall-off in leases. Leasing peaked in February 2019 with a 34% share of new-vehicle transactions. But data from Cox Automotive shows this activity will represent only 19% of deals this year.
Once lease-happy customers can thank low inventory, higher interest rates, and miserly automakers for the situation. But here's the number that will really matter very soon to dealers. There are expected to be 2.5 fewer lease maturities from 2023-2025 than for the last three years. This could lead to elevated prices for cream-of-the-crop used vehicles.
Bad Times for Joint Ventures
On paper, the idea of a joint venture holds promise for enterprises seeking to take advantage of a partner's strengths. But the opposite holds true with the recent collapse of two prominent automotive undertakings.
Stellantis and Guangzhou Automobile Group (GAC) are calling it quits regarding a joint operation for assembling Jeeps in China. The rumblings of the separation came to light earlier this year, with the divorce becoming official this week via a bankruptcy filing.
While Jeep enjoys success in numerous global markets, the 80-year-old brand has struggled to find relevance in the world's most populous country.
This happened days after Ford and Volkswagen pulled the plug on their Argo AI autonomous driving technology collaboration, with the Blue Oval taking a $2.7 billion hit and VW swallowing a $1.8 billion loss. The endeavor failed to deliver on promised Level 4 capabilities despite the billions invested.
Will Battery Supplies Hold Back EVs?
Naysayers hold that greater EV adoption may be hampered by infrastructure issues (in simple terms, a lack of charging stations and insufficient power-generating capabilities). And time will tell about the accuracy of these doom-and-gloom projections.
But, a new report from S&P Global Mobility shows a more fundamental element may hold back the march towards electrification, the availability of EV batteries. Forecasts call for 3.4 Terawatt hours (TWh) of annual lithium-ion battery production by 2030. Where do things stand now? At 0.29 TWh, based on 2021 production.
That means automakers and their battery suppliers have less than a decade to ratchet-up production by almost 1,100% to meet projected demand. No wonder manufacturers are on a steady diet of inking battery plant deals.
A Free Vehicle Runlist of Local Sellers
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Example Mailer Listing
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