There have been winners and losers, and much debate surrounding the direct-to-consumer model of auto retail in 2022. Kevin Tinnan, Senior Automotive Analyst at Bloomberg Intelligence, talks about some of these headlines and predicts volatility next year. Inside Automotive today.
As we approach the end of the year, auto retailers have tripled their profits and are still waiting on inventory. Tynan argues that 2022 was a pendulum year as customer pricing power, manufacturer incentives and dealer discounts declined for decades. Meanwhile, auto retailers are eyeing market shifts that will cause the pendulum to swing back in a different direction.
Nonetheless, entering 2023, manufacturers will raise suggested retail prices, factories will cut output, demand for trucks and SUVs will remain high, and the majority of automakers will reduce used car sales by reducing sales. We are expanding the market. Tynan adds: This he multiplies the two numbers to get the earnings, and the result is less than his market of 15 million sold for $47,000. “
Basically, part of the larger macroeconomic conversation results in inflation. Increased supply will force automakers to be content to cut production numbers. In other words, Reese was his 2022 unspoken blessing. Additionally, one of his methods of inventory management is leasing. As the world evolves, consumers will buy vehicles at sticker prices, eliminating the need for incentives.
According to Tynan, there was a positive element in 2022, so “supply could drive up seasonally adjusted prices in line with demand.” According to Tynan, the residual risk is “part of the pendulum swing that drives 2023 leases and prices to the risk that dealers should accept.”
On the other hand, “the options we had in 2008 and 2009 would allow automakers to push the market to 80% trucks and SUVs and prevent auto retailers from encountering difficult times again. We did, especially with a potential recession looming again.”
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