Faced with rising inflation, high interest rates and a historical United Auto Workers (UAW) strike, dealers are in for a complex fourth quarter. With the holiday season only weeks away, now is the time for retailers to make preparations that ensure continued success not just for the next two months but for 2024 as well.
On this episode of CBT Now, host Jim Fitzpatrick is joined by Tyson Jominy, vice president of data and analytics at J.D. Power. As an automotive industry veteran, Jominy has become a skilled advisor for both OEMs and dealers, helping them set practical financing strategies and launch successful marketing campaigns. During his time at J.D. Power, he has worked closely with manufacturers to implement effective pricing and incentive plans for the new and used car markets. Now, he shares his predictions for the fourth quarter and how the United Auto Workers strike could influence the retail automotive sector in the months to come.
1. The UAW strike has yet to make a deep impact on OEM production and new car prices. Given high incentives, it is possible manufacturers still expect a swift resolution.
2. Dealers continued to perform well in the third quarter thanks to sustained demand and seller-friendly prices.
3. Inventory levels have risen to 1.3 million, one of the highest levels seen since the onset of the COVID pandemic. This is because the United Auto Workers strike is presently impacting only 17% of vehicle production, meaning that most vehicles are still being made.
4. Given the industry’s success in Q1, Q2 and Q3, dealers should expect to achieve comparable success in Q4. However, this prediction assumes that the United Auto Workers strike ends in a reasonable timeframe.
5. J.D. Power has tracked a decrease in brand loyalty this year among car buyers. A sudden wave of new models has increased competition between franchises for consumer attention.
"Consumers are now starting to hear that siren call of a competitive model. So to the dealers out there, be aware that right now it's getting more competitive and consumers are less loyal: not dramatically so, but certainly heading toward 'hey, I'm a free agent in this model' sort of levels." — Tyson Jominy