Auto Market Weekly Summary

This summary features August data on inflation, used-vehicle sales and prices, auto loan access and performance, as well as initial September consumer sentiment. Inflation is picking up from the impact of tariffs, auto loan access declined in August as auto loan performance remained shaky, and September has started with weaker consumer sentiment.

Inflation Increased in August, Auto Loan Credit Access Declined as Auto Loan Performance Remains Shaky, and Consumer Sentiment Is Worse Than Expected to Start September

HEADLINE INFLATION accelerated more than expected in August, as the CPI increased 0.4%, up from a 0.2% increase in July.

• The core CPI, which excludes Food and Energy, accelerated as expected with an increase of 0.3%, which was the same as July.
• Transportation (0.9%), apparel (0.9%), and food and beverages (0.5%) saw the largest gains.
• Medical care (-0.1%) and recreation (-0.1%) saw the only declines.
• Shelter saw an increase of 0.4%, which was an acceleration from 0.2%.
• Private transportation saw a 0.6% increase, but transportation details saw varied trends.
• New-vehicle prices increased 0.3%, leased cars and trucks declined 0.4%, car rental declined 6.5%, and used cars increased 1.2%.
• Fuel increased 1.8%, parts increased 0.7%, maintenance and repair increased 1.6%, and insurance was again unchanged.
• We observed that wholesale used prices remained unchanged in August on a seasonally adjusted basis, while used retail prices declined, and new retail vehicle prices increased slightly.
• On a year-over-year basis, core CPI was steady as expected at 3.1% while the overall CPI increased as expected to 2.9% from 2.7% in July.

Bottom Line: Inflation picked up from the impact of tariffs.

USED RETAIL SALES estimates based on vAuto data indicate that volumes increased 9.2% in August compared to July, with volumes up 9% year over year.

• Certified pre-owned (CPO) sales increased 6.7% month over month and were up 0.9% year over year, according to a Cox Automotive analysis of Bobit data.
• Wholesale vehicle values were unchanged in August on a seasonally adjusted basis, as the Manheim Used Vehicle Value Index was steady at 207.4, and was up 1.7% from a year ago.
• The unadjusted price change in August was an increase of 1.0%, leaving the unadjusted average price up 1.8% year over year.

CONSUMER CREDIT growth accelerated in July, according to the latest report from the Federal Reserve.

• Consumer credit increased by $16.01 billion following an upwardly revised increase of $9.61 billion in June.
• Revolving credit jumped $10.48 billion after an upwardly revised increase of $0.81 billion in June.
• Nonrevolving credit, which includes auto loans, increased by $5.53 billion following an increase of $8.81 billion.

AUTO CREDIT access declined in August, but trends were varied by lender type according to our Dealertrack Credit Indices.

• The approval rate increased, and the yield spread narrowed, and those factors improved credit access for consumers.
• Terms shortened, negative equity declined, and down payments grew, and those factors moved against consumers.
• The subprime share was unchanged.
• Credit access tightened the most for CPO loans.
• Credit access in August was looser than a year ago across all channels, with the most improvement in used loans through franchise dealers.
• Only credit unions loosened in August, while captives tightened the most.
• Credit access was looser across all lender types compared to a year ago, with banks having loosened the most.

AUTO LOAN PERFORMANCE was mixed in August, with delinquencies increasing but defaults declining.

• 60-day+ delinquencies increased 0.6% but were down 1.7% year over year.
• 2.00% of auto loans were severely delinquent, which was up from 1.95% in July and up from 1.96% a year ago.
• 7.49% of subprime loans were severely delinquent, which was up from 7.17% in July and up from 7.41% a year ago.
• The subprime severe delinquency rate was 8 basis points (BPs) higher year over year, while the aggregate was 4 BPs higher.
• Defaults decreased 0.3% in total but were up 0.8% year over year.
• Defaults of subprime auto loans increased 2.3% but were down 3.0% year over year.
• The annualized default rate was 3.02%, which was 1 basis point higher than July, 9 BPs higher than last year, and 21 BPs higher than August 2019.
• The default rate year to date is 3.10%, which is down 3 BPs from the full-year default rate in 2024 of 3.13%.

CONSUMER SENTIMENT from the University of Michigan decreased 4.8% in the initial September reading and was worse than expected.

• With the decline, the index was down 21% year over year.
• Views of current conditions and expectations both declined, but current conditions declined the most.
• Expectations for inflation in one year remained at 4.8%, but expectations for inflation in five years increased to 3.9% from 3.5%.
• Consumers’ views of buying conditions for vehicles declined modestly and were worse than one year ago as views of car prices deteriorated, but views of interest rates were unchanged.

The daily index of consumer sentiment from Morning Consult shows a negative trend for the month with data through September 12.

• After increasing 1.3% in July and 0.6% in August, the index is down 2.1% so far in September.
• Views of current conditions and future expectations both declined in the first half of the month, but views of current conditions have declined the most.

AUTO FUEL PRICES have changed little so far in September.

• The average price of unleaded gasoline has decreased 0.1% for the month as of Sept. 11 to $3.19 per gallon, which was down 2% year over year but up 4.1% year to date.

BOTTOM LINE: August brought a fresh wave of economic signals that suggest inflation is accelerating, driven in part by tariff-related pressures. New and used vehicle prices edged higher, while wholesale values held steady. Auto credit access tightened in August, even as approval rates improved. Loan performance was mixed last month with delinquencies increasing but defaults declining.

September has seen a slight setback in consumer sentiment so far, just as was seen in August. Both the University of Michigan and Morning Consult indices point to declining confidence, especially in current conditions. Inflation expectations remain elevated.

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.