On this edition of CBT Now, Jim Fitzpatrick speaks with Tyson Jominy, the Vice President of Data and Analytics at J.D. Power, about the current state of the U.S. new car market, focusing on manufacturers, retailers, and consumers.
For manufacturers, the news is positive as transaction prices are increasing, and sales are rebounding, leading to record-breaking consumer expenditure in the first six months of the year. The industry is showing signs of recovery from the lows of COVID-19 and the supply chain crisis.
Profitability is a significant focus for both manufacturers and retailers. The reduced use of incentives has led to higher profits for both parties. In 2023, profitability is expected to be the second-highest on record, slightly behind the exceptional numbers seen in 2022.
Regarding inventory, the number of electric vehicles (EVs) has increased significantly, reaching over 80,000 units of inventory compared to around 10,000 a year ago. The surge is attributed to factors like pull-ahead volume from Q1, Tesla’s aggressive pricing, and the transition to a new charging standard. Dealers may need to use incentives and marketing efforts to manage this inventory and attract customers.
Despite the positive trends for manufacturers and retailers, affordability has become a concern for consumers. Monthly payments for vehicles are at record levels, surpassing $700 per month, with an increase of $150 compared to 2019. This trend may affect younger and lower credit-quality consumers, who are finding it challenging to enter the new car market.
Jominy also discusses the future of EVs and expresses optimism about the technology’s potential. He emphasizes the various benefits of EVs, including performance, environmental impact, cost savings, and the potential for technological advancements. Although challenges lie ahead, such as battery technology improvements and charging infrastructure, Jominy is confident that EVs will continue to grow in popularity.