Cox Automotive News Letter July 27, 2022

The latest news from the Federal Reserve will be released today at 2:00 pm. Most watchers are expecting another sizable interest rate increase, as Fed Chair Jerome Powell and gang pursue their "whatever it takes" policy to cool rapid price inflation. Their decision, of course, will send waves through the auto market. Our Chief Economist, a careful Fed watcher since his days as an economist covering the housing market during the Great Recession, will have more to say after the announcement. Look for his comments in Smoke on Cars in the Cox Automotive Newsroom. 

Before that, the Cox Automotive Industry Insights team is sharing its July new-vehicle sales forecast. The details were posted this morning. It's more of the same: an unchanged narrative of tight inventory holding down new-vehicle sales volumes. We've been stuck at the around-a-million level for nearly a year now and, as Senior Economist Charlie Chesbrough notes, "Tight supply continues to be the biggest obstacle over the near term, and there is little evidence of supply returning to normal.” Our July seasonally adjusted annual rate (SAAR) of new-vehicle sales for July is forecast at 13.2 million. It's where we are now. 

The slow new-vehicle market is beginning to impact the bottom line of many automakers. Revenue per sale is up across the board, but better revenue on lower volumes is not enough to offset higher material and operating costs. As the major automakers confirm lower second quarter earnings, our team is taking a look at key sale metrics for each in the important U.S. market. There's an obvious theme: Lower sales volumes and higher transaction prices. Our quick looks at Hyundai and General Motors were posted earlier. Data points for Ford, which will confirm Q2 earnings later today, and for Nissan and Stellantis (results out tomorrow) have also been posted. Our take on Toyota and Honda will be shared in the coming days, ahead of their respective earnings. Check the Newsroom for updates. 

Bonus content: If the narrative for the new-vehicle market is sounding a bit like a looping GIF (the modern broken record?), the used-vehicle market is perhaps a more interesting story. Well, interesting as in "normal", a place the market has not been for some time. In a post from last week, Chief Economist Smoke says, "The used-vehicle market is returning toward normalcy after more than a year of remarkable price movements." You can read his thoughts on recent used-vehicle market dynamics and how used-vehicle prices may influence the overall inflation picture in the coming months. 

As always, thanks for your interest in Cox Automotive. Our team is always ready to help. 

Cheers,