Auto Market Weekly Summary

Key Highlights:

• The labor market remains resilient but is clearly slowing.
• The new-vehicle market is adjusting to price sensitivity with increased discounting.
• Used-vehicle sales softened in May, but year-over-year trends remain positive.

Labor Market

The employment report for May was mostly better than expected, but reflects slowing job growth as the economy adjusts to tariffs and much slower immigration.

• Employers added 139,000 jobs in May, exceeding expectations of 126,000, but downward revisions to prior months resulted in a net loss of 95,000 jobs.
• Private sector employment rose by 140,000, while government jobs declined by 1,000, including a 22,000-job drop in federal employment.
• Auto dealer employment increased by 2,100 jobs but remains 1.1% below pre-pandemic levels.
• The headline unemployment rate held steady at 4.2%, as expected, and the labor force participation rate dipped to 62.4%.
• The underemployment rate remained steady at 7.8%, which is 0.8 percentage points above its level in February 2020.
• Average hourly earnings rose 0.4% month over month and 3.9% year over year, signaling continued wage growth.

New-Vehicle Market

The new-vehicle SAAR declined in May, but the retail SAAR was still stronger than the pace prior to the short-lived tariff-induced frenzy. Consumers are price sensitive, so incentives are no longer declining, and discounting is again on the rise to keep retail sales moving.

• New light-vehicle sales increased by 2.5% year over year in May, with one additional selling day than May 2024. By volume, new-vehicle sales increased 0.3% month over month with one more selling day than April.
• The May seasonally adjusted annual rate (SAAR) for new vehicles fell to 15.6 million, down from 17.3 million in April and 15.8 million a year ago.
• Retail SAAR was estimated at 13.4 million, up from 12.8 million last year but down from April’s 14.7 million.
• May Fleet sales were mixed: rental fleet sales rose 8.1% year over year, while commercial and government fleet sales declined.
• The average transaction price (ATP) for new vehicles was $48,799, up 1.0% year over year, while the average manufacturer’s suggested retail price rose 2.1%. [Check back in the Newsroom for the full ATP report on Tuesday, June 10.]
• The average price relative to average MSRP declined to 95.7% from 96.1%, so discounting increased to the highest level in 5 years.
• Discounting increased to the highest level in five years, with incentives averaging $3,297 – up 1.2% year over year and 0.6% month over month.

Used-Vehicle Market

Used-vehicle sales softened in May, but year-over-year trends remain positive, reflecting stable consumer demand.

• Our used retail sales estimates, based on vAuto data, indicate that volumes decreased 3.0% in May compared to April, with volumes up 4% year over year.
• Certified pre-owned (CPO) sales dipped 0.5% month over month but rose 2.2% year over year.
• Wholesale vehicle values fell 1.4% on a seasonally adjusted basis, with the Manheim Used Vehicle Value Index at 205.2 – up 4.0% year over year. The unadjusted price change in May was a decrease of 1.5%, leaving the unadjusted average price up 4.0% 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.