Today’s topics:
📈 The latest from the automotive market
🦊 Shopper corner: Can you trust vehicle history reports?
🎤 How much money dealers make, secret to acquiring 15 car dealerships, most profitable customers, tricks to get the best car deal — podcast guest Jake Lebowitz, Raceway Auto Group
Reading time: you will want to read it twice!
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📈 What’s happening in the Automotive Market?
New cars
U.S. new vehicle sales of 1.4M units for the month of April, which represented a decrease of 2.0% from March 2023, but an increase of 7.7% from one year ago, when supply chain issues were more prominent.
The seasonally adjusted annualized sales (SAAR) for April 2023 was 16.1 million units versus 14.5 million units one year ago. Healthy sales were boosted by increased incentives, declining new vehicle prices, and improved incomes.

Cox published the report showing which makes people consider most when shopping. The top 10 most-considered brands for Q1’2023 are:
Toyota (33%)
Chevrolet (32%)
Ford (30%)
Honda (21%)
GMC (14%)
Hyundai (12%)
Jeep (11%)
Kia (12%)
Nissan (10%)
Subaru(10%)
How come Chevy is almost as popular as Toyota? Two factors: 1) while Toyota has been struggling with supply issues, GM simply had available inventory, and 2) the breadth of available models, which directly correlates with brand loyalty.
Brand consideration aside, here’s what people actually buy. The best-selling models in April 2023 were:
Ford F-Series (up 35.1% from April 2022)
Chevrolet Silverado (down 12.4%)
Ram Pickups (down 12.8%)
Tesla Model Y (up 55.4%)
Honda CR-V (up 76.5%)
Toyota RAV4 (down 15.0%)
Toyota Camry (up 6.2%)
GMC Sierra (up 19.4%)
Toyota Tacoma (up 21.8%)
Chevrolet Equinox (down 1.9%)
Used Cars
Here’s the used car prices index for the last 10 years from CarGurus. The prices are still about 35% higher than before the pandemic.

Source: CarGurus
The Manheim’s index decline in wholesale price means that retail prices, typically lagging 4-6 weeks, will come down as well.
Used-car retail sales fell in April by about 8% year-over-year due to softer demand.
At the same time, dealerships still don’t have enough cars to sell. Production volume drops during the pandemic are now affecting the used car market. The industry sold about 8 million fewer cars in 2020-2022 than in 2018-2019, and it will take years to climb out of that gap. Note that about 83% of this shortage comes from the lack of lease returns and former rental cars.
Another interesting piece of data says that used cars of today cost more but have more wear than before. Before the pandemic, the average price of a used car was $19,827 and had about 65K miles, and now it is $26,686 (a 35% increase) with about 71K miles (+9%).
Financing
There’s a brewing storm in access to financing as lenders keep tightening across all lenders. Cox’s Credit Availability Index declined to its lowest reading since February 2021.
The share of loans given to borrowers with subprime credit scores is at near-historic lows.
High interest rates are making payments unaffordable for a wide tranche of shoppers, while automakers are still building more high-priced cars. There are only 10 new cars on the market that start under $25K.
What to expect?
So what can we expect in the future? New car supply is improving. Used car supply is still tight in affordable segments. But what’s going on with demand?
One of the economic surveys from the University of Michigan examines overall buying conditions for vehicles. Consumers are feeling that conditions are good when the index is above 100, and the opposite when the index is below 100.
After the dip in mid-2022, as inventories increased and prices declined, the chart has been trending upward, indicating improving consumer sentiment toward the automotive market.

Source: University of Michigan
Another study of demand is published by Deloitte. The Deloitte Vehicle Purchase Intent Index measures the demand intent based on the percentage of consumers that are planning to buy a new or used vehicle in the next six months.

Source: Deloitte
This index also shows an uptick at the beginning of 2023, tracking the index from the University of Michigan.
Among the factors that positively affect the Vehicle Purchase Index Deloitte lists stabilizing inventories and prices, healthy demand, increased vehicle age, and consumer interest in EVs. Negative factors include high transaction prices, high interest rates, lack of affordable cars, and supply chain disruptions.
Looking at these indices signals that the pent-up demand created by prolonged inventory shortages is still there. Even though shoppers are holding on to their cars (S&P global mobility reported that the average vehicle age is now at 12.5 years), these cars will have to be replaced sooner or later, especially as maintenance costs will increase.
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🦊 Shoppers Corner: Can you trust a history report?
Here are a few typical stories:
Michael bought a Volvo in July from a private seller, bought a history report, and everything checked out. He paid off the loan and got a lien released. When the title arrived, it showed that the car was a prior salvage 2 years ago.
Paulina got a used BMW at a dealership, with 66K miles and a clear title according to history reports from two major companies. A few months later she takes it to a shop to check a knock in the engine. The shop informs her that one of the modules in the car reports mileage that does not match the odometer. Turns out the mileage was rolled back before the dealership acquired the car at an auction.
Nick bought a 2 year old, clean history report, certified Nissan with an extended warranty. After driving it for 18 trouble-free months, the history report shows minor damage.
Jerry bought an almost new Mustang with 3,000 miles on it, with a clean history report. He decides to trade it in a few years later, and the history now shows “frame damage”, so the dealership offers him a fraction of the expected value.

See the pattern?
Here’s how it works. Vehicle history report providers aggregate data based on Vehicle Identification Numbers (VINs) from insurers, dealerships, repair shops, warranty providers, law enforcement, first responders, government agencies, etc. Then they sell these reports to individuals and dealerships.
Let me say it right away that for the most part, reports are accurate and are very helpful.
However, I would not trust them 100%. Here’s why. The first problem is that the information that shows up in history reports is often delayed. Some sneaky sellers know about it and try to get rid of a vehicle that has been in an accident before vehicle history reports show the damage.
Second, sometimes reports have errors because they simply depend on humans entering the correct data into various systems. Someone may type the VIN incorrectly, resulting in assigning an accident to the wrong car.
I’ve heard about the situation when someone looks up body parts in a body shop’s computer system to customize a car, for example, to change a grille to a sportier one or add a spoiler. The search for parts may result in an accident appearing on the history report.
The recourse against delayed information, mistakes, and omissions in history reports is hard and murky. There are many cases when honest dealerships and private sellers are not aware of prior damage, so they cannot be liable for selling a car that has a clean report at the time of the transaction.
That being said, I think that getting a history report is still a must when buying a used car. In most cases, it paints an accurate picture of where the car has been driven, its mileage progression, ownership history, service history, and title status.
If you know that a car you are considering was serviced at a dealership, you can reach out to the dealership and ask for the service history printout.
Cars are expensive, so do your due diligence and don’t be shy to ask sellers questions.
🎤 Podcast Transcript with Jake Lebowitz, Raceway Auto Group
How Much Dealers Make, Secret to Acquiring 15 Dealerships, Getting the Best Car Deal

Listen to the podcast (45 min) or Read the full transcript
(01:08) Raceway Auto Group
(02:40) M&A activity
(06:47) Sourcing strategies
(13:32) Jake's best deal
(17:13) Delegating operations
(21:45) Best and worst customers
(25:09) Jake's thoughts on used cars
(30:23) The uphill battle for small dealerships
(32:42) Which car brands are on the decline
(43:00) How consumers can find good deals
(46:17) Forecasting car prices
(52:42) Wrapping up
Thank you for joining me again here on the CarDealershipGuy newsletter. See you soon!
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