Uptick in Subprime Approvals Helping July Sales
The industry should take another step toward recovery with the delivery rate bouncing back to 14.3 million units for the first 15 days of July, CNW noted in its monthly newsletter. But the Bandon, Ore.-based research firm said the industry is still a long way from recapturing the strength it exhibited just a decade ago.
Even if the industry sells 14.2 million units this year, sales would represent only 4.5 percent of the U.S. population. In 1986, that percentage stood at 7.5 percent. In 2000, it was 6.2 percent. In 2007, the year leading up to the Great Recession, sales represented 5.4 percent of the population, reported F&I and Showroom magazine.
“Based on new-car sales as a share of total U.S. population, the industry remains well off the mark,” wrote CNW’s Art Spinella. “For the industry to hit the CY2000 share would require selling 19.5 million new units.”
For the first half of July, floor traffic was up, as were same-store sales vs. a year ago. Both of those metrics, however, were slightly offset by a lower closing ratio, wrote Spinella. Based on what’s happened so far this month, he believes the industry is likely to sell 1.28 million units, representing a 20 percent increase from last year.
“But here’s the rub: The CNW Jitters Index jumped 3.8 percent with double-digit increases for ‘Federal Taxes,’ ‘Meeting Day-to-Day Needs,’ and ‘Condition of Investments,’” noted Spinella. “Food concerns can’t rise much more since they are already at 9.48 on a 10-point scale.”
The only Jitters metric below a year ago are concerns related to gas prices, which is down 15.8 percent.
Working in the industry’s favor this month, however, was the massive 24-plus percent spike in the number of subprime loan application approvals. “As we said last month when approvals were down, this rollercoaster for subprime will continue at least until December when financial institutions get a clearer picture of medium-term economic activity and conditions,” Spinella wrote. “Today, it’s a matter of keeping the portfolio flexible and conservatively balanced.”
As for new-vehicle sales reaching those highs from a decade ago, Spinella noted that consumers are still gravitating toward the used-car segment. Factoring in that trend, however, still has the industry off the sales pace of a decade ago. “A look at the combined new and used sales as a share of the population shows there has been a significant deterioration here as well,” wrote Spinella. “At the height of the recession in 2009-2010, [that share] had fallen below 16 percent and remains under 18 percent this year, even with a strong used-car market.”
The good news is that fewer consumers are choosing the used vehicle segment vs. new. It’s not a big percentage, but the slight shift has been enough to replenish badly depleted used inventory for franchised dealers through trade-ins. That, along with a shortage of five-year-old and newer models at independent dealers has boosted the overall industry to 47.5 days’ supply, wrote Spinella.
“Double-digit increase in new and used sales are unquestionably worth a cheer or two. But the industry is far from the healthy, robust athlete it was just a few years ago,” Spinella wrote. “The key holdback among consumers remains having well-paying jobs and solid confidence in the economy. Today, the industry is feeding off of those who need a car, not want one.”
More Industry

RV Group Expands Carolina Footprint
Blue Compass RV Columbia Northeast is the 13th RV dealership owned by Blue Compass in the Carolinas.
Read More →
Agent Acumen
An Agent Summit panel of people who’ve been supporting auto dealers for years gave both timely and timeless advice for those starting out or mulling the prospect.
Read More →
Missed Maintenance Creates Opportunity
As families get back on the road and into daily school routines, service drives have an opportunity to capture customers who are behind on recommended vehicle maintenance.
Read More →
Mitsubishi Unveils U.S. Plan
The automaker announced a strategy that includes an expanded lineup and dealership presence, along with more ‘rugged’ and electric models.
Read More →
Selling to Grow
The question of whether you should sell your agency and if so, when, is up to you. But it’s a question worth asking to ensure you keep the business on the right path for yourself, employees and clients.
Read More →
Recalled Vehicles Hit 5-Year High
Though the number of events has fallen so far this year, impacted units are up significantly. Meanwhile, regulators consider consumer notification changes.
Read More →
Auto Group Acquires Top-Performing Rooftop
Car Pros sold its Kia Huntington Beach location to Sutherlin Automotive Group, marking the buyer’s third location in Southern California.
Read More →
China as Pacesetter
Automotive leaders huddled on where North America stands in the global picture and how it can strengthen its position against the Asian juggernaut’s surging industry.
Read More →
BMW Concept Car Makes Fuel to Burn
The prototype developed in concert with a South Carolina university engineering team generates more solar energy than it uses in a typical daily commute.
Read More →
South Carolina Auto Group Downsizes
Florida-based group Holler-Classic has acquired four rooftops, its first in South Carolina, from Dick Smith Automotive Group.
Read More →