New vehicle sales increased in July, but just barely. The July 2010 numbers were better year over year and consecutively. Still, when you consider that last year at this time Cash for Clunkers was in effect, an increase in July 2010 is a positive sign.

Another positive for us as sellers in the used vehicle market is the decline in used vehicle inventory levels at auction and on dealers’ lots. Declining inventories help support used vehicle values and factory production. Our average unit sold for 2.6% more in July, on an unadjusted basis. Demand continues to be low, but supply is lower.

The big reason demand has remained low for so long is high unemployment / weak job creation. Unemployed people typically aren’t in the market for a vehicle. The latest jobs numbers have the Bears claiming “evidence” and Bulls looking for excuses.  

A bright spot in the jobs numbers, however, is the addition of manufacturing jobs. It certainly wasn’t a big increase, but year to date manufacturing employment has expanded by 183,000 jobs. Also of note is that motor vehicles and parts had fewer seasonal layoffs than normal in July.

Contributing to the slow growth in job creation is the fact that businesses have the same confidence issues as consumers. They are sitting on cash, unwilling to expand or build inventories without more pronounced demand.

Credit remains something of a conundrum. Banks say there are not a lot of creditworthy applicants, business or consumer; yet consumers and small businesses are complaining about tight credit. My conclusion is that the most creditworthy consumers and businesses are sitting on the sidelines waiting for expansion in the economy. The danger is the self-fulfilling prophecy. The moral of the story is if you have confidence in your value proposition, act on it.

Recently passed, the Wall Street Reform and Consumer Protection Act of 2010 authorizes the creation of the Consumer Finance Protection Bureau. The full impact of this law on auto dealers won’t be known for quite some time, as there is a 12-18 month window to finalize all its rules. The National Auto Dealers’ Association lobbied hard to exempt auto dealers from the newly created bureau’s jurisdiction, the exclusion they won applies to those dealers that sell or lease AND service motor vehicles AND who routinely sell their paper to unrelated, unaffiliated third-party finance companies. In essence, Buy-Here-Pay-Here dealers and independent used vehicle dealers will probably be impacted by the new regulatory agency because those dealers don’t typically provide vehicle servicing. 

There was some recent commentary in the automotive press that touted the benefits of the 4-door, Crew Cab configuration in pick-up trucks. In short, the claim was that the value of used Crew Cabs over comparable Regular Cab models justified spending the difference in MSRP.  Dan Kipper, Donlen’s truck expert, did a comparison on a sample of 2007 and 2009 domestic models and found that the Crew Cab configuration returned a higher percentage of MSRP across the board. Furthermore, there were a couple of models where the Crew Cab configuration returned even more than the original cost of the option (both these were ¾ ton models).

The Crew Cab configuration is a more versatile vehicle and attracts more bidders/buyers in the auction lanes. It’s a more desirable vehicle and will sell more quickly and for money in the wholesale market than the Regular Cab, but it’s not likely to return a premium over the purchase price of the option.

The Crew Cab configuration won’t make up for hard use and high mileage. So if the job results in “rough” units coming out of service, and it can be done with a regular cab, then the regular cab will be the most cost effective solution.

The recovery is continuing, more slowly than anyone would like. The forecasts call for continued growth; the debate is over the rate. So, if your value proposition is solid, get the right tools for the job and proceed.