Blip or Trend? New Car Prices Fall In September

Greetings,

Well, it had to happen. New car prices declined last month, joining the pre-owned side of the business. Hang on because it's too early to tell if this is a gentle drop or the start of something more significant. In the meantime, new data shows that Tesla's competitors are making slow but steady inroads into the EV market.

There’s info now on how many cars will need to be replaced in the aftermath of Hurricane Ian. And Nissan reworks its CPO to help dealers.

Cheers!

Market At A Glance

Another week and another drop in the average transaction price for a pre-owned vehicle, according to the CarGurus Index. This time, it's a $165 slide. If this pattern continues, the typical selling price for a used car will fall below $30,000 in the next week or so. The numbers haven't been this low since December.

Breaking Headlines

• New vehicle supply increased in September, average listing prices fell - CBT News

• Stellantis, Ford and GM dealerships acquired in 4 transactions - Autonews

• Kirkland car dealership explosion injures employee - MyNorthWest

• Loop raises $60M to expand EV charging infrastructure - Techcrunch

• Canada drive secures additional $10M CAD in funding - Business Wire

• CARCHEX Acquired by Russell Place Partners - EIN Newswires

• Michigan suspends Carvana’s dealer license; 3rd state to do so - RDN

Dealer Essentials

• Novi car dealership (Carvana) suspended for 112 title delays, 127 probation violations, destroying documents - ClickonDetroit

• Tips to building a lasting culture at your car dealership - CBT News

• How to build outstanding customer experiences at your auto dealership - CBT News

• Why can't you buy a car on Sundays in Minnesota? - StarTribune

• Polestar rooftops to rise with new U.S.-oriented crossover - AutoNews

New Car Prices Drop In September

According to Kelley Blue Book, The average selling price of a new vehicle in September declined to $48,094; that's a $146 drop from August but still $2,775 more than September 2021. Although the dip is minor, it marks the first time in five months that a new car's average transaction price (ATP) has fallen. Now, both used and new vehicle prices are on the decline. Although it remains to be seen if the new-car ATP dip is the start of a trend.

Despite the lower prices, September still marks the 16th consecutive month of new-vehicle ATPs being above the average sticker price.

September ATPs for luxury vehicles were down slightly ($60) to $65,835 from August's record high. The KBB report shows Mercedes-Benz and Jaguar demonstrated the greatest price strength, with transactions averaging 2–4% above MSRP. Weaker-priced premium brands (with ATPs of 1% or more below MSRP) for September include Alfa Romeo, Audi, Infiniti, Lexus, Porsche, and Tesla.

Falling prices also affected mainstream brands in September. The average non-luxury car buyer paid $44,215, a $256 drop from August. Buick, Dodge, and Mazda enjoyed the most vibrant pricing, with selling prices running 2–4% over sticker. Meanwhile, Ford, Honda, and Toyota encountered the weakest pricing (1% or more below sticker).

Registrations Grow For Non-Tesla EVs

While Tesla models still dominate EV registrations, Ford has cracked the third spot, according to Automotive News and Experian information that covers January through August 2022. At the top of the list is the Model Y (134,978 registrations), followed closely by the Model 3 (123,634). The Mach-E completes the podium, but with 25,596 registrations, it falls far behind Tesla.

The Tesla Model S (20,032) and Model Y (19,739) occupy the next spots, with the Hyundai Ioniq 5 (19,929) and Kia EV (15,612) not far behind. Completing the top ten most-registered EVs are the Chevrolet Bolt EUV, Volkswagen ID.4, and Nissan Leaf.

EVs not wearing a Tesla badge accounted for 160,403 registrations, a 61% growth through the first eight months. Tesla's pioneering efforts have given the company a dominating lead, but its front-runner status is eroding. Autonomy, an EV subscription company, estimates that Tesla's share of the EV market will fall below 40% by the end of 2023.

Hurricane Ian Destroyed up to 70,000 Cars

The numbers are still preliminary, but research from Cox Automotive reveals that as many as 70,000 vehicles in Florida were damaged by last month's Hurricane Ian. Cox is projecting that somewhere between 30,000 to 70,000 cars will need replacement, with much of this occurring now through November. While significant, the number of affected automobiles pales compared to the more than 300,000 units damaged in Texas by 2017's Hurricane Harvey.

Further, the company projects that a market needing 33,000 replacement units (new and used) increases retail demand by 70% compared to current sales rates.

Nissan Expands CPO Program

Do more with less; that's Nissan’s thinking in revising its certified pre-owned program to include older and more well-driven vehicles. Certified Select covers cars up to 10 years old with as many as 100,000 miles. Nissan backs up the offering with an 84-point inspection and a 6-month or 6,000-mile limited warranty. Buyers will also receive one free maintenance service during the first year of ownership.

The move matches similar efforts by Ford and Honda to expand branded pre-owned vehicle offerings through franchised dealers. Borrowing a page from Ford, Nissan will include select third-party vehicles in the mix, but Nissan hasn't disclosed details on this aspect of the plan.

The existing Nissan Certified program for newer vehicles (up to 6 years or 80,000 miles) remains unchanged.

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