Hopefully, you're putting the sweltering weather to good use by closing deals or at least enjoying some vacation. In the meantime, we've got news about even higher prices for used cars (and a few curious bits of brand-specific info). Otherwise, it's a mixed bag this week with word of VW making new plans for its Scout EV brand and U.S. operations, dismal dealer profits ahead, and one CEO with good news about semiconductors.
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Let's dive in.
Market At A Glance
- Upward climb continues for used car prices
- Used Teslas stabilizing
Surprise, surprise; used car prices crept up to another record this week, according to CarGurus. It's a month-long trend, with the average retail transaction price now hitting $30,941. And while a $24 increase is yawn-inspiring, a dive into the data reveals some interesting brand-specific information.
Used Teslas have seen a 21.89% YoY increase, compared to 11.23% YoY across the entire used car market. While that's an intriguing stat in itself, this week saw the average price for a pre-owned Tesla increase by 1.86%. That's a significantly slower climb than earlier weekly jumps in the 5-7% range. Is interest cooling, or has pricing plateaued?
Curiously, used Volkswagens saw the most significant price increase over the past week, with a 1.94% bump. Most other large gains came from mainstream brands: Kia (1.26%) and Toyota (1.25%).
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Volkswagen USA's CEO to Helm New Scout Brand
VW is rearranging some chairs to allow current Volkswagen Group of America President/CEO Scott Keough to lead the company's forthcoming Scout EV division. To the chagrin of VW retailers, the automaker proclaimed earlier this year that the all-electric Scout endeavor would be separate from its existing dealer network. Hint: don't be surprised if the new initiative entirely skips the traditional sales route.
Plans call for a separate U.S.-based factory, with the first product coming in 2026. Volkswagen acquired the rights to the Scout name after the 2021 purchase of Navistar/International Harvester. Keough, who previously led Audi of America, is being replaced by Pablo Di Si, currently Executive Chairman of Volkswagen South American Region.
Volkswagen Group of America
Report: Say Goodbye To Record Dealer Profits
Citing inflation pressures, vehicle affordability issues, and a sharp drop in June new car sales, dealers are likely to see a decline in second-quarter profitability, according to a recent news report. It's another way of saying the boost from pandemic-sourced earnings may be a thing of the past.
"Prices are still hitting record highs, but there's concern that there could be a decline in the second half of the year with a recession looking more and more likely," CFRA analyst Garrett Nelson told Reuters. He adds that dealer profits will suffer "pretty materially" in the second half.
The story also lays the groundwork for poor earnings data from the largest dealers like AutoNation, which is expected to report its worst quarterly profit growth since the early days of the pandemic. Similar bad news is expected in the coming weeks from Lithia Motors, Group 1 Automotive, and Asbury Automotive.
One Automaker CEO is Optimistic about the Chip Shortage
A CNBC interview with Volvo Cars CEO Jim Rowan reveals a light at the end of the semiconductor tunnel (and it's not an oncoming train). In a conversation with the network's Squawk Box Europe program, Rowan reveals that the automaker is "back at full supply" with semiconductors and offers hope for more stable times ahead.
"We had forecasted by and large we would be through that by the end of the second quarter, and that's what we've seen. We are through those semiconductor issues," remarked Rowan.
Volvo produced almost 700,000 light vehicles in 2021. It's a fraction of the over 10 million units produced by Toyota last year, a company still getting hammered with supply-chain issues.
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