As we continue to navigate the vastly changing landscape of retail automotive, it’s imperative to take note of the recent developments that have shaped the market. On the latest episode of Inside Automotive, Charlie Chesbrough, Senior Economist at Cox Automotive, joins us to further elaborate on the industry’s ongoing challenges.
Chesbrough confirms that the industry should be pleased with the overall strength it has seen so far this year. For example, the industry has seen a pace of 15.5 million vehicles sold. Nonetheless, some dealers and analysts remain concerned about the uncertain outlook moving forward.
1. Despite the 46-day United Auto Works union strikes, the results had minimal effect on the retail side of the industry. However, there was a significant drop in the industry’s fleet activity. Chesbrough notes, “Fleet sales in October were down 10% according to early estimates.” This activity also signifies the industry’s first fall in fleet sales for the entire year.
2. October marked the seventh consecutive month in which the industry’s sales pace hovered around 15.5 million. However, Chesbrough thinks dealers will need to offer significant incentives to encourage customers to make purchases in order for sales to rise in the current climate.
3. Since the 2019 pandemic, inventory levels have shaped the sales narrative, but this narrative has shifted in recent years. Nevertheless, Chesbrough asserts how the industry has seen supply reach near pre-pandemic levels, with the nation having about 60 days’ worth of inventory on hand.
4. Heading into 2024, it has been noted that most brands will continue to see their inventory return to normal levels, which will result in a far more stable selling environment.
5. Ultimately, Chesbrough believes the demand will likely remain strong because people want and need new vehicles. However, the key focus will be on affordability.
“It’s going to be more challenging than what the industry has seen so far.” – Charlie Chesbrough