Howdy, Fam!

The market is recovering, which is a weird word for “somewhere between injured and whole.” The crazy thing is that each day in recovery, the world is changing too, so what it takes to be whole again changes too.

So, while we work to effectively serve people’s mobility needs today, we gotta remember that “work,” “effective,” “serve,” and “mobility needs” are always changing.

It’s the people who just keep on staying the same.

Keep Pushing Back,
—Chris with Paul, Kyle & Kristi

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The pandemic may be six years behind us, but dealers are still selling through its consequences.

According to Cox Automotive and J.D. Power estimates, roughly 8 million vehicles that would have entered the U.S. market during the pandemic years never got built. That's not just a production problem. It's a supply problem that continues to affect pricing, inventory, and consumer behavior today.

Every new vehicle eventually becomes a used vehicle. It becomes a trade-in, a lease return, a certified unit, or auction inventory.

When millions of those vehicles never enter the system, the effects linger for years.

That's part of the reason used prices remain stubbornly high and why Cox Automotive expects new vehicle sales to remain below the peaks we saw a decade ago. The industry isn't operating with a temporary shortage anymore. It's operating with a smaller pool of vehicles than many expected.

The average vehicle on U.S. roads is now nearly 13 years old and still climbing.

That's not because Americans suddenly fell in love with older cars.

It's because replacing a vehicle has become more expensive than many households are comfortable with. Even as affordability improves for some buyers, insurance, repairs, maintenance, and financing costs continue to eat away at household budgets.

A recent CNBC analysis found that a household would need roughly $120,000 in annual income to comfortably follow traditional used-car buying guidelines and closer to $175,000 for the average new vehicle purchase.

Consumers have responded accordingly. They're holding onto vehicles longer, repairing them longer, and becoming more selective about when they replace them.

This creates an interesting reality inside dealerships.

Some customers are still upgrading, leasing, and purchasing new vehicles. Others are stretching ownership cycles and extracting every bit of life from the vehicle in their driveway.

The gap between those groups is widening.

That was one of the more interesting takeaways from ASOTU CON this year. The team at Beaver Toyota talked less about loyalty and more about reciprocity.

If customers are keeping vehicles longer, then the ownership experience becomes a bigger part of the relationship. Service conversations, trade discussions, vehicle health updates, and transparent communication all carry more weight than they did when replacement cycles were shorter.

The ownership years used to be the quiet part of the relationship.

Increasingly, that's where the relationship is won.

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