American Express Global Business Travel’s Post

→ The automotive industry hangs in balance as people’s disposable income gets tighter 📉 → Income required for home purchases is climbing 📈, as shown. → Like other sectors, the #automotiveindustry is indirectly affected but perhaps even worse as cars are a very large expense. → High housing costs paired with higher interest rates may suppress new car purchases even more. → Automotive inventory levels remain low post-pandemic. This scarcity sustains *current* higher vehicle prices. → Lower vehicle prices would follow from normalized inventories. → While consumers might gain from price drops, carmakers would face profit margin challenges if cost remains high. → The balance of automotive supply and demand remains delicate for all power trains. Source: https://lnkd.in/eaxXxDqk

Used car prices are dropping faster than usual. 3-year-old cars depreciated by *1.6%* in April compared to only *1%* between 2014 and 2019. What gives? Here's my hypothesis - > Tax refund season was weaker than usual this year. > That led to a higher percentage of inventory remaining on dealer lots. > And that led to reduced demand for additional inventory at auctions. What I'm looking out for over the next 30-45 days: Will vehicle depreciation trends stabilize, or will they continue dropping faster than expected due to weakening demand? (Data via Manheim)

The U.S. auto market presents a mixed landscape, marked by significant variations across different segments. While light weight vehicle sales surge with a 198% annualized increase, indicating a shift towards more fuel-efficient vehicles, domestic autos suffer a steep decline, highlighting challenges in competitiveness. Foreign autos experience robust growth, suggesting stronger market acceptance. On the other hand, heavy weight trucks face severe downturns, reflecting potential industrial slowdowns. Additionally, disparities in inventory levels and production rates suggest mismatches between supply and demand, with domestic auto inventories swelling and production ramping up despite flat annual growth. Trade dynamics also vary, with Canadian auto imports declining sharply, contrasting with an increase in imports from Mexico, painting a complex picture of the auto industry’s current state and future direction. https://lnkd.in/eifDhBw4

Used car Prices – 29.02.2024 Changes in second-hand vehicle prices are a good indicator of economic activity. Used car prices saw a nearly 50% jump in covid when manufacturing was either suspended or curtailed. The spike was expected to ease after covid restrictions were lifted but several challenges such as chip shortages, shipping unavailability, wars and higher-than-usual demand have kept used prices higher. As the global economy normalises, used vehicle prices are expected to trend lower throughout this year – they have dropped about 15% from their covid peak but are still roughly 30% higher than the pre-covid range. A decline in used car prices indicates higher availability and sales of new cars – auto manufacturers may do better in the coming 12-24 months. I am still underweight this sector – will have to see some concrete changes and normalisation in supply chain and labour costs, materials availability and a solution to chips shortage. Data Source - FRED St. Louis Fed. 

Week 32 - 5 Things to Know in Investing This Week Point 5) Is Inflation Creeping Back? In June, the Manheim Used Car Index recorded a rise in used vehicle prices, reaching 201.6. This marks a 2.8% increase compared to the previous month, though it represents a 4.8% decline year-over-year. The Manheim Index is based on an analysis of over 5 million used vehicle transactions annually. This data allows them to generate a monthly index that reflects the current state of used vehicle prices across the market.

Used car prices are down 12.1% from a year ago and with 21 consecutive months of YoY declines, it's a good sign of continued disinflationary pressures. CIO Larry Adam provides insight into this and other market-moving headlines in Up & Adam.

Used car prices are down 12.1% from a year ago and with 21 consecutive months of YoY declines, it's a good sign of continued disinflationary pressures. CIO Larry Adam provides insight into this and other market-moving headlines in Up & Adam.

Used car prices are down 12.1% from a year ago and with 21 consecutive months of YoY declines, it's a good sign of continued disinflationary pressures. CIO Larry Adam provides insight into this and other market-moving headlines in Up & Adam.

Used car prices are down 12.1% from a year ago and with 21 consecutive months of YoY declines, it's a good sign of continued disinflationary pressures. CIO Larry Adam provides insight into this and other market-moving headlines in Up & Adam.

Used car prices are down 12.1% from a year ago and with 21 consecutive months of YoY declines, it's a good sign of continued disinflationary pressures. CIO Larry Adam provides insight into this and other market-moving headlines in Up & Adam.