Cox Automotive Auto Market Report: Feb. 18

Cox Automotive’s Auto Market Report video delivers a comprehensive analysis of the current automotive market. Chief Economist Jonathan Smoke leads our effort to translate data and trends into actionable insights. This video covers a wide range of topics, including consumer spending patterns, consumer sentiment, retail vehicle sales, financing rates, supply dynamics, pricing trends and leading indicators from Cox Automotive’s extensive data ecosystem.

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Report Summary – Feb. 18, 2025

Key Highlights

• Consumer spending surged at the end of 2024 but pulled back in early 2025.
• Auto loan rates increased in January, putting upward pressure on payments.
• Tax refund season is off to a strong start, boosting used vehicle demand.

Consumer Spending Trends

Consumer spending saw the strongest year-over-year growth in the final week of 2024 and early January 2025, but it has since pulled back.

• The surge in spending at the end of 2024 was driven by high consumer sentiment and holiday shopping.
• Early 2025 has seen a decline in spending, reflecting a more cautious consumer outlook.

Consumer Sentiment

The Index of Consumer Sentiment declined by 0.1% in January and is down 0.7% so far in February.

• The decline in sentiment is attributed to economic uncertainties and rising interest rates.
• Lower consumer confidence may impact future vehicle sales and overall market stability.

Retail Vehicle Sales

Sales trends for new and used vehicles increased in the latest week and continue to show strength year over year.

• New retail sales have followed typical patterns in early 2025, with steady growth compared to previous years.
• Used retail sales have also shown resilience, maintaining strong demand despite economic challenges.

Auto Loan Rates

Auto loan rates declined in December but increased in January, with the average used rate now at 14.12% and new at 9.53%.

• The rise in loan rates is putting upward pressure on monthly payments, affecting affordability for consumers.
• Low-interest rate deals have declined sharply since December and are lower year-over-year.

Vehicle Supply

New-vehicle supply dropped for the first time this year, while used supply has trended downward modestly so far in 2025.

• The decrease in new vehicle supply is a result of production challenges and supply chain disruptions.
• Used vehicle supply remains tight, reflecting strong demand and limited availability.

Used-Vehicle Prices

The average retail price for model year 2022 vehicles fell by 0.3% in the most recent week, while wholesale prices remained unchanged.

• Used vehicle prices are higher year-over-year, driven by strong demand and limited supply.
• The market for used vehicles remains competitive, with prices reflecting the tight supply conditions.

Tax Refund Season

Tax refund season is off to a strong start, with the total number of refunds up 8% compared to 2024 and the average refund higher by 19% year-over-year.

• The influx of tax refunds is boosting consumer spending and driving demand for used vehicles.
• Dealers are optimistic about the impact of tax refunds on sales, expecting a strong spring season.

Cox Automotive Leading Indicators

Leading indicators from Cox Automotive were mixed.

• Leads: Leads are up year over year so far in February on Autotrader and Kelley Blue Book, and leads are up for the month compared to January on Autotrader but down slightly on Kelley Blue Book.
• Dealer Metrics: Unique leads per dealer for new and used vehicles are down year over year so far in February on websites hosted by Dealer.com, and new and used leads are down for the month compared to January. Unique credit applications per dealer on Dealertrack were up 4% year over year last week with the trend in applications per dealer declining slightly week over week.
• Service Trends: Service trends on Xtime relative to last year were stable but remained weak last week, as completed appointments were down 31% year over year.