Auto Market Weekly Summary

The pace of new and used auto sales picked up as prices declined slightly and credit loosened, while loan performance was mixed.

New light-vehicle sales increased 6.6% year over year in July, with one more selling day than July 2024. 

• By volume, new-vehicle sales increased 9.3% month over month, with two more selling days than June. 
• The July seasonally adjusted annual rate (SAAR) increased 7.1% to 16.4 million, which was up 3.7% from last year’s 15.8 million pace and up 7.1% from June’s 15.3 million. 

Large fleet buyers contributed strongly to July’s performance.

• Combined sales into large rental, commercial, and government fleets were up 17.9% year over year. 
• Sales into large rental fleets were up 56.2% year over year, while sales into commercial fleets were up 1.1%, but sales into government fleets were down 19.8%.
• The fleet share was 15%, which was down slightly from last year’s 15.1% share.

Retail sales also improved.

• Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be up 6.7% from last year, leading to an estimated retail SAAR of 13.8 million, which was up 0.4 million from last year’s 13.4 million and up from June’s 12.9 million pace. 

Lower prices and higher incentives helped.

• The average transaction price (ATP) of a new vehicle in July decreased 0.1% from June, with an initial estimate of $48,841, which was up 1.5% year over year. (The July ATP report will be published later today.)
• The average price relative to the average manufacturer’s suggested retail price (MSRP) increased to 95.8% from 95.7%, so discounting decreased slightly but remains near the highest level in 5 years.
• The average incentive from manufacturers increased 4.2% month over month to $3,553, which was up 5.4% year over year and at the highest level this year.
• Incentives as a percentage of average transaction price increased to 7.3% from 7.0% and were higher than the 7.0% level one year ago. It was 9.7% in March 2019.

Used sales also grew in July.

• Our used retail sales estimates based on vAuto data indicate that volumes increased 1.7% in July compared to June, with volumes up 2% year over year.
• Certified pre-owned sales increased 11.4% month over month and were up 5.0% year over year.

Wholesale vehicle values decreased 0.5% in July on a seasonally adjusted basis.

• The Manheim Used Vehicle Value Index decreased to 207.4, which was up 2.9% from a year ago.
• The unadjusted price change in July was a decrease of 1.4%, leaving the unadjusted average price up 3.0% year over year.

Credit trends remain supportive of auto demand.

Consumer credit growth accelerated in June, according to the latest report from the Federal Reserve. 

• Consumer credit increased by $7.37 billion following a smaller increase of $5.13 billion in May. 
• Revolving credit decreased $1.05 billion after declining $3.82 billion in May, but nonrevolving credit, which includes auto loans, increased by $8.42 billion following an increase of $8.95 billion.

Access to auto credit improved in July, but trends were again varied by lender type according to our Dealertrack Credit Availability Indices.

• The approval rate increased, the size of down payments declined, and the yield spread narrowed, and those factors improved credit access for consumers. 
• However, the subprime share decreased, terms shortened, and negative equity declined, and those factors moved against consumers. 
• Credit access loosened the most for new loans through captives but tightened slightly on new loans across all lender types, including banks and credit unions. 
• Credit access in July was looser than a year ago across all channels, with the most improvement in new loans from non-captive lenders. 
• Captives loosened the most in July, while credit unions tightened. 
• Credit access was looser across all lender types compared to a year ago, with banks having loosened the most.

Auto loan performance was mixed in July, with delinquencies increasing but defaults declining based on our review of Equifax data.

• 60-day+ delinquencies increased 3.8% and were up 0.6% year over year.
• 1.95% of auto loans were severely delinquent, which was up from 1.87% in June and up from 1.90% a year ago.
• 7.17% of subprime loans were severely delinquent, which was up from 6.92% in June but down from 7.23% a year ago.
• The subprime severe delinquency rate was 6 basis points (BPs) lower year over year, while the aggregate was 4 BPs higher.
• Defaults decreased 2.2% in total and were down 1.9% year over year.
• Defaults of subprime auto loans decreased 4.4% and were down 6.8% year over year.
• The annualized default rate was 3.01%, which was 6 BPs lower than June, 1 BP lower than last year, but 9 BPs higher than July 2019.
• The default rate year to date is 3.11%, which is down 2 BPs from the full year default rate in 2024 of 3.13%.

Bottom Line: July was a strong month for the vehicle market, with strength in fleet and retail and strength in new and used. The main sign of issues from tariffs so far is the accelerating year-over-year increase in average price paid, along with the underlying MSRPs accelerating even more. However, growing incentives and lower rates are offsetting the inflation trend for buyers.

Jonathan Smoke

Chief Economist

Jonathan Smoke leads Cox Automotive’s economic and industry insights team, which tracks key metrics and trends impacting both the wholesale and retail markets for vehicles informed by the proprietary data from the company’s businesses and platforms. For 28 years, Smoke has focused on translating data and trends into relevant actionable insights for the industries that represent the biggest purchases that consumers make in their lifetimes: real estate and automotive. Smoke joined Cox Automotive in 2017.