The Auto Market Right Now

Yes, it is hot, as the pent-up demand looks for a release valve. But. . .

“The quarter ended strong, setting the market up for an incredible spring from a demand perspective, with $1,400 stimulus payments starting to be issued, tax refund season beginning, rising consumer sentiment because of the vaccination progress, and, literally, it is spring which normally causes people to think more about buying vehicles. All those things are coming together right now, and the industry would likely be setting all-time sales records if it were not for tight supplies and elevated prices.”—Jonathan Smoke, chief economist, Cox Automotive

It’s that second thing that can be troubling.

According to Experian, in 2020 U.S. consumer debt was $14.88 trillion, which is a 6% increase compared to 2019 and the highest growth rate in more than a decade.

And of that, auto loan debt was at an all-time high of $1.35 trillion, a 3.8% increase over 2019.

Gen X has the largest auto loan debt balance, at $22,307, followed by the Boomers, at $19,306, which is just ahead of the Millennials, at $19,011.

(Seems like Gen X is big on debt, as it leads all generations in all categories, including credit card debt, student loans and mortgages.)

How Are Sales Doing?

Were it not for things like blizzards, probably even better

Although it seems that new vehicle sales are an unstoppable force now that more people have become bored with COVID been vaccinated, according to Cox Automotive, in February there were 2.82-million cars, trucks and utilities on dealer lots—and in January that number was 2.79-million.

Turns out that things like winter storms not only knock out power grids but keep people from showrooms.

While 2.82-million may seem like a lot, back in normal times (remember those), the number was bigger: a year ago it was 3.41-million.

That’s for new. What about used?

Well, that part of the business is evidently better. There was an unsold supply of 2.59-million units on lots at the end of February. The number was 2.66-million in January, or a 70-million-unit difference.

And the difference between now and last year is notable: 12%. There were 2.97-million used vehicles ready to go in February 2020.

Still, whether it is one of the 2.82-million or 2.59-million, there is probably a vehicle that could have your name on it.–gsv