Despite the nation raising the debt ceiling, the automotive industry has continuously felt the consequences of rising interest rates, inflation, and supply chain issues. On today’s CBT Now, we’re joined by Jessica Caldwell, Edmunds‘ Executive Director of Industry Insights, to provide us with an update on the market conditions.
According to Caldwell, sales remained primarily vital for April and May. She notes how they started to see fleet sales, and the consumer demand also remained strong. “It didn’t look like the market conditions would miraculously change overnight. But, heading into the summer, it does seem to give the industry optimism,” asserts Caldwell. Edmunds’ report has shown that prices haven’t moved as frequently as they did, so now may be the best time to purchase a vehicle, which benefits consumers looking for incentives. Caldwell also notes, “Sale rates are normally high for the summer. It may be due to the graduation season, road trips, and heavy-duty work.”
Dealers have experienced difficulty with their vehicles selling above sticker price since the pre- and post-pandemic pandemonium. However, depending on the brand dealers are selling, some cars will stay in strong demand, but the supply will be low. Caldwell asserts, “We’ve seen the average MSRP be more than ATP since November. Consequently, the difference between trend prices and MSRP is almost $6,000. “Pre-supply chain shortages,” she continues, “Was roughly north of $2,000.” While market sales are improving, the industry is seeing more flexibility, and vehicle days to turn are increasing.
Caldwell outlines that while interest rates remain at an all-time high, they are on customers’ minds. Currently, in the new vehicle market, interest rates are at 7% and 11% for the used car market. “So, when you think about the amount people are financing their vehicles, it’s a significant interest payment, which is depleting the demand that could be there,” expresses Caldwell. For example, on a new vehicle, consumers would be paying roughly $9,000 just for the accumulated interest.
Consumer Sediment Data
The results of the new survey data from the 2023 Edmunds Consumer Sediment Data about customers’ attitudes toward EVs found that EVs account for 6% of recent vehicle sales, and people are more fascinated by the idea of EVs than they are driving them. The survey also revealed that brand loyalty with EVs has disappeared. According to Caldwell, “85% of people are open to new brands, and they’re even open to buying an EV from a brand they’ve never owned before.” However, this is still problematic for customers since there are currently more questions regarding EVs than solutions.