Summer hits its stride as we cover the latest from the automotive world. There are record retail numbers for both used and new vehicles, Porsche gears up for an IPO, and BMW angers some customers.
Please take a minute to complete our quick poll on the state of the industry.
Market At A Glance
- The third week for record used car prices
- Unusual data for vans and pickups
Ignoring a shaky economy and rising interest rates, used car prices continue to increase to record-setting levels. The latest CarGurus Index pegs the average second-hand car transaction at $30,917, the highest ever reported and the third consecutive weekly increase (last week’s average was $30.900).
This is a good time to drill down further into the numbers for used vans and pickups. There’s a head-scratching disparity, according to the data. The typical pre-owned van now sells for $35,083, a whopping 43.08% year-over-year increase. Among all the vehicle types (SUVs, sedans, etc.) that CarGurus tracks, no other body style has had such an increase. The closest is the wagon, with a 20.49% YoY growth.
But, remarkably, used pickups have only seen a YoY price rise of just 1.25%. Is the average $38,295 transaction a plateau, or are other factors in play?
The market is in flux again and while the industry has held strong so far, it's hard to predict the future. Complete our quick ( < 1 min! ) poll below about how your dealership is handling the uncertainty to see how others are preparing for the future.
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A Record June for New Vehicle Prices
According to Kelley Blue Book, the average transaction price for a new car in the U.S. crossed the $48,000 threshold for the first time. The $48,043 average amount topped the previous high ($47,202) set in December 2021. The report also highlighted that June prices rose $895 or 1.9% from May and added to a 12.7% ($5,410) jump from June 2021.
Kelley Blue Book/Cox Automotive
Porsche IPO Plans Advance
What’s the next best thing to owning a Porsche? Try owning Porsche stock instead. According to news reports, Volkswagen still plans to spin off its Porsche unit through an initial public offering. The action is set to take place by the end of the year, despite the Russia-Ukraine war and the euro reaching parity with the dollar.
If everything goes according to plan, the estimated $90 billion offering could be one of the largest IPOs in German history. The number dwarfs the $46 billion market capitalization for both Ford and GM but is a fraction of Tesla’s $725 billion valuation.
CPO Sales Decline In June
According to June numbers from Cox Automotive, sales of CPO vehicles are again down. The 1% drop from May (205,924 versus 208,423 units) adds up to an almost 17% decline from June 2021. However, the data contrasts with the overall 5% increase in used retail sales in June from May.
“With six months to go, CPO sales remain on track to finish near 2.3 million in 2022, down nearly 18% from last year’s 2.7 million,” comment’s Cox’s Chris Frey.
BMW Options Going The Subscription Route
In 2020, BMW announced its plans to start charging monthly subscription fees for select options like heated seats. Well, that day has arrived for BMW shoppers in Germany, the UK, South Korea, South Africa, and New Zealand. The Twitterverse erupted in protest as the #BMW and #greed hashtags gained traction, and the media picked up the story.
Heated seats run £15 ($18) per month or £350 ($410) for a one-time unlimited-use payment. Other monthly subscriptions are available for a heated steering wheel, adaptive cruise control, and high-beam assist. For reference, the company charges $500 for heated front seats in its U.S.-spec 330i xDrive sedan. An April 2022 survey revealed that 75% of U.S. consumers pooh-poohed the idea of subscription-based options.
Some online commenters praise the subscription idea, particularly for drivers who may only need the heated seats or steering wheel a few months out of the year. Notably, there’s no word if the unlimited-use subscription is transferable to subsequent owners, if BMW shares any subscription revenue with its dealers, or if the approach is coming to the U.S.
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