This edition of the Auto Market Weekly Summary includes updates on credit availability, consumer prices, consumer sentiment, and the labor market.

The week brought a meaningful slate of economic releases against a backdrop of war in the Middle East, which is already making its presence felt at the gas pump and in consumer confidence readings. Yet at Manheim, data shows few signs of slowing down in the wholesale used-vehicle market, suggesting dealers are still expecting strong retail demand this spring.

Bottom Line Up Front

The Middle East conflict is emerging as the dominant economic wildcard for automotive markets this spring. Rising energy prices have revived inflation concerns and raised the likelihood that financing costs stay elevated through the spring selling season.

Against that backdrop, the consumer picture is mixed. Credit availability reached its highest level since June 2022, giving dealers another tool to help bridge affordability challenges. Tax refunds are still running 10.6% above last year, with the average refund nearing $3,700, which often helps boost used-vehicle demand. At the same time, consumer sentiment is weakening. The University of Michigan’s index posted its lowest reading of the year, while Morning Consult’s daily tracker is down more than 6% from a year ago as consumers react to the uncertainty of war in the Middle East and rapidly rising gas prices.

The wholesale market is sending a more positive signal. Manheim data shows the seasonal spring lift continuing, with sales conversion remaining strong and pricing trends pointing to firmer values. That suggests many dealers still expect solid retail demand in the weeks ahead. The labor market remains a quieter concern, with job openings still well below year-ago levels despite a modest rebound in January.

The through-line is clear: tax refund dollars and better credit access are helping support demand in the near term, but geopolitical uncertainty and the prospect of higher-for-longer rates create a more difficult environment for big-ticket discretionary purchases.

Credit Availability

Auto credit availability reached its highest level in more than three years in February, with the Dealertrack Credit Availability Index rising to 101.3, up 1.5% from January and nearly 6% from a year earlier. The improvement reflects lenders’ continued willingness to extend credit more broadly, particularly to borrowers with weaker credit profiles.

  • February’s gain was driven by a notable rise in subprime lending, with the share of loans to subprime borrowers jumping 180 bps to 17.5%, its highest level since March 2025 and up 320 bps year over year.
  • Lenders also continued to accommodate affordability-stretched buyers. The share of loans extending beyond 72 months reached 29.3%, while negative equity rose to 58.0%, both record highs.
  • Captives led the month’s loosening, posting a 3.9% gain, their strongest monthly increase in several years. Franchise used and all-new channels also posted the largest year-over-year improvements.

Consumer Price Growth Accelerates While Spending Outpaces Income

The Consumer Price Index increased modestly in February, driven by higher food and energy costs, while core inflation remained relatively mild and shelter inflation continued to ease. The Fed’s preferred inflation measure, the PCE index, also showed signs of moderating slightly.

  • CPI rose 0.3% month over month in February, up from 0.2% in January. The year-over-year rate held steady at 2.4%.
  • Food prices accelerated, with grocery prices rising 0.4% in February compared with 0.2% in January. Energy prices rose 0.6%, driven by a 0.8% increase in gasoline and a 3.1% jump in utility gas.
  • Because the February inflation report reflects conditions before the current Middle East conflict escalated, it does not yet capture the latest energy-price pressure. As of late last week, gas prices had risen to $3.63, up 21.7% from the beginning of March.
  • Shelter inflation continued to moderate, rising 0.2% in February after a 0.3% increase in January. Shelter remains the largest single component in CPI, accounting for nearly 36% of the index.
  • The PCE price index, updated through January, increased 0.3% for the month, down from 0.4% in December and in line with expectations. On a year-over-year basis, PCE was up 2.8%, roughly where it has remained since August.
  • Personal income rose 0.4% in January and was up 4.4% from a year earlier, the slowest annual growth rate since June. Personal consumption expenditures, however, rose 5.3% over the same period, continuing to outpace income growth and putting added pressure on household purchasing power in real terms.

Consumer Sentiment

Preliminary March data from the University of Michigan showed consumers growing more pessimistic about prices and personal finances, while Morning Consult’s daily consumer sentiment tracker also weakened as gas prices moved higher.

  • The Michigan Index of Consumer Sentiment fell to 55.5 in the preliminary March reading, the lowest level of the year, reflecting growing concern over the conflict in the Middle East and rising fuel costs.
  • One-year inflation expectations were unchanged at 3.4%, ending a six-month stretch of declines. Longer-term inflation expectations improved, falling to 3.2% from 4.1% in March 2025.
  • Morning Consult’s Daily Index of Consumer Sentiment declined to 91.6 as of last Friday. That measure is down 3% from the end of February and 6.6% from a year ago.

Labor Market Data: Softness Persists Despite Modest Rebound

Recent labor market data continues to point to a softer employment backdrop, even with a modest rebound in job openings at the start of the year.

  • Job openings rose to 6.9 million in January from 6.6 million in December, but that follows a sharp decline in late 2025 and remains well below the 7.4 million openings recorded a year earlier.
  • Hiring was flat at 5.3 million, with the hiring rate steady at 3.3%, indicating employers remain cautious about adding headcount.
  • Separations edged down to 5.1 million, with quits and layoffs both easing slightly. That suggests workers are not rushing to leave jobs, but employers are also not cutting aggressively.