COX AUTOMOTIVE – So far the omicron variant has not impacted consumer sentiment or economic activity but creates some uncertainty as winter begins. The Index of Consumer Sentiment from Morning Consult and the Back-to-Normal Index increased again last week.
“New-vehicle sales are gaining modest momentum in December as deliveries are slightly improving, but it is not enough for this December to equate to a normal December,” according to Cox Automotive Chief Economist Jonathan Smoke in the final Auto Market Report video of the year published this morning.
Auto loan access improved again in November, getting closer to early 2019 levels, according to the Dealertrack Auto Credit Availability Index. Meanwhile, November average transaction prices for new vehicles increased for the eighth straight month, moving further into record territory, according to Kelley Blue Book. Retail prices have increased 15 straight weeks, leaving average retail prices at new records.
The Fed announced that tapering would accelerate and bond buying would end by March, setting the stage for rate increases to begin soon thereafter. That means consumers will likely see auto loan rates slightly higher by the end of next year. From a historical perspective, rates would still be low and attractive. However, that would mean an end to the 2021 financing trend that helped mitigate some of the vehicle price inflation.
Read more in the Auto Market Weekly Summary and watch the Auto Market Report video for a full update on key economic and Cox Automotive industry indicators.