Rusty West lists the latest industry trends to watch

Rusty West lists the latest industry trends to watch

There are currently numerous factors influencing the automotive landscape in the retail sector, such as the effects of COVID-19, the war in Ukraine and semiconductor shortages. Today at Inside Automotive, we’re joined in the studio by Rusty West, the president and CEO of Market scanto give us his perspective on the industry and share market forecasts.

West reports that his company obtains a lot of data and has connections to various industries, which allows his team to conduct comprehensive analyzes of the market. He sums up the auto industry with the statement ‘it’s crazy now’, but says it may be starting to slow down.

West says many consumers have used stimulus money for down payments but are now “over their heads,” which could spark an influx of repossessions. This would of course ease the pressure of low inventory as many used vehicles would return to dealer lots.

As for the involvement of banks in the current state of high car prices and payments, he feels that “the lending institutions were more or less put in a competitive position” and would have lost business if they had not made the decisions that the market has seen lately.

Speaking of the current profits that dealers are bringing in, West warns dealers that there are “a lot of risks involved.” He reports that many companies are being set up to help restructure loans, which can lead to unwanted chargebacks for dealers.

When it comes to the war in Ukraine, West notes that much of the supply of certain metals needed for semiconductor chips comes from Russia and a significant portion of the wiring harnesses come from Ukraine. He thinks this will remain a problem for a long time to come, probably even into 2024.

New rules proposed by the Federal Trade Commission (FTC) have created a “huge gap” between what the FTC will require and “what is actually realistic” for car dealers. He refers to potential disclosure regulations as “discouraging” and suggests that many dealers are unlikely to be able to fully comply with the proposed regulations.

As for electric vehicles, West believes the targets announced by states like California and New York will be “missed” because there are “too many moving pieces.” These include, he says, the lack of viable infrastructure in much of the country and an inadequate power grid that cannot supply enough energy (even in the present).

West calls Ford’s recent announcement that dealers will have to invest heavily to sell EVs a “very bold move,” but says it may be due in part to dealers’ recent pricing behavior. He also notes that there is a huge demand about what OEMs will choose to do with vehicles that have been sitting on the lots waiting for parts.

West’s advice to dealers is to “continue to sell cars as they sold them,” try to predict what consumers will want in the near future, and “prepare” to meet these needs. He also advises dealers to “be aware of the risks,” especially when it comes to chargebacks.

West predicts that 2023 will be “incredibly challenging,” especially the second half of the year, when new inventory is expected to increase, meaning used car values ​​will fall. He predicts negative stocks comparable to those seen in the mid-1990s and that leasing activity could increase.

Finally, West reports that credit scores are falling across the board due to the current auto and real estate markets, but ultimately says 2023 will present good opportunities for dealers despite challenges.

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