3 major car market trends I'm watching 👀

Hey, everyone. Exciting announcement: I just launched the Car Dealership Guy Industry Job Board! I built this job board so that employers in the auto industry could take advantage of my network and I could help great people find great jobs. It’s really a win-win.

Vendors, lenders, dealers, auto tech entrepreneurs—anyone in the industry can use this tool. And the best part? Employers can post up to 50 roles for free.

Check it out and post your jobs (or find your next one) right here.

—CDG

First time reading the CDG Newsletter? Subscribe here.

Today’s Biggest News

3 Major Car Market Trends I’m Following

I don’t have a crystal ball, but I do have a hunch: There are a handful of market realities already emerging, three weeks into 2024, that I think will dominate the industry conversation in the months to come.

As we head into some major industry events (NADA Convention, here we come) and get closer to tax refund season in the spring (when seasonal trends will really start emerging), I’m tracking these three auto market trends →

1. It’s all in the segment. 

Cox noted “weaker-than-normal buying demand for this time of year,” given dipping average daily sales conversion rates so far this month. But when you dig in deeper to individual segments, things look a little more nuanced →

Full-size pickups are “perhaps the most flooded major segment, relative to sales,” according to S&P Global. The segment is a major profit source for Detroit, but increasing inventory has resulted in deep discounts.

Meanwhile: Compact SUVs have the most inventory…but also healthy registrations of about 200,000 per month—putting the segment right at the ideal ratio of two months' supply. Goes to show you how data requires analysis.

2. Used could be cooling off. 

The stat that jumped out to me: Cox expects that wholesale prices on its Manheim Used Vehicle Value Index (which tracks prices of used vehicles sold at its US wholesale auctions) will end 2024 only 0.5% higher than 2023. The normalization trend continues, even through this continued systemic shortage of used cars.

Important context: The Manheim Index fell 7% in 2023 and almost 15% in 2022 as the used car market evened out following a period of inflated prices and limited inventory during the pandemic.

What that means for buyers: Stability isn’t a bad thing, especially for determining book values that serve as the foundation for lending. And wholesale used vehicle prices decreased 1% from December in the first 15 days of this month. But used car prices are still higher than they were pre-pandemic.

And what does it mean for dealers? Those lower prices have to hit someone—no such thing as a free lunch and all. Several dealers mentioned that volume was solid but gross margins were down when I polled the CDG audience recently.

• “For the economy and the auto market, we’re in for just 1% to 2% growth, but growth beats a recession,” Jonathan Smoke, Cox Automotive chief economist, said on a call recently.

• “As we enter into 2024, new supply is back to spring 2020 levels, which favors consumers and leads to lower prices.”

All in, dealers have noted that used demand is still decently strong to kick off this year. But as automakers 1) revive new vehicle supply (relative to volume, inventories are up 30% these days, per S&P) and 2) further incentivize new vehicle sales…we could be witnessing the end of the sellers’ market.

3. The macro makes the micro. 

You know who doesn’t buy cars? People who aren’t confident they can pay for them (usually…). So macroeconomic trends like consumer confidence matter.

Right now: Retail sales turned up stronger than expected for December. Consumers’ POV on car buying conditions has improved to the best level since July 2021. Inflation concerns continue to fall.

Translation? Buyers seem buoyed by generally strong economic conditions—and the fact that the University of Michigan’s consumer sentiment index notched its biggest monthly advance since 2005 this month is proof.

That’s what I’m thinking about right now, as I consider the car market’s near- and long-term future. What are you paying attention to? Hit reply and tell me more.

This Week’s Episodes of the CDG Podcast

Want to know the secret weapon to dealership efficiency? David Domm, cofounder and CEO of Carmatic, told me just what he thinks it is—plus whether his car sales tech business poses a risk to anyone’s job at a traditional dealership—in this episode.

The future of dealerships will require tech solutions. But which tech helps and which tech hurts? And how can US dealerships learn from what their international counterparts are doing? Brian MacDonald, CEO of CDK Global, shares his POV on all the above and more in this episode.

Listen to the episodes here, and subscribe to the CDG Podcast on Apple, Spotify, or wherever else you get your podcasts. And thank you to Cars Commerce, CDK Global, and Valvoline for making this content possible.

Together with Cars Commerce

You know your store’s reputation is essential to the health of your business—but do you know how to diagnose it?

With so many reviews to read through, it's not easy to identify which specific aspects of your experience are resonating well (and not so well) with your customers.

Dealers: Check out your Cars Commerce Experience Report. 📊👀

This free report measures and tracks customer sentiment for each aspect of your experience—from lead follow-up to financing—and helps you benchmark those perceptions against your local market and OEM averages. 

Improve your experience. Build your reputation. Promote what makes you different. It all starts with using data to diagnose where you are today.

Get your Experience Report.

In Other News

It’s curtains for Vroom. The company, which went public in 2020, is shutting down its online used car marketplace and laying off about 800 employees, or 90% of its workforce. Vroom plans to sell off its remaining used vehicle inventory to wholesalers. From now on, Vroom will focus on its auto financing and AI-powered analytics business units.

What happened? “Despite significant efforts to do so, we ultimately were unable to raise the necessary capital in the current market,” Vroom CEO Tom Shortt said in a statement. Vroom ran out of liquidity after the market lost its appetite for online vehicle shopping—which has waned in the post-pandemic years. Worth noting: Vroom’s biggest competitor, Carvana, has managed to keep humming along pretty well…but Carvana shares are down almost 90% from an August 2021 high.

The Backlot

• The FTC is postponing the effective date of the CARS Rule while a legal challenge against the rule is pending. You can read more about my POV on the CARS Rule from a few weeks back here.

• Ford (in a joint venture with Lincoln dealers) is launching a new ecommerce platform for dealer solutions called The Shop—it’s sort of like a directory or App Store for dealers.

• The EPA has sent its proposal to finalize major emissions cuts for new cars and trucks through 2032 to the White House for review.

• GM unveiled a redesigned 2025 Chevy Equinox.

• This was an interesting look at what went wrong with autonomous trucking company TuSimple, which just voluntarily delisted shares from the Nasdaq.

Thanks for reading. Hard to believe Vroom was worth $5+ billion and running a Super Bowl ad just two years ago. Things change fast. What auto tech companies do you see going the distance, even when the competition bites the dust? Hit reply and tell me who you’d bet on.

—Car Dealership Guy

Want to advertise with CDG? Click here.

Want to be considered as a guest on the CDG podcast? Right this way.

Want to pitch a story for the newsletter? Share it here.