Pub. 12 2023-2024 Issue 3

145,682 131,665 142,607 146,300 2021 Actual 2022 Actual 2023 Actual 2024 Forecast YTD '23 YTD '24 % Chg. Mkt. Share thru June thru June '23 to '24 YTD '24 TOTAL 71,288 72,400 1.6% Car 19,978 18,236 -8.7% 25.2% Light Truck 51,310 54,164 5.6% 74.8% Domestic 25,900 23,706 -8.5% 32.7% European 10,274 10,057 -2.1% 13.9% Japanese 27,962 31,156 11.4% 43.0% Korean 7,152 7,481 4.6% 10.3% Second Quarter 2024 Released July, 2024 Market Summary Forecast for County New Retail Light Vehicle Registrations Domestics consist of vehicles sold by GM, Ford, Stellantis (excluding Alfa Romeo and FIAT), Tesla, Rivian, and Lucid. Data sourced from Experian Automotive. The graph above shows annual new retail light vehicle registrations from 2021 through 2023 and Auto Outlook’s projection for all of 2024. Historical data sourced from Experian Automotive. UP 13.1% vs. ‘20 DOWN 9.6% vs. ‘21 UP 8.3% vs. ‘22 UP 2.6% vs. ‘23 San Diego Auto Outlook Comprehensive information on the San Diego County new vehicle market FORECAST County New Vehicle Market Predicted to Increase Slightly in 2024 Key factors boosting new vehicle sales Key factors holding back new vehicle sales Existing vehicle fleet is old. Average age of vehicles in operation has reached an all-time high. No question, modern vehicles are built better and last longer, but today’s models offer many upgraded features vs. the average 12.5 year old car. Passive and active safety technology, advanced infotainment options, and alternative powertrains are just a few examples. Many vehicle owners have a strong incentive to upgrade. Transaction prices are falling. Right now, affordability is a deterrent for new vehicle sales (see right), but increased inventories and rising incentives have pushed down vehicles prices which will spur demand. Economy is hanging in there. After significant interest rate increases in 2022 and 2023, fingers were crossed for a soft landing. GDP has remained positive, employment levels continue to move higher, and household incomes have largely kept pace with inflation. Interest rates are elevated and prices have risen sharply since 2021, but recession seems unlikely. Heightened uncertainty. There are always unexpected events lurking that can impact the market. The CDK outage is a recent example. In addition to these surprises, there are ongoing and upcoming events with uncertain outcomes that cloud the sales forecast. The presidential election is at the top of the list. As we have already seen, events related to the campaign are rightfully leading to heightened anxiety and uneasiness. This will last up until election day, and hopefully, for a relatively short period afterwards. Geopolitical unrest surrounding the Ukraine and Middle East conflicts are other examples. Consumer confidence takes a hit when the list of things to worry about lengthens, and this is a negative for new vehicle sales. New vehicle affordability is a drag. Monthly finance and lease costs remain elevated due to higher interest rates. As noted on the left, vehicle transaction prices have fallen and household incomes are increasing, but inflation has eroded purchasing power. Monthly new vehicle payments as a percent of consumer income will move lower in the coming months, but are high right now and it’s holding back sales. Key Trends in San Diego County Market » Forecast summary: replacement demand and falling transaction prices will provide some momentum for the new vehicle market for the rest of ‘24, while the negative factors will limit growth. » We think the market still has a good chance to improve for all of this year vs. 2023. Current forecast is for registrations to increase 2.6%. » Registrations approached 37,000 units in the Second Quarter of 2024 and declined a slim 1.3% versus 2Q ‘23. » Battery electric vehicles accounted for 23.0% of the market in the Second Quarter of this year, up slightly from 22.5% in the First Quarter, but down versus 2Q ‘23 (see page 4). » Rivian, Lexus, Toyota, GMC, and Honda had the largest percentage increases so far this year (see page 4).Tesla, Toyota, Honda, BMW, and Lexus are strong performers in the county market based on a comparison to U.S. market share (see page 5). 28 SAN DIEGO DEALER

RkJQdWJsaXNoZXIy MTg3NDExNQ==