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Market Pulse is a monthly podcast by Equifax, in partnership with Moody’s Analytics. Equifax hosts bring you interviews with industry experts on the latest economic and credit insights that can help drive better business decisions. Whether you’re in financial, mortgage, auto or another service industry, we help make sense of the latest economic conditions that impact you. This podcast series supplements our Market Pulse webinars, which occur on the first Thursday of each month.
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Welcome to the Market
Pulse podcast from Equifax,
where we break down the latest economic
and credit insights to help you navigate
today's business landscape.
Welcome to the Market Pulse Podcast.
I'm your host, Emmaline Aliff,
leader of the Equifax
Advisors. As a group,
the advisors identify
economic considerations and
leverage data and analytics
to translate into industry insights
and recommendations for you.
The goal is to support our clients during
economic uncertainty while uncovering
growth opportunities and consumer
and commercial credit risk.
Today we're focusing on how macroeconomic
forces are impacting the auto market.
I'm pleased to welcome
our guest, Jeremy Robb,
chief Economist at Cox Automotive,
who is a leading expert on the
auto industry As chief economist,
he oversees Cox Automotives
enterprise level economic outlook,
monthly forecasts, client
advisory, media briefings,
and the strategic integration of data
drawn from across the company's extensive
retail and wholesale
platforms. Welcome, Jeremy.
Before we jump into our main topic,
we'd like to level set with our brief
economic update from economist Justin
Begley. At Moody's Economics.
Global Economic Uncertainty
has spiked. Once again,
thanks to the ongoing
conflict in the Middle East,
oil prices have jumped about $30
a barrel since the conflict began,
and the price of regular unleaded gasoline
has increased by about a dollar per
gallon. Freight costs have also
spiked as a Straight of Harmuz,
which is a key choke point
for the shipment of energy.
Agricultural and industrial goods
has been essentially closed.
Traffic through the stray is down by
about 90%. Since the conflict began,
the supply disruptions have reignited
inflation fears putting central banks on
watch.
In the US the Federal Open
Market Committee kept the
Fed funds rate unchanged
between 3.5% and 3.75%.
At its March meeting last week.
The Fed has kept the policy rates steady
for the last three of its meetings as
it watches how the US economy
adapts to earlier rate cuts,
tariffs. And of course, the more
recent supply shocks like tariffs,
an energy shock is,
is a hit to supply and monetary policy
makers can do little to head off
any of the resulting inflation.
Monetary policy is really a
demand side instrument, therefore,
the policy makers have to
determine whether or not it's
prudent to wait and see
how things shake out.
And that seems to be what the
Fed is doing. For now, though,
the worst effects of the tariffs are
likely behind us in terms of inflation,
the severity and duration
of the oil supply shocks are
at this point unknown. Inflation
expectations, though always important,
have therefore become crucial to watch
the effects of high tariffs and energy
price shocks are coming after
five years of above target
inflation. And while expectations
remain anchored at this point,
if businesses and consumers start
to embed higher inflation into their
own decision making, the Fed will be
forced to once again tighten policy.
Thank you, Justin. Welcome,
Jeremy. Happy to have you back.
And I know we've had you featured
on our Market Pulse webinar recently
in, in January. And then also
I had the opportunity to,
to hear some of the great things
you had to say at you know,
the Auto Week in Las Vegas.
So you're really looking forward to
our conversation today in part of our
podcast.
Yeah, thanks for having me. It's you know,
I know we talked just about a month ago.
That month has gone by really quickly,
, and here we are you know,
and into March now with
everything happening in the
automotive space and lots of
things around the world happening too.
But we're also right in the middle of
the tax refund season which is really a
fantastic time to talk about what
goes on in the automotive market.
Yeah, it, it is a fantastic time. And
so, you know as we, as we head into this,
one of the things that I
found particularly interesting
is when we were going
into the Auto Week I gave a presentation
and we had an extension of that.
So it was, it was submitted six
weeks before my presentation,
and during that time period,
there were 35 substantial changes that
I would've made across the content
. So just over six
weeks. So I, I imagine all,
all the things you're
gonna talk about today,
how much things could have possibly
changed since that time as well.
So yeah, I think if any of us
learned anything from last year,
it was you need to be
nimble mm-hmm .
And your thinking and not just 100%
dialed into exactly one view of what's
going to happen when you talk about
what's, what's going to
happen in the future.
Because things change pretty quickly
right now in the environment that we live
in, especially in the automotive space.
Absolutely. So, why don't we get
started here because, you know,
a lot of things we've been hearing and
and I've heard you talk about it as well,
is the K-shaped economy and
how behavior has been playing
out. And of course, that means a
lot of things across industries,
and I imagine you have your perspective
on what it means for auto that I'm
really looking forward to diving into.
But when we look at that macroeconomic
picture through the lens of Cox you
know, automotive data,
along with you know,
any form of consumer credit health that
we watch through our Market Pulse index
and credit trends, you know, we see
you know, deeply bifurcated you know,
k-shaped with some expansion and
divergence on the tails, especially. And,
I saw some things published with you know,
a dealer track credit availability
data, you know, showing, you know,
a two year high. And I know, you know,
if you go back in time, it may not have,
you know, been that necessarily,
but maybe you can help us, you know,
as the chief economist reconcile and
then expand it wherever you'd like to go.
With respect to you know, understanding
how that could be with you know,
tightening consumer wallets
or loosening of credit.
What are some of the
behaviors you're observing?
Yeah. there's a lot going on. You know,
affordability continues to be maybe like
the number one thing that people talk
about in the United States
as it relates to consumers,
specifically when we talk about
big ticket items like purchasing a
vehicle or a home or something like that.
They're very interest rate sensitive.
You know, inflation acts just
like stock market returns,
do they, it compounds you know your,
your 401k the stock market, you
want that to compound every year.
The problem is that inflation does
the same thing and but we want it to
happen at a lesser pace.
And we haven't seen a lesser pace
for several years now. You know,
actually the average rate of consumer
price inflation over the past five years
has been 4.9% on average.
We started to come down
some in 2024 2025 we
rose back up. A lot of that was due
to the tariffs out there and that,
so that continues to put
pressure on consumers.
A lot of people think that as we move
through the first half of this year,
we'll continue to see
impacts from tariffs.
And we are seeing that especially on
the new vehicle side with pricing and
things like that. And then might,
maybe it gets a little bit better as we
move into the back half of this year.
And, and then going off from there one
of the things that you think about the K
shaped economy I've done quite a bit
of work on this and what it means for
consumers in terms of how much
they're spending on owning their own
automotive or auto automobile.
Having private mobility
access every month.
It shows that the highest end
consumers are, are really pretty good,
you know and, and that
may strike some people as,
as odd given where all inflation has,
but those people have seen
their incomes grow a lot,
and most of them are benefiting from a
wealth effect from a stock market that
even though lately it's been
a little bit more volatile,
it's still very high
related to long-term trends.
That's giving people a lot more money
and assets and things like that.
So the wealth effect is alive at, well,
especially on the new vehicle side.
And you can see that because like,
even though we know the average new
car is somewhere around $50,000 there's
really, you know, quite a,
a strong level of demand or demand
supply balance in vehicles that
are, you know, $70,000 or
above that too. So the,
the top end pretty good, the
middle part of that curve,
and the k you know, they are feeling
impacts of inflation overall.
They have had some, some decent
income growth but it's, it's not,
it's not great for them.
And then the lower ends have really felt
a lot of that impact of that growing
inflation. And that, you know,
in a, in a lot of ways, it,
it really cuts that consumer
out of having their own vehicle.
Now more than ever,
when we look into the total price
of having a vehicle with insurance
and maintenance and repair costs and all
of that when we talk about like dealer
track credit availability and,
and it expanding some of it
is a little bit nuanced in how
that works.
So if we see that lenders
are more willing to finance
lower down payments or negative
equity or longer loan terms,
that actually expands credit access.
So it may be like lenders are showing a
little bit more willingness to go down
into maybe what we would call a subprime
customer that helps expand credit
access and helps that index rise
at the time when we're seeing
some of the stress on
the consumer overall.
Yeah, that's, that's really
helpful. It sounded like the,
you you mentioned and rattled off a
number of economic you know, you know,
either policies or statistics
and all roads seem to lead to
the point of affordability and, and
how that will play out, whether it's
you know, tying into the, you know,
credit availability or
the monthly payments or,
or even things like insurance like you
described, so mm-hmm . I,
I appreciate that.
And we are also seeing the wealth effect
directly in our in our wealth and asset
data. And, you know, we,
we have some things that we'll be
looking to compare notes with you as we
release those upcoming in the
next month or two. But let's,
let's go ahead and and,
and shift then and start,
we're gonna start drilling a little
deeper into you know, you know,
things here from the general nature
that we were just talking about,
but let's jump into the shifting
wholesale pipeline. So, you know,
some of the things we've seen
is that there's, you know,
some traditional pipeline of, you
know, three year leases. It, you know,
could be fundamentally changing or the
recent expiration of the federal EV tax
you know credit aggressively
cooling you know, with,
especially as it relates to the, the
new pure EV market. And, you know,
we're seeing, and you know,
and a lot of this stuff is,
is things that I've observed from,
from your talking around volume
surging with respect to hybrids,
or what about the secondary market?
So there's a lot of things that
are occurring in this space,
specifically as it
relates to that pipeline.
What are we expecting over the next 12
to 18 months as we are looking at various
policy shocks ripple through the system?
Yeah. we are expecting a lot
of changes. But a lot of those,
a lot of the impacts we've seen from
the last several years all stem from the
pandemic, believe it or not. You know,
sometimes we're still talking about
the pandemic and people are like,
is this still a thing?
But for the automotive market
and for the used vehicle market,
it's very much a thing
when we did not produce or
ever make those new vehicles
in 2021 and in 2022,
and then we got more normal in
2023, those calendar years, right?
That pulls supply out of the
entire used vehicle ecosystem at
large, and it will never be replaced.
It's, it's never coming back.
It, historically speaking,
the number one input into the used
vehicle market was an off lease vehicle.
You could see that the three-year-old
was the highest mix of vehicles in the
wholesale market.
It's the highest mix of vehicles
typically in the used retail market.
And so back in 2021 and 2022,
we had lower new volume overall.
And OEMs were really centered on selling
those vehicles where they made the most
money. That also meant they
didn't lease many cars.
So we didn't get many leases on
the new vehicle side. Back then,
most leases are three years old,
so that really pulled vehicles that would
have come back off lease starting in
2024 down. So the wholesale market,
the used vehicle market overall started
to see that number one supply input
declined a lot in 2024.
It was low all last year through 2025.
And now in Q1 of 2026,
we're just getting to the point where
it we're starting to come out of our,
our bottoming period, if you will,
and we'll increase a little bit
in the second quarter of 2026.
We'll increase quite a bit more
in the second half of 2026,
because back in 2023, we
started getting more normalized,
new vehicle sales leasing
rates rose a little bit.
But the thing that really happened
back in 2023 and in 2024 and in 2025
were those federal tax incentives
really drove a lot of EV leasing.
And we saw EV and plugin hybrid
lease rates on the new car
side that were running hotter and
higher than traditional hybrid or
ice vehicle rates. And that
culminated to last year,
in 2025 when we actually
saw for the full year,
pretty much ev lease
penetration rates be over 50%.
So that means that a lot of
EVs are gonna come back to the
market.
We're gonna start to see those increase
in share in terms of like their
share of all lease maturities
coming back some this year.
But it will grow this year in 2026.
It will grow again in 2027 and 2028.
So once we start seeing a lot more of
these EVs come back to the marketplace,
they're gonna stay there for,
for quite some time and be a much
bigger part of the whole ecosystem. And,
you know, that could be
kind of a counterbalance to
what we've talked about with
affordability,
because EVs have depreciated more
than some other vehicles have.
And so we've seen last year
that consumer adoption rates for
used EVs grew.
If that holds in 2026 into
2027, that would be great,
because there's gonna be more of
these vehicles to come back to market.
Yeah, that's very very interesting,
especially with the direction
of where I wanted to to go.
You kind of you're kind of leading me
into my questions. And this specifically,
I'm, I'm, I'm curious,
because you mentioned a lot of things
around like tax refunds the, you know,
vehicles and I've read and seen
that $15,000 vehicles the most in
demand thing right now, both on the
the lower ends, but also people who,
who may not want to you
know, pay, you know, the,
some of the higher prices that they've
been experiencing. But let's get these,
let's take these macro forces down
to the showroom specifically as we're
starting to get into
looking at, you know, what,
what are some things we may expect or
what can people do about it with respect
to that, you know, massive wall
that could exist for, you know,
a large segment of buyers. And we know
tax refunds, you know, as I mentioned,
and you already were describing
that with them being a little more,
they may bridge that that gap a little
bit. But, you know, high financing costs,
interest rates, et cetera, you
know, some potential concern.
How does the some of that
potential fragmentation you know,
alter how a dealer structures
deals or, you know,
partners with lenders on a daily basis?
Yeah. Well,
it makes the relationship between dealers
and lenders all all more important.
It's always important, but, you know,
for the dealer to transact and get
that car to move much of the time they
need a lender that is willing to
finance that vehicle for that customer.
And no two customers are the same,
right? They have different desires,
different down payments, different, you
know, financial impacts and all that.
So looking at all that, it means,
it's a lot of work on the FI
department really to go out there and,
and look through that. You know,
the good part about it is that pro
a lot of dealers a lot of lending
institutions and a lot of
finance companies are leaning
into using some of these
AI tools, you know,
and those AI tools help them chew
through some of these scenarios that
speed up and,
and like really grow the expansion
of being able to look at wider
options down the road. But you know,
you still got to like meet a consumer
where they are in terms of the payment,
right? Can they, can they make that work?
We've seen things where people
are extending terms out. The,
but the problem with extending a term to
get the payment lower is that a lot of
times if you go from a 72 month to
an 84 month or something like that,
you're also gonna have a
higher interest rate. Mm-Hmm.
So that may negate part of the part
or all the benefit that you may
seen from going at a, a longer term. So
there's just a lot of things to look at.
But I do think it is, you know,
lot not lost on me that some of the
ability with the systems and tools we have
from a technological
standpoint help us better
you know,
meet a consumer where they need to be
and look at a range of options more so
than we've been able to before.
Yeah, that's I think that's really you're
really helpful, especially as you're,
we're thinking about you know, consumer
stretching their wallets and, you know,
trying to make that
affordability. There's, you know,
clever things that are being done with
respect to you know, terms financing,
deal structures putting people in
different vehicles. But on the,
on the other side of that, there's the
opportunity for leveraging data. And,
you know, of course, you know, we
we're, we have a lot of you know,
data at Equifax from, you
know, various things that we,
we bring and incorporate,
and we've already talked about
the shifting risk profiles,
and we've seen and observed
that specifically in our
data, you know, such as,
you know, some new, some newer
trends in this space in particular,
like rise in synthetic fraud
rise in credit abuse those types
of activities. Given
your focus on you know,
some of the aspects about, you know,
these economic concerns and
strategic integration of data,
what do you think is a
takeaway that you know,
both lenders and dealers can have
with trying to balance moving metal
with managing those hidden risks?
Yeah, that's a difficult question,
you know for sure. That's why.
I wanted you to answer it, .
Yeah, there's, there's
a lot. The thing is,
and this kind of relates to what
I was talking about just before,
like having some of these tools
that we have that are more advanced,
they're faster, you know,
those are helpful in terms of looking
at a whole picture of the consumer,
looking at what the consumer's, you know,
scores have been in the past from
a financing standpoint, or their,
their credit file, right? Thinking
about where they may be in the future,
you know, even with some of this
fraud that is ratcheting up,
which is probably also a byproduct of,
of these advances in
technology that we have. And,
and then make it more difficult for
people or businesses to really know,
you know, is it real or is it
not real? That kind of thing.
There's all kinds of processes being
put in place to try to you know,
rein some of that in, if you
will. And be diligent on that.
It just means that really every day you
gotta stay on your toes, you know, and,
and you have to, you
really need to build your,
your system in terms of how you're
going to finance a customer,
help this dealer look at this credit
bureau or something like that.
Your system needs to be,
be almost updated every year now to,
to put into place how are, are you,
your teams going to pull some of this
information you haven't seen before
and utilize some of these
tools to help you make
better decisions with the data that you
have in front of you each and every day.
You know,
my team at Cox Automotive
we use ai we talk about it
weekly have people trying to like,
look and see what we can do with it.
It's basically changing
the way that we work.
I can't imagine that it's not
changing the way lenders, dealers,
you know, groups of people
and teams are working as well,
but no one's got the playbook
written yet on it either.
So we've gotta be in a space
where we're open to adapting
and adopting these new tools
and also rewriting how they
integrate with our past to stay
on top of what's going on right
now.
Yeah, I couldn't agree, agree more
with you about the, the aspects of ai.
There's been a lot of movement
that has occurred there.
And so I think at least knowing
where you stand is probably the,
the thing now is to say, we're exploring
it, we're doing this, but of course,
you know, time will tell with respect
to the overall impacts. But let, let's,
you know, you mentioned all the
things we've been talking about.
I wanna understand also what is the
impact on the dealer's lot in particular.
So if we think about those
factors, like what do you,
what's gonna dictate who wins and loses
on inventory mix and pricing strategy?
Yeah. you know, the,
the vehicle market has changed a lot
over the past several years. You know,
we talk about the influx of EVs there,
that's one component of it. You've
got this, you know, plugin ev,
vehicle volume that's different to,
you have to charge those
vehicles. So, you know,
dealers have had to get used to this,
but we're also seeing still a lot of,
a lot of adoption and
growth in the hybrid market.
Your traditional hybrid market, very,
very strong marketplace overall.
And we're still seeing that ice
marketplace decline a little bit.
Some of what's happened on the new car
side is that really we pulled back in
terms of new car sar, our,
our estimates for this year,
that it's gonna be down a little
bit on a year over year basis,
but you think about it impacts
affordability, where consumers are,
how high these new car prices
are, you know, that we're,
we're in this market where that
may limit what new vehicle sales
are happening.
But it's also like basically putting
more demand into the used marketplace.
We've seen more higher
income or upper middle income
consumers moving down the chain into
the used vehicle space. You know,
that helps. Things like depreciation,
it slows down depreciation curves.
When you have high demand,
you usually have prices that are stickier
on the upside on that kind of thing.
And then you've got situations
where, and this matters too,
like, you know, you think the,
we're talking about the total cost of a
vehicle and insurance costs have gone up
a lot. Maintenance and repair
costs have gone up a lot too.
And a lot of consumers have put
that cost that, that, you know,
fixing that vehicle the
big piece off for a while
they're maybe at a point where
they can't do that anymore, right?
Or it just doesn't make financial
sense in the realm they are.
And so maybe they need,
it's time for them to go change
out and get get a new to them
used vehicle,
or maybe they're going to use some of
their tax refund money to spring for that
big repair in the car too. So you know,
anytime we structurally increase
the price of a new vehicle
I contend that we create a
new used vehicle customer.
And last year when we had some of
these tariffs and they're, you know,
impacting the price of vehicles
in 2026 still from that because it
operates on a big lag effect. You
know, you, you increased demand on the,
the used car side.
And so the used car market from a
supply standpoint continues to suffer a
little bit from those off lease
maturities we were talking about.
But there's a lot of demand there still,
and it's a really robust
part of the marketplace.
And I expect that that's gonna continue
to be that way for, for quite some time.
Yeah. I, that, that makes sense.
And it is it the curiosity here
then as we drive into like the, now,
what the first thing I'm, I'm interested,
but is understanding how you're
gonna spend your tax refund .
? Well, I don't
know if I'm getting one.
We'll see if I do
you know I have a daughter
that's a freshman in college,
so that I very well may
go to something like that.
So I don't have any, any big plans.
I will tell you in our data that at
Manheim though mm-hmm .
We are expecting to see a very
strong impact on the mm-hmm.
The used vehicle market. And,
and that's coming through in terms
of demand on the wholesale market,
and then pricing levels too.
So I believe the industry is
very bought into expecting to see
a, a strong, a strong spring market.
And one thing we haven't
talked about it explicitly,
but I think matters a lot
for tax refunds this year.
Was that part of the increase that a,
a lot of consumers are gonna see are
from those salt deductions mm-hmm
.
Typically those really are more
applicable to a little bit of a higher
income consumer.
And a higher income consumer has a little
bit of propensity to file their tax
refund later in the tax refund
cycle or tax return cycle.
So that could extend the time
period that we see this benefit
from tax refund season against where
we typically see it in other years.
Yeah. I was hoping to get a new guitar,
but I'm paying for college as well.
.
.
Yeah. So what I thought I,
you brought up a couple things there as
you were as you were thinking about that
from an impact standpoint.
It's just, you know, the,
which made me think about some
of the high level you know, how,
how do you recommend bringing
in these macro concepts to micro
day-to-day execution? And I, the reason
I'm asking you is most people, like,
if they ask me about that question,
I I send them your way, .
And so I'm just curious
where you where would you,
where would you take that besides,
because you can't send 'em to yourself.
.
The thing about macro trends
is that seasonality is
real. You know, there are,
there are times of the year
that are stronger times of
the year that are weaker.
The new car market is the weakest in
January, typically every year. You know,
it gets better as we move into March.
March is the fiscal year in for
a lot of these Japanese brands,
you know, Toyota, Honda, Nissan.
So that usually makes March
a pretty big time of year.
I say that not to talk about what's
happening right now, but to say, you know,
you need to maybe center your focus
on the, over the next quarter.
Like what are some of the big
trends that are happening?
Like we're in the spring market,
it's tax refunds, we've got this,
usually get this big push
from Asian brands, right?
Summer sometimes tends to
be we have another like push
into the August timeframe
kind of like end, end of summer, back
to school, whatever for whatever reason,
you know, that can be
a stronger point too.
And then usually in Q4 is a little
bit weaker. And so, you know,
it's really hard to plan your
strategy and tactics around a year out
because of,
I think we all have and the
dealer community has gotten
really good at this too
to be nimble, you know,
especially over the last year with
all of the tariff administration,
you know, anything that could
come at you kind of any, any day.
And we've seen that already
this year in 2026 too. You know,
everybody has learned to adapt
to that as best they can,
but having a viewpoint over
knowing where we are in the cycle
within a annual period, really
getting geared up for, okay,
over these next three months, I think
these things are gonna matter a lot to me.
You know,
and really working that into
your own process as kind of
a guiding force I think is something
that could, could help a lot of dealers
out there. So being a little bit more
intentional and practical with your
strategy like almost quarter by quarter.
Hmm. That's, that's such a great
recommendation. Especially, it's,
it's kind of like a health check.
It's like you, I mean, you, you,
they recommend servicing vehicles at
a certain interval, you know, should,
should service their portfolios
the same way. Yeah. Yeah.
So when we look at you
thinking about, you know,
relying on solely on legacy metrics
or other like 30 day supply model
doesn't seem like it's enough anymore
based on the things you were describing,
the amount of iterations
that, that are recommended,
especially leading into things
like incorporating ai et cetera.
And, and there's so many things that
can happen from like the, you know,
industry first analytics tools.
And so when we think about
where that is, like what,
are there any types of data that you
recommend looking into know whether it's
like exact recommendations? I'm
not sure if that's the you know,
specific detail that we
need, but it's more like,
what are the types of data to look into
or any forward looking indicators that
could be brought into that regular
ongoing process you described?
I've been in the data and analytics
side of the automotive business
for six or seven years now.
At, at Cox Automotive before,
before I, I came, I was kind
of doing it for Nissan son.
Anyway, my point is, you think about
over the last like 15 years, you know,
we have really as an
industry kind of broken the,
the mold of everything
that we can look at.
And over the past couple of
years, that's sped up a lot.
Our team has developed a lot of
things related to lease equity.
I know a lot of dealers have had that
and the ability to look at it within,
like what is on their books.
But we kind of have an industry view
of it that helps guide, you know,
a lot of things like,
like how many vehicles are gonna return
to market off lease versus being bought
at residual value, things like that.
We did the same thing on the retail loan
side where we kind of mine retail loan
equity and see what those trends do.
And we hear dealers talk
about trade-in or negative,
negative equity rates of
trade-ins and, you know,
we can kind of like push that back to
where it fits into some of the things we
see too.
And I just say it because
basically we're all awash in data.
We have to have information.
A lot of the things we've
built are very informational.
I think a lot of the things, whether
it's dealer groups, lender groups,
risk groups,
anybody in automotive or business over
the past five years have developed a lot
more tools to look at
things. But you, you need,
you really need to stay on top of all
of them or look at the ones that matter
more either to your specific
business dealer, lender, whatever,
new car used car, you know, high
end vehicle, low end vehicle,
things like that. What
matters more credit me,
whether it's credit metrics
or day supply or turn
rates or interest rates.
There's all kinds of things.
And then use these newer
tools like AI or things like
that to really help you
synthesize that information.
You know, and I think a lot of
us are still trying to figure out
the best application for that, which
ones matter the most. But right now,
you know, we, you can't
just look at one thing.
You kind of gotta look at it all
and you can run, you can, you know,
you can run kind of statistical models
in your own business to say, you know,
these things correlate
better with my customer base.
But as we probably think about
it with all these EVs coming
back on the used car side, you know your
customer base may change some or your,
your vehicles that you have for sale
may change some of the next couple of
years. So, I, i, not to
sound like a broker record,
but I think being, you know,
kind of quick on your feet and nimble
using some of these analytical tools that
we have are just really
paramount for your everyday
managers out there to help you
guide where your business is going.
Yeah. I, I would say it's more of a,
something I wanna listen to on
repeat versus a broken record.
because That point hits home
to a lot of these things. And,
and so I, you, you mentioned something
about you know, things, you know,
coming off lease, et cetera.
And so I'm specifically interested in
the potential electric vehicle wave
that might happen. And,
you know, how, how are,
how do you think that's a strategy
should pivot potentially to be able
to successfully price, turn,
or profit off of the, you know,
incoming incoming amounts
of used vehicles that are,
that are expected and especially
now that buyers can they
aren't necessarily able to rely on the
federal tax incentives to offset some of
the costs like in the past?
Yeah. really good point there.
I talk with a lot of big dealer
groups and I had one of them
publicly traded not too long
ago. At the end of it, say, well,
so you're basically telling me
I I have to go sell used EVs.
And I was like, yeah, I
mean, kind of, you know,
if if you're not moving towards
that this year and into next year,
you're really going to kind of be trying
to work with a little bit of a hand
tied behind your back. And I say that
from a supply standpoint, you know,
the supply into your newer used vehicles
anywhere from a two to 4-year-old has
historically been driven by that off lease
product. Off lease is starting
to come back this year,
but it's really, the growth is
going to be driven in the EV market.
And we just talked about
lease equity, you know,
lease equity for traditional ice vehicles
and hybrid vehicles is actually a lot
higher than it is for EVs.
So there's maturities in like
lease maturities and then
there's the return rate.
How many of those actually come back
to some type of wholesale environment?
And that is driven a lot by
those lease equity rates.
And so having higher ice hybrid lease
equity rates mean those return rates will
be a little bit lower,
also means they're gonna be
higher for EVs with that negative
lease equity. So you're gonna see
a lot more of those. You know,
consumer education is a big thing.
There are a lot of dealer groups
that have been against this.
There are certain parts of, you know,
the United States where you
have to travel a lot and
you know, EVs probably aren't
like the best option for that,
or the weather's really rough
or something like that. I,
I totally understand that, and I'm
not, I'm not saying that by any means.
But as someone that had one of
those original leafs you know,
back in my days at Nissan
that got about, you know,
65 miles on a charge on a
good day the vehicles that are
coming back now are vastly
different than those.
And there a lot of 'em are Teslas, you
know, they've got a lot more range.
But, you know most u ev used EVs,
if they're getting somewhere around 200
miles, that's pretty good for people.
It'll get you a lot further
than you thought it would.
The battery health has typically
shown that it's held up a lot more.
And the data we have so far right
now also shows that those batteries
are lasting for quite a bit longer than
a lot of us thought they were going to
when they were originally made,
which means that the car is going
to be around for longer now,
the car doesn't need as much servicing,
which is part of the reason
that dealers maybe not,
not be so, you know,
high on it because they can't get that
consumer to come back and do oil changes,
things like that. But they do
choose through tires pretty quickly.
And, and they will need, you
know, those tires done more. And,
and so I think there's the
industry we just kind of,
this is coming whether we
like it or not, and, you know,
there's gonna be winners
and losers out there and,
and there's gonna be pockets of
the us where it can be adopted
more in pockets where it's adoptive less,
but you generally see it
like the spiderweb, right?
Growing across an adoption, even in,
in places where it hasn't been so high
before starting to grow. But it just,
it takes time. And, and
once this starts coming,
like I said, in 2026, we're gonna be,
we're gonna see at least through
2028 very high levels of,
of off lease maturities for EVs.
Yeah. It's, it, it, yeah, I, I
agree with that. And it becomes,
it becomes interesting, you know,
I have a friend who purchased
an ev maybe a year ago,
and then they moved locations and at
the new apartment that they live at,
they did not have a charger.
And so it was a very interesting situation
that it wasn't one of those things
just like, what is the
infrastructure set up?
You talked about the distances where
things are, et cetera. It's a very,
it's very complicated as we're moving
through some of those things as,
as infrastructure continues to build.
But yeah, ahead, look forward to,
to seeing it as well. So I,
I'll close out with you know,
I I guess you described the, you
know, the environments you know,
could potentially improve for
the second half of the year.
What leading indicators should dealers
be watching to ensure that they're
positioned to capture that momentum
as it as it potentially arises?
Yeah, I mean, you know,
it's, it's early March.
We're gonna continue to see
tax refunds come in. You know,
as we talked earlier in the podcast,
consumers have a lot of demands for
where their tax refunds are gonna go. So,
you know, we're expecting to see pretty
good translation from consumers to
vehicles new and used in terms
of the purchase rates that
will be really key to watch,
like how those ratchet up
over the next several weeks.
So seeing like what happens
with tax refunds, are that,
is that translating into
what extent over rates
from other years because it's
seasonal, right? So, so do,
do we see that translating to
vehicle sales that I matter a lot?
One of the things we had just started
seeing that really is gonna matter a lot,
you know, the fed cut rates
three times last year.
So the Fed funds rates coming down,
not expected to see the
Fed cut again until June,
and then the second half of the year.
Some of these things with like the,
the Supreme Court ruling
against the tariffs,
if we see a lesser impact
on the economy from tariffs,
meaning that we see lower
levels of inflation, that
takes time to come through.
If you start to see that in the monthly
data though and how people talk about
that, especially in the
second half of the year,
I think that does free us up for
seeing a little bit more you know,
fed cuts to the downside mm-hmm
. In terms of rate impacts.
And that's the stuff it takes,
it takes a bit when the Fed cuts to see
it into mortgage rates or to see it into
used or new vehicle interest
rates, how that transpires.
But those are things that really keep
your eye on. And, you know, just a,
about a week or so ago,
we saw the 30 year mortgage rate go
under 6% for the first time since
September of 2022. And that
doesn't sound like that long ago,
but it's three and a half years ago. Yeah.
Now. So we've had these higher rates.
And, and one of the really interesting
things about automotive is that,
you know,
there's probably a lot of pen
up demand for people to move
houses, right? Or to buy a
house or something like that.
And there's a lot of correlation
between buying a vehicle and when
you move and home. So if
we see mortgage rates,
you know, continue to come down a little
bit, drive a little bit more activity,
and the mortgage side, people
moving, things like that,
that's probably fairly simulative
for the automotive market as well.
Well that's about what we had today.
So I do really appreciate your time.
Hopefully we can check back in midway
through the year to see some of the things
and,
and do some comparisons of
what modifications would
you recommend at that time.
So I wanna thank you again
for joining us today,
and for our listeners who would like
to learn more, where can they find you?
Yeah, we have our, our Cox Automotive
Market Insights Newsroom page.
That is the best place to go. We
publish a lot of things every week.
Me I have a team, all kinds of
stuff that we put out there.
You know, we do regular things.
At the end of this month,
we're going to do a webinar for
about an hour and then we do
quarterly calls on the Manheim
Index and things like that.
So whether you dial in and can go and
listen to that a lot of people just
download the presentations that
kind of stuff. We know that too.
But we're out there really every
week trying to bring the best
information available in
the automotive market.
And I would encourage everybody to just
go read up on that as much as you can.
Yeah, I, I would encourage it as well.
You're definitely obviously a go-to
resource for us as we explore those topics
as well. So thank you so much
for joining us again, Jeremy.
Yeah, thanks for having
me. I appreciate it.
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guidance only, and are subject
to change without notice.
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