George Augustaitis

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Bio: Director of Automotive Industry and Economic Analysis

Posts by George Augustaitis

Will limited credit availability slow car sales this summer?

Posted by George Augustaitis on May 21, 2020

As states begin to reopen and CarGurus leads trend upward again, it seems we might be through the trough. These signs indicate that the US might soon emerge from the worst of the COVID-19 pandemic. However, we must be cautiously optimistic because it’s unlikely that the unemployment rate has reached its peak or that we are fully in recovery mode. And for the auto industry, there is an additional headwind on the horizon: credit availability.

While demand for vehicles is growing—US lead volume on CarGurus has nearly returned to the same level as February—the sales bounce back in the auto market may be tempered by the availability of credit.

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Topics: covid-19, credit, economic analysis, financing

Uptick in U.S. leads across all vehicle price ranges points to start of recovery

Posted by George Augustaitis on May 15, 2020

While I personally think we’re weeks, if not months, away from knowing exactly how long the economy will take to fully rebound, consumers are coming back—and they’re submitting leads. In fact, U.S. leads* on CarGurus are almost at the same level they were at the start of February. Yes, February generally represents a smaller share of units sold than March and April, but the fact that consumer interest is trending up this early is a positive sign.

cargurus-total-indexed-leads-us-chart

While total U.S. lead volume on CarGurus has nearly returned to the same level as February, lead volume varies by price bucket, and I’ll dig deeper into this below.

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Topics: CarGurus data, covid-19, economic analysis

Why 2020 is an automotive year unlike any other

Posted by George Augustaitis on May 8, 2020

New vehicle sales seasonality has always been rather predictable. The end of the fiscal year, the model year changeover, Labor Day, and the end of the year have always led to stronger months in March, May, August/September, and December.

YoY-new-vehicle-sales-seasonality-graph

However, during recessions, seasonality trends break from their normal patterns—and this year is no exception. While we know the patterns will be different due to COVID-19, the variation is difficult to predict. That’s because the prolonged impact of the pandemic, which has led to stay-at-home orders, record jobless claims, declining consumer confidence, delayed tax returns, usage of stimulus checks, and increased OEM incentive spend is still relatively unknown. This makes 2020 unlike any other.

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Topics: covid-19, seasonality, trends

Declining consumer confidence delaying — but not stopping — car purchases

Posted by George Augustaitis on April 27, 2020

Before the global outbreak of COVID-19, consumer sentiment (as measured by the University of Michigan) in the US was trending upward. Last Friday, reporting for the final full week of April showed a drop of 17.3 points to 71.8. This is the largest monthly decline ever recorded. Buying Conditions declined across large durables with car buying intentions falling to lows last recorded in 2011 and home-buying intentions at their lowest since 1983.

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Topics: consumer sentiment, covid-19

Will used vehicle prices plunge due to COVID-19?

Posted by George Augustaitis on April 17, 2020

For the past five years, the number of new vehicles coming off lease has continued to increase. So much so that many in the automotive industry expected a decline in prices because of the rising supply. However, because the mix of vehicles coming off lease favored the more expensive SUVs and pickups, used vehicle prices have remained high. Even with a record number of off-lease vehicles coming back to the market this year and the used vehicle market flat YoY, used vehicle prices still would have only seen a slight decline. However, COVID-19 looks to have changed all of that.

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Topics: covid-19, industry analysis

How COVID-19 is impacting consumer sentiment among CarGurus shoppers

Posted by George Augustaitis on April 10, 2020

Today, our Director of Automotive Industry and Economic Analysis, George Augustaitis, and our Director of Consumer Insights, Madison Gross, team up to take a look at how consumer sentiment is trending among CarGurus shoppers.

We first mentioned the importance of consumer sentiment when we kicked off this COVID-19 series, and we’re going to dive in a little deeper with it. This is an important indicator for the industry because if a consumer isn’t confident in the economy, their job stability, or their ability to find a new job, they will be less likely to make a big-ticket purchase, such as a vehicle. When confidence is low many consumers will turn to the used vehicle market due to the lower price points, but others will wait until they feel more positive about their job security and the economy.

Because consumer confidence and consumer sentiment numbers don’t fully reflect yet the impact that the COVID-19 pandemic is having on the economy, we’re running two polls on cargurus.com. These polls allow us to track and trend how CarGurus shoppers currently feel about the economy and their sentiment about its future.

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Topics: consumer sentiment, covid-19, industry analysis

Why a record number of jobless claims due to COVID-19 matters to dealers

Posted by George Augustaitis on April 3, 2020

As the economic data catches up with the COVID-19 pandemic, we’re poised to start seeing many economic indicators at historic levels or levels we haven’t seen since the Great Depression. One example of this is jobless claims, also referred to as unemployment claims, which set a new record the week ending March 28, 2020, when 6.6 million people filed for unemployment.

While the number of jobless claims set a record at the federal level, the impact at the state level has also been unprecedented. In the coming weeks, many states will surpass the number of claims filed throughout the entirety of 2019—and that’s if they haven’t already.

The automotive sector has played a role in the jobless claims number, but due to self-isolation policies, leisure, hospitality, and retail have had the largest impact. A turnaround will happen though. When the self-isolation guidance from the federal and state levels ends, Americans will resurface and go out once again. Demand for services and goods (like vehicles) will return and the jobs will follow, but it might take some time before we reach a new normal.

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Topics: covid-19, economic analysis

Making sense of economic developments during COVID-19: an overview of key indicators to watch

Posted by George Augustaitis on March 27, 2020

COVID-19 is disrupting nearly all facets of the US economy, and as many dealers are experiencing, the domestic automotive market is no exception. As Director of Industry Analytics at CarGurus, I’ll be posting regular updates about economic developments impacting your business, including developments that signal recovery, which will come.

To shape my analysis of the evolving situation, I’m tracking a variety of indicators. This post provides an overview of those indicators and explains why they matter for the automotive category. Some are traditional economic indicators, which are weeks if not months behind and will not account for the full impact of COVID. Others are consumer behavior indicators, which help to identify real-time changes in consumer patterns.

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Topics: analysis, covid-19, market analysis

Industry Pulse: Could forgiveness of student loans lead to a new peak in new and CPO vehicle sales?

Posted by George Augustaitis on July 29, 2019

Our Director of Automotive Industry and Economic Analysis, George Augustaitis, provides insight into how forgiveness of student loans could impact vehicle sales in the US.

Debt continues to increase while wages lag, and many Americans struggle to purchase a new car. In fact, affordability represents the most severe headwind causing the decline in vehicle sales, which are down 2.0% calendar year to date (CYTD) 2019.

A recent survey from Bankrate finds that 58% of Millennials and 56% of all Americans lose sleep over money troubles. Today, 40% of Millennials earn at least half their income from a side hustle. Millennials are the largest living adult generation as of 2019, and they represent a key demographic in the success of the new and certified pre-owned (CPO) vehicle market. However, an increasing number of Millennials indicate that cost pushes them away from purchasing a new vehicle. Knowing this, increasing Millennial disposable income would lead to a rise in the new-vehicle market.

For Millennials, student loans represent the primary reason for their low disposable income. An estimated 44.7 million people in the US have student debt, which amounts to 1 in 4 Americans. With the estimated student debt at $1.49 trillion and the average monthly payment at $393, the increasing amount of student debt shapes affordability significantly more than wages, housing costs, and the rising price of vehicles.

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Topics: analysis, industry insights, industry news, trends

Industry Pulse: it’s more than just tax cuts impacting the used vehicle market

Posted by George Augustaitis on June 3, 2019

At CarGurus, we’re always looking for ways to share more industry insights with our valued dealers. Today, our Director of Automotive Industry and Economic Analysis, George Augustaitis, takes a look at how tax cuts and dwindling inventory are affecting the used car market.

The IRS started to release information on tax returns in the first week of February. As the data from the IRS changed over time, the media released weekly headlines, whipping back and forth between negative and positive:

Tax Refunds down 8.7%…”

Here’s why the average tax refund check is down 16% from last year

After a slow start, tax refunds are ticking up…”

Tax refunds are up from last year…”

About 8 million individuals who received a refund last year may owe this time

To date, the IRS has reported filings through the week ending May 10, 2019, and at first glance, the average refund is down 1.7%.

While the key metrics—total number of refunds, amount of money issued, and average refund—show a negative story, refunds alone aren’t the factor driving change in used car sales in the US.

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Topics: CarGurus data, industry news, industry pulse, trends