This edition of the Auto Market Weekly Summary includes updates on the new-vehicle sales and pricing, job openings, and consumer confidence, along with credit trends through the end of last year. Although we avoided another full-scale government shutdown, it did delay the official employment report, which will be released this week. Tax refund filing data has been delayed as well.

Bottom Line Up Front

January data reveals a cautious start to 2026, with competing forces shaping dealers’ outlook. New-vehicle sales softened 3.5% year over year to a 14.9 million SAAR, pressured by weather disruptions and margin constraints as OEMs and dealers pulled back on incentives to offset rising tariff costs. However, the used-vehicle market showed strength with a solid sales pace and the Manheim Used Vehicle Value Index rising in January, providing support for trade-in values and dealer inventory positions.

The labor market is showing early signs of cooling that warrant attention: job openings plunged to their lowest level since September 2020, falling by over 1 million in just three months as employers pull back hiring plans. While jobless claims remain below distress levels, this forward-looking indicator suggests potential headwinds for consumer spending on big-ticket purchases.

At the same time, consumer sentiment improved modestly in February, and tax refund season is now underway, putting additional dollars in consumers’ pockets that could support near-term traffic and sales. Overall consumer credit grew 3.3% year over year in December, with revolving credit finally turning positive, though vehicle loan balances contracted for the second consecutive quarter, signaling continued consumer caution, particularly in auto financing.

Two wildcards bear watching: Consumers expect 3.5% inflation over the next year, higher than current forecasts and, if accurate given their recent track record, a potential constraint on Fed rate cuts and on financing affordability. Additionally, significant stock market volatility this week, driven by concerns about AI and technology valuations, could impact wealth effects and consumer confidence, particularly for higher-end vehicle segments. The spring selling season will test whether near-term positives from tax refunds and used vehicle strength can offset broader economic uncertainty.

New-Vehicle Sales and Pricing

New-vehicle sales for January were released last week, indicating a slight slowdown from last year’s pace. In our own tracking of Cox Automotive data, we observed that weekly sales of new vehicles were roughly flat with last year but likely slowed considerably in the last week of January and depressed overall transaction levels due to the snowstorm across much of the eastern United States. Data on pricing for new vehicles in January indicates a seasonal decline, with lower incentives, as dealers and OEMs fight to maintain margins.

  • January SAAR finished at 14.9 million, lower by 3.5% against last year and a bit lower than our estimate, driven by lower passenger car sales and foreign imported SUVs.
  • The sales volume for January was 1.11 million units, higher by 0.6% against last year’s rate, but it was boosted by having one additional selling day this year.
  • Fleet sales for January grew by 14% compared to January 2025, driven by gains in rental and commercial sales. General Motors showed the largest volume gains this month, and all of the Big Three out of Detroit were higher, while most Asian OEMs were lower.
  • New-vehicle average transaction prices (ATP) declined 2.2% in January from a strong December level, reflecting a higher mix of luxury vehicles sold at year-end. ATP is currently higher by 1.9% against last year, while the average manufacturer’s suggested retail price is higher by 2.1%, although it also fell in January. (Check back for the January ATP report.)
  • Incentives were lower on both a percentage and dollar basis in January, as OEMs and dealers look for ways to offset the rising costs from tariffs. Incentives across the industry overall averaged $3,200 in January and were over 6.4% lower against last year. Incentives fell to 6.5% of ATP, a decline of almost a full point against December 2025.
Jobless Claims and Job Openings

Initial jobless claims continue to rise gradually, though they remain below levels that would signal widespread distress. Additionally, the December Job Openings and Labor Turnover Survey (JOLTS) report revealed the most dramatic shift: Job openings fell sharply in the month, signaling that employers are pulling back on hiring plans.

  • Initial claims rose to 231,000 in the week ended Jan. 31, up from 209,000 the prior week, marking the highest level since early December.
  • Job openings declined to 6.54 million in December, down nearly 400,000 from November and representing the lowest level since September 2020. Openings have fallen by more than 1 million over the past three months.
  • Hiring remained flat: The hiring rate ticked up slightly to 3.3% in December, but hiring has been essentially stagnant in recent months.
  • Further, with tightening immigration policies reducing labor force growth, some economic forecasters suggest the breakeven rate of jobs added per month could be as low as 20,000.
Consumer Sentiment and Inflation Expectations

The University of Michigan released preliminary consumer sentiment numbers for February, showing that consumers remain cautious overall but are growing slightly more optimistic about the rate of future inflation.

  • University of Michigan’s Index of Consumer Sentiment rose to 57.3 for the preliminary February reading and remains down 11% against last year, although it was up almost 2% from the end of January.
  • Importantly, consumers’ expectations of prices over the next year fell to 3.5%, the lowest reading since last January’s expectation of 3.3%. Consumer inflation expectations have proven somewhat accurate recently: In December 2024, they expected 2.8% inflation, and actual PCE readings a year later came in at 2.8% (CPI at 2.7%). Consumers are expecting to see inflation at 3.5% for the next year, higher than current forecasts, which would further complicate the outlook for Fed policy.
Consumer Credit

The Federal Reserve updated the report on consumer credit through December on Friday, showing broader gains in credit than expected as credit flowed a bit more freely later in the year. Additionally, we learned that flows from student loans and vehicle loans showed mixed results.

Credit growth was also seen across student loans, up 3.2% year over year, but flat compared with Q3 2025. On the other hand, vehicle loan balances contracted modestly, marking the second consecutive quarter of year-over-year declines.

Total consumer credit rose by $24 billion in December, up 0.5% in the month and showing a stronger gain of 3.3% year over year. Credit growth rose across both revolving and non-revolving lines in December. However, it should be noted that this was the first year-over-year increase in revolving credit since November 2024, as the metric has been consistently down over the last year.