Category: Economy

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Economy

Guarding Against the $400 Emergency

Contributing Author: John Stephens Executive Vice President EFG Companies
Contributing Author:
John Stephens
Executive Vice President
EFG Companies

The economic picture has certainly looked relatively good for the last few years. Unemployment is at record low levels and companies report continued hiring. However, wages remain mostly flat and the Federal Reserve just issued a quarter-point interest rate hike. A potential trade war could also bring a serious cloud to our sunny economy.

In addition, there lies a very troubling and widening gap in wealth in this country. According to data from the Pew Research Center, the median upper-income family (those who make more than $127,600) now holds 75 times the wealth of the median low-income family (those who make less than $42,500). To give some historical perspective, in 2007 the upper-income family was worth 40 times as much as the lower income family. In 1989, the multiple was 28. To put it another way, the top 1% of US wage earners now holds 38.6% of the nation’s wealth, up from 33.7% in 2007. The bottom 90% now holds only 22.8% of the nation’s total wealth, down from 28.5% in 2007.

Some in retail automotive might perceive this widening gap as good news. More wealth can mean more auto sales, or at least more luxury vehicle sales. But, let’s add some perspective to those numbers.

According to FORBES, despite being the largest generation in the workforce today, Millennial salaries are 20 percent lower than Baby Boomers’ salaries when they were the same age. Their unemployment rate is twice the national average, and according to CNBC, their student loan monthly payment hovers just under $400.

Continue reading “Guarding Against the 0 Emergency”
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Economy Industry Trends

Headwinds – or Smooth Sailing?

Eric Fifield Chief Sales Officer EFG Companies
Contributing Author: Eric Fifield Chief Revenue Officer, EFG Companies

Many toasted the end of 2017 with a collective “Whew – we made it!”  The year was one of contradictions. If you are feeling a bit whipsawed – you’re not alone. From political gains/losses to cultural uprisings, there was no shortage of news.

With 2017 in the rear-view mirror, here are a few data points that characterize the tumultuous year.

  • Sales of light trucks and SUVs finished strong while sedans bumped along the bottom of the market metrics.
  • While gas prices increased, and even spiked regionally during last year’s natural disasters, improvements to gas mileage efficiency and lighter body stylings helped buffer the impact.
  • Even though the major OEMs saw overall sales declines, the final numbers were still the fourth highest since the end of the Great Recession.
  • OEM incentives reached record highs, and the volume of lease returns spiked. But used car inventory continued to tighten as the year’s natural disasters prompted the need for replacement vehicles.
Source: Wall Street Journal
Source: Wall Street Journal
Continue reading “Headwinds – or Smooth Sailing?”
Categories
Economy Industry Trends

Are Today’s Vehicles and Buyers Mismatched?

Contributing Author: John Stephens Executive Vice President EFG Companies
Contributing Author:
John Stephens
Executive Vice President
EFG Companies

On October 3, General Motors made an announcement that many in the retail automotive space had been anticipating.  GM reported a 12 percent year-over-year increase in total sales in September to 279,397 units, driven by a 17 percent increase at Chevrolet and a nine percent increase at GMC. Crossover deliveries were up 43 percent and trucks were up 10 percent. Passenger cars were down 11 percent. Retail deliveries, which accounted for about 80 percent of sales, were up eight percent for GM’s best September retail performance since 2007. Not to be outdone, Ford Motor Co. said its sales rose nine percent, with a 21.4 percent increase in its F-150 pickup truck.

Some of this strong growth can be directly attributed to the recent natural disasters from Hurricanes Harvey and Irma. Economist Jonathan Smoke at Cox Automotive has said that 600,000 vehicles lost to the hurricanes in Texas and Florida will need to be replaced. Sales prompted by prior weather disasters generally increase within two months of the start of the recovery.

But there is more to this story. While truck sales have surged, passenger cars are down across the board, minus Toyota whose sales rose 15 percent thanks to the redesigned Camry sedan. So this begs the question – why are car sales stalled? Car manufacturers continue to throw money at the problem, offering incentives of over $3,500 per vehicle. Could the retail lot inventory be mismatched for consumer demand?

Continue reading “Are Today’s Vehicles and Buyers Mismatched?”