Automotive
Trends Report

Q3 2022 Sales Results and Auto Industry Trends

By Lauren Fyke | Dec 8, 2022

Last updated on Dec 8, 2022

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Take a thorough look at performance trends across the automotive retail market featuring data from more than 1,700 dealerships nationwide, supplemented with larger industry indicators.  

With 13 months of historic data included, you’ll get a fuller picture of how the third quarter’s results play into the larger trends and see how your dealership stacks up against several key sales and F&I performance metrics.

Get the Full Report: Automotive Trends Report Q3 2022 →

Key Takeaways

  • How F&I product penetration is impacted by inventory
  • How rising interest rates are affecting car prices
  • How Gen Z shoppers feel about the F&I office
  • How dealer profitability is being impacted by electrification
Get all the details below and find out how you can capitalize on these trends and more.

Sales Performance

The Sales Performance data, which is an aggregate of surveyed dealers from across the country, will help you understand consumer spending habits, including willingness to pay for the vehicle and the variety of protection products offered at the point of sale.   

We will highlight national averages on dealership performance in:

Although dealers experienced a drop in overall vehicles sold, we saw increases in PVR (up 7%), VSC (up 2%) and Products Per Deal (up 4%), compared to the same period last year, indicating that despite ongoing inventory hurdles, dealers are maintaining profitability. 

Share this information with your sales teams to consider how store personnel can positively impact overall dealership profitability and performance. 


F&I/Front PVR (Profitability)

For the first time all year, we saw a downward trend in profitability in Q3, which is consistent with the return to more normal vehicle pricing and inventory levels.

F&I PVR

F&I PVR

 

Front PVR

Front PVR

 

Car Sales

After a slight summer uptick, overall vehicle sales reached their lowest level since January at the close of the quarter.

img-si-report-fall-2022-car-sales-chart

 

Vehicle Service Contract/Products Per Deal

Although we saw gains early in the year, Vehicle Service Contract (VSC) penetration and total Products Per Deal (PPD) have been on the decline for the past four consecutive months. That said, we still closed the third quarter ahead of where we were at the same time last year.

VSC

img-si-report-fall-2022-vsc-chart

 

PPD

img-si-report-fall-2022-ppd-chart

Get the Full Report: Automotive Trends Report Q3 2022 →

Vehicle Sales

The Vehicle Sales data examines how macroeconomic factors and consumer preferences impact vehicle sales on a national scale. We will share overall demand for the quarter, as well as the perceived value of used cars and the implications of pricing on vehicle financing.

Manheim Used Vehicle Value Index

We saw a peak in the value of preowned vehicles in January, but that number has been on a downward trajectory since then, reaching its lowest value of the year. We see this as an indication of the impact that higher interest rates are having on the price of both new and used vehicles.

img-si-report-fall-2022-manheim-chart

 

Deal Percentage (New vs. Used)

The sale of new vehicles continues to outperform used, with slight fluctuations from month to month. As additional incentives are introduced, we anticipate the number of new vehicles to extend its lead in the coming months.

img-si-report-fall-2022-new-used-deal-percentage-chart

 

Deal Percentage (Lease vs. Cash vs. Finance)

The ratio of leased, cash and financed deals has remained fairly constant throughout 2022 with no significant change in the third quarter. We have seen a slight decrease in leasing, whereas cash deals have been on the rise. The reason being that new car prices and interest rates are high, making leasing an unattractive option for consumers.

img-si-report-fall-2022-lease-cash-finance-deal-percentage-chart

Automotive Industry Updates

In addition to analyzing performance data, this section will review and interpret the top consumer trends and shifts in the car buying process across the auto industry during the third quarter. We will consider how changing demographics, economic factors and emerging technologies will impact the dealership and F&I office in the near and distant future.

New and Used Car Average Interest Rate

The average interest rate on used vehicles has seen incremental gains over the past several months. The Fed interest rate hikes have also impacted auto loan interest rates, creating a dent in demand for dealers.

Interest Rates and Car Prices

Interest rates are on the rise as the Fed actively tries to temper economic activity and combat continued inflation. The combination of high interest rates and historically high vehicle prices (according to Edmunds, the average amount financed for new vehicles hit a record high in Q3 2022) has begun to impact vehicle sales as consumers are being priced out of the market. As supply starts to normalize and interest rates are lessening demand, dealers are having to price vehicles more competitively to maintain volume.

"More new cars and trucks are finally trickling into dealerships as supply-chain troubles ease and automakers increase factory output. Now, rising interest rates and other economic pressures are starting to put a damper on the car-buying mood."

The Wall Street Journal (Oct. 2022)

Gen Z Buyers

Although shoppers from Generation Z (born after 1996) have the highest penetration of products per deal compared to other age groups, a recent study by CDK shows that for this group, waiting to enter the F&I office is a pain point in the car-buying process.

As the younger shoppers are proving to be receptive to receiving guidance about, and ultimately taking advantage of, their F&I options, this will be an important revenue opportunity as more shoppers enter the car-buying market.

(Gen Z only represented about 9% of dealership business in 2022.)

 

img-si-report-gen-z-graphic

 

EV F&I Performance

Electrified vehicles are outpacing ICE vehicles in terms of the dealer profit on each vehicle sold (PVR) but underperforming in the number of contracts per vehicle (PPD).

In fact, F&I gross income on an EV is $115 higher on average than an ICE vehicle. Additionally, ICE vehicles see higher penetration across the board, from service contracts to prepaid maintenance and GAP.

This data, along with the fact that EVs account for just 1% of dealers’ business, tells us that there is still huge room for growth when it comes to coverage for EVs.  

Now that you know how your performance compares to national industry trends, you know what to anticipate as we close out the final quarter of 2022 and prepare for the year ahead. We will continue to watch and provide an analysis of the market as the conditions fluctuate further in the months ahead. 

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