Kelley Blue Book said replacement demand driven by hurricanes Harvey and Sandy is already being felt in some areas. The firm predicts that will continue into October and potentially November as vehicle insurance payouts are received.
Sentiment speaks to recent auto finance data showing prime and superprime car buyers shifting toward used, where the average monthly payment was $139 less than the record $504 average monthly payment for new in the second quarter.
Despite the nine-basis-point increase, the auto loan default rate remains near levels recorded one year ago. However, declining auto sales and the normal end-of-year push to make room for newer models may encourage easier credit conditions and raise concerns about future defaults.
Out of the 22 vehicle segments tracked monthly by Kelley Blue Book, only 10 posted higher sales numbers compared to the first eight months of 2016. Of those 10, large vehicles commanded eight of those spots.
The index’s July reading shows that demand is absorbing the high supply of newer used vehicles. The good news on the new side is that inventories fell below four million and are at their lowest level of the year.
It was the second consecutive month that Manheim Used Vehicle Value Index reached a record high. Officials said strong retail demand for recent model-year used vehicles is encouraging dealers to buy more vehicles at auction, and the increased demand is more than offsetting the high supply.
The nation’s 9,600 international nameplate franchises registered their fourth straight sales decline in June, but the association representing them said dealers are feeling confident about the second half of 2017.
Despite record incentive spending, the auto industry is on pace to record its weakest first-half sales performance since 2014, according to the two firms. Days to turn remained at 70 through June 18, the highest level since July 2009.
Lease applicants registered a 48.1% approval rate, the lowest level since the car lease marketplace began tracking the stat in 2014. The firm explained that the rise in consumer interest for luxury SUVs is what’s driving the uptick in declines.
A survey of more than 9,000 vehicle owners found that 38% of them plan to buy used on their next purchase. That percentage grew to 53% among individuals under 40 years ago age.
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