Autumn Reflections

As the fourth quarter of 2023 is already well under way, we’re seeing another robust year of business in the automotive industry come nearly full circle.

There’s been talk of a recession all year, but so far we’ve avoided it, and vehicle sales have proved robust across the seasons. The National Automobile Dealers Association predicts that’s how they’ll end 2023. And all despite continued high prices and interest rates and auto worker strikes in Detroit.

Nevertheless, as we anticipate a new year, it pays, as always, to look at the road ahead to be prepared for any obstacles, as well as any new roads to travel down.

After all, there are signs of shakiness in addition to the aforementioned pressures: elevated auto loan delinquencies, particularly among young borrowers; eroding affordability; international instability, including the wars in Ukraine and now Israel; and declining white-collar hiring.

Vehicle sales have soared this year due to revived inventories as supply chains reopened following the pandemic, met by pent-up consumer demand.

But it’s uncertain when that wave will break, and many consumers are still hanging onto old models, as evidenced by the vintage of sold used vehicles. Edmunds says they’re waxing older these days, the share of those 3 years old and newer falling from 58% in the second quarter of 2019 to 49% in this year’s second quarter.

Like a consumer watching his budget or saving for an emergency, preparing for the worst is always a good idea. As an agent, that can mean doubling down on current client relationships and working to establish new ones, looking into new lines of business or new geographies to explore.

It could also mean considering selling or merging your agency with another. Two industry experts weigh in from different angles of that prospect in this issue to help you decide if that’s the right step for you. John Hammer, writing about the ins and outs of that consideration in this issue, says the time happens to be ripe for mergers and acquisitions in the space. Also check out Doug Dingman’s piece on the prospect.

There are many factors to consider, particularly in such a dynamic period, the likes of which we haven’t seen before. This winding-down season of the year may be the perfect chance to reflect on what the future should look like for you.