All Things Used Car +
In the Economy:
- Costs are starting to rise again, driven by energy flowing into recon, parts, and transport.
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- Food prices remained the same MoM but up 2.7% YoY
- Energy prices increased 10.9% MoM but up 12.5% YoY
- Shelter costs were flat MoM but up 3.0% YoY
- Good news is demand is still being supported by tax refund money with more of that still to come.
- As of last week, only 57% of filers have filed for refunds, 11% behind last year.
Automotive:
- Wholesale is softening while retail is holding. That creates a real opportunity, but only if we stay disciplined.
- Retail is still strong, so spreads are widening, especially in non-luxury. This is a margin environment, not a discounting environment.
- On the credit side, approvals are up, but quality is down. We’re seeing more:
- Subprime,
- Negative equity
- Longer terms.
- That means more deals, but also more risk if we’re not careful.
Take Aways:
- The biggest mistake right now is paying yesterday’s buy price in today’s market.
- Do not chase inventory any longer. If you overpay, we will feel it in 30 days.
- Hold gross by moving inventory faster.
- Approvals are easier to get, but the customers are riskier. Be smart in how we structure deals.
- Bottom line, there’s still a lot of opportunity, but only if we stay disciplined every day.”
