Auto Market Weekly Summary

Key Highlights

• Inflation accelerated in January, with vehicle prices, parts, and insurance contributing strongly to the gains.
• Retail sales experienced a notable decline in January, with the auto sector underperforming the broader market.
• Consumer credit excluding mortgages saw a record increase in December, while auto loan performance showed mixed results.

Inflation Trends

Inflation accelerated in January, with vehicle prices, parts, and insurance contributing strongly to the gains as year-over-year inflation increased to 3.0% and core inflation increased to 3.3% year over year.

• Headline inflation, according to the Consumer Price Index (CPI), rose by 0.5% in January, surpassing expectations.
• Core CPI, which excludes food and energy, increased by 0.4%.
• Used vehicle prices surged by 2.2%, following a 0.8% gain in December.
• Motor vehicle parts saw an increase of 0.8%, up from 0.1% in December.
• Motor vehicle insurance jumped 2%, compared to a 0.5% rise in December.
• Year over year, core CPI increased to 3.3% from 3.2%, while overall CPI rose to 3.0% from 2.9% in December.

Retail Sales Performance

Retail sales declined 0.9% in January, as most categories declined, with winter weather playing a role. Vehicle sales underperformed the market.

• Retail sales fell by 0.9% in January, following a 0.7% gain in December.
• Sales of motor vehicles and parts declined by 2.8%.
• Eight of the twelve major retail categories saw sales decline for the month.
• Gas stations and food service and drinking places recorded the largest gains at 0.9% each.
• Sporting goods, hobby, book and music stores experienced the largest monthly decline at 4.6%.
• Year over year, retail sales were up 4.2%, down from a 4.4% increase in December.

Consumer Credit and Auto Loan Trends

Consumer credit excluding mortgages saw a record increase in December, while auto loan performance showed mixed results.

• Consumer credit expanded by $40.85 billion in December, following a $5.37 billion decline in November.
• Revolving credit jumped by $22.86 billion, while nonrevolving credit increased by $17.99 billion.
• Access to auto credit was unchanged in aggregate in January, but channel trends were positive, and trends by lender type were more mixed, according to the Dealertrack Credit Availability Index.
• Subprime share increased, terms lengthened, negative equity rose, and down payments declined slightly.
• Approval rates declined, and yield spreads widened, negating some positive factors.
• Auto loan performance had been stabilizing to improving at year-end, but performance generally declined in January, which is typical for the time of the year.
• Severe delinquencies increased to 2.11% in January, up from 2.02% in December.
• Defaults increased by 2.2% in January and were up 2.6% year over year.

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.