Auto Market Weekly Summary

Key Highlights

• Inflation pressures remain steady as new and used vehicle prices show mixed movements in November.
• Consumer credit access loosens, with significant improvements in auto financing availability.
• Auto loan performance improves, as delinquency and default rates decline in November.

Inflation and Vehicle Pricing Trends

Inflation indicators signal modest increases, with vehicle prices showing varied movement across categories.

• The Consumer Price Index (CPI) for core inflation rose 0.3% in November, maintaining stability from prior months.
• Used-vehicle prices increased 2% in November, following a 2.7% rise in October, as the CPI measure tracked a similar gain on the Manheim Used Vehicle Value Index in November.
• New-vehicle prices climbed 0.6% after showing no change in the previous month, according to the CPI report. Kelley Blue Book reports also indicate transaction prices rose in November, alongside increasing incentives.
• Used retail listing prices declined in November, while wholesale vehicle prices were mixed in November.

Growing Consumer Credit

Consumer credit excluding mortgages saw accelerating growth in October, according to the latest report from the Federal Reserve.

• Consumer credit grew by $19.24 billion, up substantially from $3.21 billion in September.
• Revolving credit growth surged and had the highest growth of $15.72 billion since June 2022.
• Nonrevolving credit increased by $3.52 billion.

Improved Auto Credit Availability

Access to auto financing improved significantly in November, driven by positive adjustments in approval processes and credit conditions.

• Approval rates increased, and yield spreads narrowed, contributing to better financing opportunities for consumers.
• Credit access eased across all sales channels, with new vehicle financing seeing the largest improvement.
• Credit unions demonstrated the most substantial loosening of credit over the past year, while banks adjusted the least.
• These favorable conditions outweighed challenges like higher down payments and shorter loan terms, making November the first month in six where credit access was looser than the previous year.

Auto Loan Performance and Delinquencies Show Progress

Auto loan performance is improving at a time of the year that is atypical, with notable improvements in delinquency and default rates.

• Severe 60-day-plus loan delinquency rates decreased for the first time since May, falling to 1.98% in November.
• Subprime auto loan severe delinquency rates also declined slightly, down to 7.42% from October’s 7.44%.
• Defaults on auto loans dropped 7.7% month over month in November, although they remained 15.3% higher than a year ago.
• The annualized default rate for November stood at 3.22%, aligning closely with pre-pandemic levels seen in 2019.

A Mixed Labor Market Impact on the Automotive Sector

The broader labor market exhibited mixed trends after disruptions from hurricanes Helene and Milton, possibly influencing consumer behavior and purchasing power for vehicles.

• Initial jobless claims increased by 17,000 to 242,000 for the week ending Dec. 7, marking a rise but falling short of recent hurricane-driven peaks.
• Non-seasonally adjusted initial claims increased by 99,100 and were 65,200 higher than they were before the pandemic.
• Continuing claims rose slightly to 1.89 million, reflecting a labor market that is recovering unevenly.
• The broadest measure of continuing claims declined by 63,300 to 1.69 million in the latest data, which lags the traditional number and is not seasonally adjusted. That total measure is up 15,000 over the last 4 weeks but is 415,000 lower than the pre-pandemic level.
• The labor market has deteriorated this year, with claims increasing and lasting longer.

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.