As summer enters August, momentum in the retail used vehicle market appears to be building.
New estimates from Cox Automotive this week show used vehicle sales were up nearly 3 percent year over year at the end of July. Sales were also ahead 0.4 percent ahead of the previous week.
Cox Automotive Chief Economist Jonathan Smoke in his biweekly Auto Market Report expressed optimism for the vehicle market entering August, due to growth in consumer sentiment and declining inflation numbers.
“We’re expecting improving momentum because the consumer is alive and well and feeling better about the future and seeing some real income gains with inflation coming down,” Smoke said.
Morning Consult showed consumer sentiment increased 1.6 percent week over week. It increased 2.8 percent in July. The index is up 19.1 percent year over year.
Though the Federal Reserve raised interest rates by 25 basis points at its July meeting, it has not impacted the used vehicle market. Rates remained unchanged from June at 13.61 percent. Rates are down nearly a half-point from their peak in the spring.
Retail used prices are continuing to decline and are down 0.4 percent week over week and 1.7 percent in the past four weeks. They are down 4.6 percent for the year. Wholesale used vehicle prices are down 5 percent from the start of the year.
“Used price declines are slowing in wholesale, but we’re clearly back to a world where used vehicles depreciate and that is creating and will create more buying opportunities for affordability challenged consumers later in the year,” Smoke said.
Used vehicle supply was down two days from June and six days year over year.
New vehicle sales are 23 percent ahead of last year though many incentives for consumers are drying up. Only 7.5 percent of financed new sales are receiving 3 percent APR or less.
