About David Hult
David Hult, CEO of Asbury Automotive Group, discussed the new and used car markets in a September 2023 interview. He stated that new car demand remains but is cooling, and that used car valuations have declined and are expected to decline further, though he said they will likely not return to 2019 levels due to a lack of supply. Hult attributed the supply shortage to factors such as reduced trade-ins from low new car inventory and aging fleet vehicles, and he predicted the used car market would stabilize.
Hult expressed concerns about the electric vehicle market, noting that while demand for luxury EVs has been strong, he anticipates challenges over the next 18-24 months as up to 90 new EV models enter the market. He cited insufficient charging infrastructure as a key issue, stating that there are not enough chargers to sustain an increased fleet. Hult also said that during economic downturns, consumer spending on parts and services tends to remain high, and he expected Asbury to perform relatively well through 2023.
Source: AI-verified profile updated from David Hult's recent appearances.
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Transcript (12 segments)
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Interviewer0:01
Joining us is the CEO of one of the largest retailers in the country, David Hult. Good to have you with us this morning. Give me a quick take on both the new and used car market from your perspective as we head into the new year.
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David Hult0:17
Sure. Thank you for having me. From the new car side, it's been governed the last couple years with supply chain issues. The demand is still there. It's cooling off from where it was. We're still selling a good percentage of our inventory that we're receiving. Not all brands are coming back at the same time as far as supply. Used car side is a little choppier. We've seen a decline in valuations. We anticipate a further decline in pricing. At some point it will stabilize and probably won't get back to '19 levels simply because of the lack of supply in the market.
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Interviewer0:52
On the new car market, as the supply chain finally catches up with demand, what are your expectations for next year? Stable, or will we see perhaps a bit of a slip?
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David Hult1:04
I don't think they're all created equal. I think there will be a little growth in the SAR year over year. There's still a demand there. Things we have going, the average age of the car in the U.S. is over 12 years old. Typically when you go into some recessions or economic downturns, the propensity for consumers to spend on parts and services is high. We think we'll fare better than most through '23.
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Interviewer1:31
People on the street have been watching Manheim come in every month with... all eyes have been on it. I think it was Morgan Stanley the other day said with the Fed keeping their foot on the brakes and tough comps ahead, year on year declines on Manheim could approach 20%. Do you think that's too dramatic?
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David Hult1:51
I think it's a little dramatic. I think the things you have to think about over the last couple years, with the lack of new car inventory, there's been less trades, the cars getting older. The fleets... I don't know if anyone has rented a car lately, they all have 40,000, 50,000 miles on it. There's a real vacuum to be filled in the fleet business. I think the next couple years, the used car market, there's not going to be a plethora of vehicles in the market. Typically your used vehicle SAR runs over 40 million sales.
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Interviewer2:22
Do you think trade-in valuations impact demand for new cars?
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David Hult2:28
So the trade-in valuations have certainly been moving around. They move around by market, and it depends whether it's a four-wheel drive truck or luxury sedan. We anticipate it being choppy for the next few months. We think certainly by the spring it will stabilize.
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Interviewer2:46
David, one thing we talk a lot about here is demand for EVs, market share gains or losses by some of the leaders, namely Tesla. What are you seeing on the ground in terms of that, and what are your expectations as we head into next year?
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David Hult3:01
Sure. A lot of the EVs we've seen come to the market have been in the luxury lines. The demand has certainly been there. Certainly we have concerns over the next 18-24 months because up to 90 models with EVs coming to market. We certainly have concerns in the markets where we do business as relates to infrastructure and as relates to charging.
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Interviewer3:24
That's a key issue. When you say that, do you mean simply there are not enough chargers out there to sustain an increased fleet?
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David Hult3:33
There really isn't. The luxury consumers usually have homes that have multiple cars. They're not relying on it as a daily driver. When you get into some of these larger areas...
