Key Highlights

With the Federal government shutdown into its sixth week, new labor market data wasn’t available last week. However, we did receive initial data on consumer sentiment in November as well as preliminary data on October new- and used-vehicle sales.

  • New-vehicle sales softened in October on a seasonally adjusted basis as incentives declined, as the market adjusts to no tax credits for electric vehicles.
  • Used retail sales increased 5.1% in October compared to September, with volumes higher by 5.8% year over year.
  • Sentiment is down again in November as the government shutdown is now the longest in history.
New-Vehicle Sales Slowed in October With Lower Incentives

Official new-vehicle sales numbers are reported by the Bureau of Economic Analysis, but no reporting on sales has occurred since August numbers were reported in September. We can use data from Wards to get very close to what would have been in that report.

  • New light-vehicle sales increased 2.7% month over month, with three more selling days than September and decreased 3.6% year over year in October, with the same number of selling days as October 2024.
  • With more selling days, the October seasonally adjusted annual rate (SAAR) decreased 6.7% to 15.3 million from September’s 16.4 million pace and was down 4.9% from last year’s 16.1 million pace.
  • Combined sales into large rental, commercial, and government fleets were down 0.6% year over year.
  • Sales into large rental fleets were up 10.7% year over year, while sales into commercial fleets were down 9.8%, and sales into government fleets were down 11.8%.
  • Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be down 2.3% from last year, leading to an estimated retail SAAR of 13.0 million, which was down 0.4 million from September’s 13.4 million pace and down 0.3 million from October 2024.
  • Based on these estimates, the fleet share was 14.5%, which was down 1.1 percentage points from last year.
  • The average transaction price (ATP) of a new vehicle in October decreased 0.4% from September, with an initial estimate of $49,766, which was up 2.1% year over year, according to Kelley Blue Book estimates. (Check back in Cox Automotive Insights for the ATP report on Tuesday, Nov. 11.)
  • The average price relative to the average manufacturer’s suggested retail price (MSRP) was steady at 96.0%, so discounting did not change.
  • The average MSRP also decreased 0.4% month over month but was up 2.6% year over year.
  • The average incentive from manufacturers decreased 11.8% month over month to $3,238, which was down 12.9% year over year.
  • Incentives as a percentage of average transaction price fell to 6.5% from 7.3% and were at the lowest level since April 2024 as support of electric vehicles fell.
Used Retail Sales Held Up Better, But Wholesale Used Prices Declined

Used retail sales increased 5.1% in October compared to September with volumes higher by 5.8% year over year based on our estimates from vAuto data.

  • CPO sales increased 7.5% month over month and were up 2.6% year over year.
  • Wholesale vehicle values decreased 2.0% in October on a seasonally adjusted basis, as the Manheim Index declined to 202.9, and was unchanged from a year ago.
  • The unadjusted price change in October was a decrease of 3.7%, leaving the unadjusted average price up 0.2% year over year.
Sentiment Is Down Again in November

Consumer sentiment declined 6.2% in the initial November reading from the University of Michigan and was worse than expected.

  • Views of current conditions and future expectations both declined in the first seven days of the month, with current conditions down more.
  • With the decline, the index was down 30% year over year, almost as bad as its lowest level in history during the inflation surge of 2022.
  • Views of current conditions and expectations both declined, with current conditions declining the most.
  • Expectations for inflation in one year increased to 4.7% from 4.6%, but expectations for inflation in five years declined to 3.6% from 3.9%.
  • Consumers’ views of buying conditions for vehicles declined to the lowest level since June 2022 as views of car prices and interest rates both deteriorated.
  • The daily index of consumer sentiment from Morning Consult shows a negative trend for the month with data through Nov. 7.
  • After decreasing 3.3% in September and 3.4% in October, the index is down 1.2% so far in November.
Bottom Line 

The auto market is showing signs of strain as October brought softer new-vehicle demand and shrinking incentives, reflecting the industry’s adjustment to the end of EV tax credits. Affordability pressures remain front and center, with consumer sentiment sliding to near historic lows amid the prolonged government shutdown. While used retail sales demonstrated resilience, wholesale values declined, signaling ongoing price normalization. Overall, confidence and affordability challenges are shaping a cautious outlook for the months ahead.