Smoke Shrugs Recession Talk, Costco Talks Hot Dogs, Markups.org Talks Straight

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It’s a beautiful Friday and we’re covering Cox Chief Economist Jonathan Smokes latest bi-weekly Auto Market report. We’re also talking about the retail mindset and how it is affected by the price of Costco hot dogs and Dealership markups from across the country. 

• Cox Chief Economist Jonathan Smoke’s report shrugs off recession talk in latest bi-weekly Auto Market report
  • Strong labor market, high credit availability, and elevated savings point to stability in purchasing power
  • Limited supply continues to insulate the industry from any drop off in sales
  • Noted in an ancillary interview that the more consumers hear about a recession the more they are likely to pull back on spending
  • “My biggest worry from the dealers’ sentiment data is that the outlook is down and lower than the current market,” says Smoke. “Dealers are naturally optimistic and then it's not common to see them less enthused about the future…but such was the case in the second quarter. However, the numbers are still positive. I think the key issue is uncertainty, and especially uncertainty from things that dealers cannot control, namely the economy and new-vehicle production.”
  • Take away: Don’t believe everything you hear, but be ready anyway
• Costco fends off internet mis-information about raising the price of its $1.50 hot dog deal
  • On its Q3 earnings call, SVP Bob Nelson who was filling in for the vacationing CFO talked about price stability throughout the call. Then said:
    • "Finally, I want to address some incorrect information floating around on social media and a few other media outlets, claiming that we have increased the price of our $1.50 hotdog-and-soda combinations sold in our food courts," 
    • Let me just say the price, when we introduced the hot-dog-soda combo in the mid-'80s, was $1.50. The price today is $1.50, and we have no plans to increase the price at this time."
    • Some less-famous food court items received a bump. Chicken bake from 2.99 - 3.99 and a fountain soda from .59 to .69
  • Take away: Costco understands the brand play
• Enthusiast website Jalopnic features Dealership markups across the country complete with commentary
  • Range from a modest 1,398 markup on a Hyundai Palisade to 18,000 on a Ranger XLT, to a 200k on an EV Hummer
  • Everyone is entitled to their own strategy, but please read the comments that range from free market defenders to questioning the point of MSRP, to both asking for and talking bad about direct sales
  • Take away: Listening is learning

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