Auto Market Weekly Summary

Key Highlights

• The Consumer Price Index (CPI) fell in March relative to February as year-over-year inflation declined to 2.4% and core inflation declined to 2.8% year over year.
• Auto loan performance improved in March as severe delinquencies and defaults declined.
• Consumers’ views of buying conditions for vehicles declined to the lowest level since September 2022 as views of prices deteriorated, but views of interest rates improved.

Inflation and Its Impact on the Auto Industry

The CPI fell in March relative to February as year-over-year inflation declined to 2.4% and core inflation declined to 2.8%. This is likely a temporary low before these metrics rise by a percentage point or more later this year due to tariffs on more imported goods.

• Headline inflation, according to the CPI, became deflation in March, as the CPI declined 0.1%, down from a 0.2% increase in February.
• The core CPI, which excludes food and energy, saw a larger-than-expected deceleration, with an increase of 0.1%, when 0.3% was expected.
• Transportation commodities less motor fuels saw a decline of 0.2%, while used vehicles declined 0.7% following a 0.9% gain in February.
• Given the impact of tariffs on imported vehicles, prices for new and used vehicles are likely to be higher in April.

Consumer Credit Trends

Consumer credit excluding mortgages declined in February, according to the latest report from the Federal Reserve.

• Consumer credit declined by $0.81 billion following growth of $8.90 billion in January.
• Revolving credit declined $0.94 billion after a $2.35 billion increase, and nonrevolving credit increased by $0.13 billion, down from an increase of $6.55 billion in January.

Access to Auto Credit

Access to auto credit improved modestly in March, but channel and lender trends were mixed, according to the Dealertrack Credit Availability Index.

• The approval rate increased, the subprime share increased, and negative equity increased, improving credit access for consumers.
• Down payments increased, terms shortened, and yield spreads widened, negating some of the positive effects.
• Credit access was looser across most lender types compared to a year ago, with credit unions having loosened the most over the past year while captives tightened.

Auto Loan Performance

Auto loan performance improved in March, auto loan performance improved in March, which is what we expect to see from positive impact of tax refunds. Meanwhile, severe delinquencies and defaults declined.

• 60-day+ delinquencies declined in March for the second month in a row but were up 2.3% year over year.
• In March, 1.95% of auto loans were severely delinquent, down from 2.09% in February but up from 1.88% a year ago.
• Defaults declined 14.9% in total in March and were down 14.7% year over year.

Consumer Sentiment

Consumer sentiment is down again in April and close to an all-time low.

• The initial April reading on Consumer Sentiment from the University of Michigan declined 10.9% to 50.8, the lowest reading since June 2022.
• Views of current conditions and expectations both declined, with expectations for inflation in one year jumping to 6.7% from 5.0%.
• Consumers’ views of buying conditions for vehicles declined to the lowest level since September 2022 as views of prices deteriorated, but views of interest rates improved.

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.