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Fall is here and spooky season is now just around the corner – and along with the new season, car dealerships may expect some changes within the auto industry during the month of October. Here are some of the biggest developments within the industry, and what dealers should anticipate.
Within the first half of September, wholesale used car prices declined for the seventh month in a row, down 2.3% from August. Wholesale prices saw a 4% decrease in August from July 2022 as well, which isn’t insignificant. Of course, prices are still higher than they were at this time last year, but it’s still nice to see prices fall.
This decline in wholesale prices means that auto dealers can potentially make a higher profit from their auto sales, but that’s also highly dependent on whether consumers are willing to pay.
Speaking of falling prices, September now marks the fifth month in a row that we’ve seen used car prices fall. The average price of a used vehicle sits just at around $29,000, which is heading in the right direction as the highest average price on record – which we saw in December 2021 – was a whopping $29,969. But while the prices are falling consistently, it’s not by too much.
Used car prices are up by roughly 8% since July 2021, and used cars selling for just about $20,700 on average back in February 2020. This recent drop in prices, while perhaps a sign that we’ll continue to see price dips, is still pretty insignificant compared to pre-pandemic prices.
It’s anticipated that the steady decline in wholesale prices is an indicator that retail prices will be the next to drop, but the bubble isn’t expected to pop anytime soon. When consumer spending was down in many categories this month, auto industry consumer spending actually rose – more than any other category, in fact. This is likely due to the fact that many manufacturers have decided to make and sell more of their higher end models as they continue to struggle with chip shortages.
Though both inventory and sales of new vehicles are higher this month, prices are also higher than ever before. In fact, the average price of new vehicles hit an all-time high this month, with the average price now over 80% of the Median household income in 15 states. The average price of a new car in the U.S. as of August is a whopping $48,301. As stated, this is thanks to the fact that more luxury vehicles were produced in the past few months, and the sudden increase in inventory has made consumers more willing to purchase these higher end vehicles.
This rise in new vehicle purchases is also probably partially due to the increase in interest rates, which have made used vehicles less attractive due to having higher interest than new vehicles.
While the increased stock of new vehicles and lower wholesale prices are definitely helpful for auto dealerships, the current shortage is still making business tougher than it was pre-pandemic. Used car dealers certainly have a bit of an uphill battle, as more and more consumers are becoming turned off from purchasing vehicles due to rising interest rates and an increased stock in new vehicles.
Many experts still claim that the auto industry is still a long way away from returning to normal, but the industry is at least starting to show signs that things are slowly getting better.
But auto dealers who are looking to further cut their costs may want to invest in the proper tools; dealers who happen to sell and ship their vehicles online should consider using Super Dispatch, as it can provide users with the ability to more easily manage their inventory, track shipments, easily send and file reports online, and much more. Request a demo today!Published on September 26, 2022
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