Retail automotive continues to change under a multitude of factors, from fluctuating interest rates to changing consumer preferences. As dealers prepare for the new year, it is crucial to study the industry’s current landscape.
On this episode of Inside Automotive, host Jim Fitzpatrick is joined by Patrick Manzi, chief economist at the National Automobile Dealers Association (NADA). Manzi applies his academic skillsets to the car business by carefully studying trends and analyzing data points. His work at the NADA has produced crucial insights into the factors driving retail automotive excellence and the challenges that lie in wait for dealers. Now, he shares his insights into the last few months of business and his forecasts for the coming year.
1. Manzi expects the industry to lose 200,000 units of production. However, the retail automotive sector continued to see inventory levels rise, a trend likely to continue before the end of the year.
2. Interest rates continue to challenge both consumers and business owners. However, the Federal Reserve has opted to hold rates steady for the foreseeable future. Manzi does not expect rates to decline until Q3 2024.
3. Sales have continued to rise throughout 2023. Although prices and demand fluctuated in October due to economic headwinds and the UAW strike, the retail automotive sector is still well-positioned for the coming year.
4. Fleet sales began the year strong but started to decline in the second quarter. The issue was further exacerbated by supply constraints caused by the United Auto Workers strike in October. As the industry recuperates from the United Auto Workers strike, inventory levels should return to normal with relative speed.
5. Electric vehicle inventory has skyrocketed in 2023. Unfortunately, high prices and interest rates are making it difficult for the retail automotive sector to attract consumers. To boost demand, automakers will need to address obstacles to EV adoption, such as range anxiety and charging accessibility.
"Once we get back to normal, once everybody's back working at the plants, I think we'll start to see those fleet deliveries closer to 20% again in the next couple of months." — Patrick Manzi