Third-quarter reports from the big dealership groups and automakers are in, giving analysts insight into the impact of the ongoing United Auto Workers strike and what the upcoming months have in store for the car business. Understanding the state of affairs will be key to forming successful strategies for 2024 and beyond.
On this episode of Inside Automotive, host Jim Fitzpatrick is joined by Kevin Tynan, senior automotive analyst at Bloomberg Intelligence. Tynan is an expert on car buyer behavior, allowing him to notice and predict important trends with precision. His familiarity with the automotive industry’s inner workings means that dealers can confidently rely on his insights to fuel their strategies and campaigns. Now, he discusses the most important takeaways from this year’s third-quarter reports and how current events will shape the automotive sector’s future.
Key Takeaways
1. The United Auto Workers strike appeared to have little effect on Detroit-Three third-quarter reports. However, since the strike began in the middle of September, its impact on the October-December period is likely to be more significant should it continue.
2. Tynan believes that the strike is nearing a conclusion and expects to see the manufacturing sector recover from its losses in only a few months.
3. Third-quarter reports from retailers indicate that new vehicle prices have started to decline. Although dealers continued to see strong sales, profit margins are starting to normalize back to pre-pandemic conditions.
4. Although electric vehicle prices have declined dramatically from their peak, sales in the sector remain far behind original projections.
5. According to Tynan’s estimate, a 36% increase in automaker labor pay would only result in a $500 price tag increase on new vehicles. Considering the pace with which car values have risen, this should be absorbable for OEMs despite their claims to the contrary.
6. Despite third-quarter reports showing some stagnation in price increases, inflated MSRPs are likely to be a consistent theme well into the future, with sub-$20,000 listings becoming increasingly rare.
"On the vehicle, drive train mix, I think 2024 will be a very, very important year for electric vehicles in terms of; if there's not significant improvement in profitability and demand profile for that specific technology, I think you're going to start to see a walk back of some of the targets and some of the production plans." — Kevin Tynan
