The Auto Market Brief

What do newly-released May sales numbers, rising hybrid demand, and shifting consumer behavior reveal about today’s auto market?

In this episode of The Auto Market Brief, Host and Executive Analyst Erin Keating is joined by Jeremy Robb, Cox Automotive’s Chief Economist, to break down May sales performance, evolving demand, and the latest data shaping how the market is responding to ongoing economic pressure:

What May sales reveal about market resilience: 
New vehicle sales improved in May, with stronger performance emerging later in the month and signaling continued stability across the market.

Why hybrid momentum continues to build: 
Automakers offering strong hybrid portfolios are seeing gains as consumers increasingly prioritize fuel efficiency and overall value.

How affordability pressure is reshaping demand: 
Rising fuel costs and elevated inflation are shifting consumer spending patterns, with increased interest in lower-priced and older vehicles pointing to continued trade-down behavior.

The episode also explores evolving industry dynamics, including tariff uncertainty, supply chain risk tied to supplier disruption, and how automakers are adjusting EV strategies in response to changing demand.

The Auto Market Brief delivers timely data, clear context, and practical insight to help industry leaders make smarter decisions—what’s happening now, and what’s coming next.

The Auto Market Brief is powered by Cox Automotive. For more industry insights and expert perspectives, visit our Insights Hub at https://www.coxautoinc.com/insights.

Creators and Guests

Host
Erin Keating
Erin Keating is an Executive Analyst and Senior Director of Economic and Industry Insights at Cox Automotive. She brings 30 years of professional experience, including 14 years in the automotive industry, providing analysis on market conditions, automaker performance, and consumer demand shaping the economics of the new-vehicle market. Erin spent 10 years with Audi of America, including leading Audi Motorsport North America, informing her perspective on both commercial strategy and competitive dynamics.
Guest
Jeremy Robb
As chief economist at Cox Automotive, Jeremy Robb oversees the enterprise-level economic outlook, monthly forecasts, client advisory, media briefings and the strategic integration of data from the company’s extensive retail and wholesale platforms. Jeremy leads Cox Automotive's Economic and Industry Insights team, working directly with clients and executive leaders in sales, strategy and finance. He draws on his background helping companies consume data and insights to make better business decisions. He has been focused on finance and strategy for large corporations in the financial services and automotive industry for the past 20 years. Jeremy joined Cox Automotive in 2018 after spending 6 years at Nissan where he led functions in finance and remarketing.

What is The Auto Market Brief?

The Auto Market Brief, powered by Cox Automotive, breaks down the latest trends and forecasts shaping the automotive industry. The show is hosted by Cox Automotive Executive Analyst Erin Keating, coupling years of experience translating data and trends with the data and industry insights of the largest automotive services and technology provider.

Joined by other Cox Automotive experts and outside guests, you’ll get data-driven insights and industry outlooks from some of the industry’s leading voices.​

Erin Keating:

Welcome to The Auto Market Brief from Cox Automotive. Each episode, our experts and special guests break down the latest trends, insights, and news shaping the automotive market. We'll give you the information that truly matters so you can make smarter decisions and drive your business forward. Hello, and welcome back to the Auto Market Brief. I'm Erin Keating, your host and executive analyst here at Cox Automotive.

Erin Keating:

And as usual, I am joined by our chief economist, Jeremy Robb. Hi, Jeremy.

Jeremy Robb:

Hey, Erin. Good morning.

Erin Keating:

Good morning. I know you've been on the road quite a bit, so hopefully you're wide awake for this. It's lots of interesting news. I know we're going hear from you today. We've got some GDP revised reads, some inflation readings that we want to discuss, some trends on used EVs.

Erin Keating:

And then I know you and I both want to eagerly discuss how May sales actually panned out in the new vehicle market at a minimum. Yeah. And for me, guess what? Tariffs, shocker, still part of the conversation.

Jeremy Robb:

They're whack a mole. Right?

Erin Keating:

Exactly. Got some updates this week on that. And then we also have a strike among us right now. So I wanna talk about that, what's happening in the industry as far as the strike. And an unusual or surprising, but not really surprising EV announcement.

Erin Keating:

So I'll be covering those in the industry updates. But let's kick it off with you, Jeremy. As usual, let's tell us what's happening out there in the economy.

Jeremy Robb:

Yeah. So a lot of data has been coming out, and we have a little bit more that's coming out soon too. Well, I guess we'll have to talk about that in our next episode. But pretty recently, we got updates on GDP growth. A lot of people that listen to this and that we go talk to know what GDP is.

Jeremy Robb:

But if people don't, it's really the broadest measure of growth overall in the economy. And it's comprised of consumer spending and investment and government spending and then net exports. So we have exports and imports and all of that. And that's why we talk about consumer spending so much because it really drives, historically speaking, around 70% of all GDP growth. It's still really important overall, but the overall number for Q1 was revised down from 2% growth in Q1 to 1.6% growth.

Jeremy Robb:

And one of the reasons it was revised down a little bit was because the consumer spending read in the second iteration came in a little bit weaker than it had the first. And what we actually saw was that investment spending driven by non residential fixed investment, which is the AI spending line item was actually contributing more to total growth in GDP than consumer spending was. And that was the, I think the first time that's happened for several years, I think going back to like 2023. So, you know, it's a smaller component of it. It matters more.

Jeremy Robb:

Obviously, AI spending is driving a lot out there. But as I talk to people, a lot of people are pretty worried about the economy and the consumer overall. And if you were to see weakness from a consumer, then you're even more dependent on AI spending really to prop up the economy. And I think that's the corollary that a lot of people are worried about.

Erin Keating:

Gotcha. And so does the consumer spending did it go down then in in in relation to the investments going up? And is that is that cause for concern given we're in a an industry that relies on consumer spending? Or what are

Jeremy Robb:

your thoughts? For us, you know, we still see pretty good trends in the automotive market, you know, and not to get into the new car piece yet, but consumer spending is still it's still holding up. And the we measured a few different ways. We also look at some weekly measures of consumer spending. Those are still showing us positive growth on a year over year basis.

Jeremy Robb:

But both in that data and in other ways that you cut it, not going to surprise you, but the spending on gasoline and gasoline station spending is driving by some estimates around two thirds of all the spending growth that we're seeing. So you and you look at that and fun fact for you, I did this a few weeks ago, I won't put you on the spot. But gasoline prices has come down a little bit in the past week or so. But they spent most of May up at $4.50 or beyond. And so if you think about $4.50 relative to where we were prior to the Middle East conflict when it started, that was at $3.

Jeremy Robb:

It's a dollar and 50 a gallon. It cost The US economy $561,000,000 extra per day, just in fuel cost at

Erin Keating:

those prices.

Jeremy Robb:

So yeah. And that's, you know, that's every day. It's it but that's money that could go into saving. It could go into investment. It could go into, you know, buying something else, clothing or food or something for your kid and whatever.

Jeremy Robb:

And so that's the drag. And it's 0.7 percent of daily GDP to put it into a number. So pretty wild, then that's why everyone's really focused on it. Sorry I harped on it so much. That's part of me like I've spoken at so many events this week, all this stuff off the top of my head.

Erin Keating:

No, that's really important. Of course, I would assume that leads us into the inflation discussion because obviously, glass is one of the biggest places where we're feeling it.

Jeremy Robb:

Totally. So the Fed cites, at least for now, Kevin Wash, I guess, is proposing that maybe we look at a different metric of inflation. But there's lots of metrics of inflation. The one that the Fed really centers on is called PCE inflation or the PCE deflator. It was up 0.4% in April.

Jeremy Robb:

And that took the year over year gain from 3.5% to 3.8%. Obviously, that's a pretty long way away from 2%. Like, want to see lower interest rates out there, and you've seen market interest rates rising in recent weeks, and that's all due to inflation. Energy is really driving up a lot of the growth there. The components of energy driving up what we've seen.

Jeremy Robb:

And like we talked about a few weeks ago, we saw producer prices had risen a lot because of energy inflation in the last region we got. So that likely means that you're going to continue to see more inflation in the consumer sectors and driving It's kind of sucking that money out of the economy for energy prices. And so that's the inflation read, clearly did not go the right way for things. So we're going to get the jobs report pretty soon on unemployment trends and things like that. They think unemployment is going stay pretty stable, but, you know, we'll get that data pretty soon and and then we'll we'll have something else to talk about on a macro factor for the economy overall.

Erin Keating:

Absolutely. And I know you had some news on used EVs or some trends there.

Jeremy Robb:

Yeah, I do. Talk about obviously, I think we've talked about EVs a fair amount in this. But I talk a lot with a lot of industry people, and and we recently released our dealer sentiment index and some of the independent, you know, dealers were talking about EVs. Why are they, you know, interested in EVs? It's because they can get their hands on those cars.

Jeremy Robb:

Right. Right? Independent dealers and and a lot of dealers out there are very they they can only sell what they can what they can get to sell. And because of these, you know, growing off lease maturities in the marketplace overall, they can get their hands on them more. They're more interested in it.

Jeremy Robb:

But the really interesting thing happening is because of the gas prices, I think, and then also the correlated to that those newer EVs have depreciated more in the last couple of years. So even if they're a higher dollar amount, they're a high right? On a relative value scale, you know, they're better. And so we've seen we've seen more interest in used EVs in terms of day supply declining both at Manheim and on the used retail market. But right now, the top basically three year old retail EVs are up in price about 6% year over year.

Jeremy Robb:

And Tesla's around 36% of that group for those top 40 ish models. They used to be 50%, so it's still the biggest group of them. But the way we measure that data and kind of like cut it down by a model year

Erin Keating:

Right.

Jeremy Robb:

To kind of center on some things. And the trends at Manheim, I think we've seen the three year old used EV rise in price for fourteen weeks in a row.

Erin Keating:

Wow. Okay.

Jeremy Robb:

And it's really, you know, it's starting to be like, you can see the the like the diversification in the lines, right? From really back starting at the end of March, early April, we started to see normal depreciation for the non EV segment. It's still like higher from where it started the year because we had a lot of spring bounce appreciation, tax refunds, all that stuff. But the EVs continue to go higher. And and so it's just, you know, pretty pretty fascinating to see.

Erin Keating:

Yeah. And to your point, I mean, the fact that Tesla is going down in share of those vehicles reminds us that there's a lot of new EVs in the market. A lot more variety and diversity came into play for consumers. And so I definitely have been harping on that as a reason why people would continue to be excited about EVs even if we know that the demand is somewhat subdued overall from where we've been before. There's just so much more variety out there now.

Jeremy Robb:

Totally. And it's gonna we're just the tip of the iceberg. We are just on our journey to see these, what was leased in the EV market come back to the used market. Right. And that's gonna continue for the next two or three years.

Erin Keating:

Yeah. Exactly. So on the new cars, I know there's a lot of interesting things this month that happened. There's a couple of friends that came out. So wondering what your read of it was.

Jeremy Robb:

Yeah. I mean, the BEA revised up the SAAR rate for April a little bit. So April looked like, I think it moved up to 16,000,000. May came in at 16,100,000. So a little bit better rate.

Jeremy Robb:

In our own internal data, what we've seen in the month of May, last year, we saw tariff induced demand driving March and April really strong. And part of May was strong and then it started to come down. So we were underperforming in our own data, what was happening, especially like in April. But as we move through May, the end of May, we actually were starting to see higher year over year numbers for those weeks. So then the the BEA number at 16,100,000 looked looked pretty good there overall, I thought.

Jeremy Robb:

It's actually risen every every month since January. So it kind of got off to a slow start this year, but looking a little bit better. What have what have you seen in it?

Erin Keating:

Yeah. I mean, well, we saw that clearly the Asian manufacturers are having a run at it right now. Hyundai, Honda, Kia, Genesis, all of them saw rises this past month. Even Subaru saw an increase, which, you know, they had been struggling for the first couple of months of the year, and even they saw an increase. And so it just goes to show that the market is really moving towards value, towards, you know, different hybrid powertrains, etcetera, and, you know, brands that can actually meet the market across across that entire bridge, you know, value, really great value for the car, hybrid engines, especially.

Erin Keating:

I mean, they're going gangbusters. We expected that this year anyway, but certainly, this gas crisis has pushed people even more towards that powertrain. The interesting thing is that we saw Ford is continuing to struggle, especially the F Series. That's, you know, always sort of a a flag out there because we do heavily rely in The US on our pickup sales, our big SUV sales, Ford and GM, obviously, our two biggest, domestic manufacturers in those segments. GM, you know, we'll talk a little bit, later about some things that are happening for them, but they they are, you know, still stable, but Ford was definitely down, which, you know, is a little bit concerning.

Erin Keating:

Toyota was flat, you know, pretty stable, which we expected. You know, they're never really sitting there chasing the biggest numbers or the lowest numbers. They're just steady Eddie because they've got the the full portfolio and, you know, offering anything from sedans all the way up to SUVs and anything from electric vehicles to hybrids to mild hybrids to internal combustion engines. So manufacturers that can do that best are the manufacturers that continue to win.

Jeremy Robb:

Yeah. It it totally makes sense. I I actually looked into some other data for the first time. I hadn't really paid too much attention to it. But, like, the BEA also puts out, this ties right into what you're saying, data on production.

Jeremy Robb:

And they break it down to Canada and Mexico and domestic. And we I mean, we know new vehicle inventories is up year over year. Right? It's up a little bit. So Yeah.

Jeremy Robb:

The domestic year to date is actually down about 9% domestic production is from where it was last year through, I think through March. I think there's a lag of about a month when they report on it. So but Canada is actually down 35%, and they ended last year up 65%. So it wasn't like they were taking it down all year long.

Erin Keating:

Right.

Jeremy Robb:

Right? It's like it's been a pretty big shift so far this year. Mexico is roughly flat, but they ended last year up a lot too. So Yeah. If all of these three are down or flat, Right.

Jeremy Robb:

It's coming from what you just said.

Erin Keating:

Right? Right.

Jeremy Robb:

And so it's like really pretty fascinating. Like, that's why I always think to see all these pieces and how they work in concert with each other and

Erin Keating:

Yeah.

Jeremy Robb:

Talk about what's happening in the auto market.

Erin Keating:

Absolutely. Now it's it's interesting. And, I mean, we we know that there's a couple of manufacturers that we've just been keeping an eye on. Again, like Subaru surprised us. They were on a real long, long, long history of month over month increases, and then they kinda fell off the wagon there.

Erin Keating:

But they brought some new hybrids into market, and any brand that brought more hybrids into the market is just seeing that their share is going up. So, yep, a lot of people asking, you know, oh, are hybrids the new thing? I mean, hybrids have been in the market for a long time. I think there's actually gonna be a point in the next few years where it's ubiquitous and people aren't even really making a choice for a hybrid rather they're just that's the car they're getting into. But it's a good time to be a hybrid manufacturer, especially if you've got it in a couple different segments.

Jeremy Robb:

Absolutely. Yeah. If you're you're I mean, we know, like, you you gotta plan ahead. Right? So a little bit of it's planning ahead and being in the right place at the right time.

Jeremy Robb:

And there's a few of them that are definitely in the right place in the right Yes.

Erin Keating:

Yeah. A couple of them that are always in the right time at the right place despite what everyone else might think.

Jeremy Robb:

But Right.

Erin Keating:

Well, this is great, Jeremy. Thanks so much for the update on the on the economy and where we are. Great to talk about sales. Anything you wanna leave us with before we say goodbye?

Jeremy Robb:

Yeah. The only other thing I I didn't get to it, we're talking about used vehicle values. We have been seeing in the Manheim data for several weeks that some of our older vehicles, like a nine year old and a 10 year old vehicle, are actually some of the strongest performers. And and, like, a a 10 year old vehicle in the in the auction is averaging around $8,000, a nine year old vehicle is averaging around $9,500. But in terms of their strength, in terms of pricing, they're up the most relative to all their units.

Jeremy Robb:

And I I think what that is telling you is that there is a big trade down happening in this affordability thing, and consumers are shopping for it, and now dealers are shopping for it.

Erin Keating:

Right.

Jeremy Robb:

So pretty interesting stuff out there.

Erin Keating:

Yeah. I mean, the good news for consumers out there and the good news for dealers selling these cars is even a 10 year old vehicle still a heck of a lot better than a car that was, you know, than a 10 year old vehicle twenty years ago. Right?

Jeremy Robb:

So 100%.

Erin Keating:

Yeah. But, I mean, it's it's I'm glad there's options for those that really do still need four wheels and an engine that we're still being able to pump out vehicles even if they're 10 years old. So really interesting. Yeah. Well, thanks so much as always for being here.

Erin Keating:

Always good to talk to you.

Jeremy Robb:

Definitely. Great to be around. I hope you have a good rest of your week.

Erin Keating:

You too. So on to some broader industry topics. We have the USMCA negotiations and some other tariff news. I know this is shocking. The volatility around these policies have been killing us for over a year now, and they continue to linger.

Erin Keating:

So, we know that the USMCA negotiations were underway, specifically with Mexico. Canada is still lagging behind, even though Canada officials are actually saying that they are having discussions. Most of the news is being reported that it's really squarely focused on Mexico. But the big news of this past week was what the administration wants to propose for the new negotiated terms of the USMCA, and that is that they want to move to 82% North American content. That's up from 75% that was previously required.

Erin Keating:

And that's significant in and of itself. But another unique thing that they called out was that they want 50% US content. Now, US content specifics has never been called out in the USMCA. So, that is a big change for the manufacturers to be considering, and one that we think that will continue to be a real source of contention or a point of negotiation as they continue these discussions. But on top of that, President Trump actually announced yesterday that they are looking at implementing new three zero one tariffs to the tune of 10%, and they're focusing on forced labor violations as the underlying reason why they would put these 10% tariffs on about 60 nations.

Erin Keating:

Remember that the IEPA tariffs were actually rendered not allowed by the Supreme Court. So, the IEPA tariffs that were originally there, which were otherwise called the reciprocal tariffs, those are now gone from the market, refunds have begun in that space. But Trump wanted to really hold on to a tariff that was, you know, more universally applicable across different countries. And to do that, he had initially put in the Section 122, which held just a, you know, a statutory 10% for, I think it was about ninety days that he was allowed to keep that in. That then disappeared, and they were working in the background to find something else.

Erin Keating:

So the 10% has come into play. A key thing for the automotive industry is to say that these don't stack, at least still, they don't stack on top of the automotive tariffs. So, this is a little bit separate than what automotive manufacturers are going to be looking at. However, it is always important to note when any kind of tariff comes into play, because it squeezes all of the different markets, you know, more so. So, it makes the economic picture for where these automakers are based more and more difficult.

Erin Keating:

So, it doesn't necessarily mean that an automotive manufacturer is going pay an additional 10%, but there are parts, are componentry, there are other aspects of manufacturing that will be impacted by this 10% if it should go through. So, wanted to make sure I mentioned the newest and latest updates in the tariffs. It continues to be a source of a thorn in our sides, if you will. And it creates, you know, volatility in strategic decision making for the manufacturers. So, we will keep you up to date on what we're hearing.

Erin Keating:

Stay tuned. As I like to say, grab the popcorn. It continues to be an interesting little show we're watching here. The second thing I wanted to mention, as I talked about upfront, is that we have a strike out there. And what's unique about the strike that we're seeing is that it's actually at a tier one supplier.

Erin Keating:

It's not at one of the major manufacturers. So American Axle actually had about a thousand employees walk off this week, and they are a tier one supplier, most importantly, to General Motors. And they provide the axle, which is when you don't have an axle, you don't have a car. And specifically, they are very important in the Sierra and the I'm forgetting now what the other car is, but the Sierra and Silverado, as well as two midsize trucks. So, as General Motors is trying to actually push these really high demand vehicles off the line and remember, Ford F-150s are actually also suffering from a production slowdown due to the Novelis fires that came into play and some aluminum pricing and supply shortages, etcetera.

Erin Keating:

This is like the prime time for any of the F-one 150 competitors to be out there in the market and aggressively going after customers. So, really inconvenient for a GM that their trucks would be impacted by a strike at a tier one, right as the moment where they have a potential to try to grab some market share. Now, most manufacturers run-in sort of a just in time inventory situation, and it's been reported that GM has about two weeks of inventory to be able to continue to push cars off the line. But if this strike continues to go on, that could really start to impact their production and, in the future, their sales. We're hoping that this is resolved quickly, but it is an old argument that deserves attention.

Erin Keating:

It is the workers at American Axle who actually agreed more than ten years ago, back in the great financial crisis in 2008, 2009, just before GM was actually facing bankruptcy, they agreed to go way below in their hourly minimum, and they've never gotten back up to that rate regardless of inflation, etcetera, etcetera. So, they're fighting to be able to get back to their pay rate at a minimum. And I think they're actually going for about $8 more an hour at this point. So, we're going to be keeping a close eye on this. Again, we are typically seeing UAW strikes, but usually it's actually at the manufacturer level.

Erin Keating:

So, the fact that this is starting to go downstream into suppliers and really impacting the manufacturers nevertheless is something to keep an eye on. It's something to make sure that we're watching as far as production in The US. And, you know, it just gets complicated because we're also pushing for more manufacturing in The US, right? So, these things kind of come up against each other. And the last announcement that I wanted to talk about, and again, I say it's surprising, but also not surprising.

Erin Keating:

You know, Toyota's consistently been called out as one of the best manufacturers for having a really strong powertrain strategy. They were one of the last to come into the market with EVs. They really stuck to hybrid for a very long time, as we talked about in the conversation about sales. They are always doing well with the hybrids. They've really sort of, I would say, democratized that technology in the sense that people are now looking actively for hybrids because they were so available with Toyota and, of course, then with Honda and so forth.

Erin Keating:

But Toyota has stepped into the EV landscape as other manufacturers have actually stepped out. And we were really excited about what they were doing with their new their next generation technology. And they had announced that that next generation technology would actually be launched with a Lexus LFZC flagship sedan, and they have now canceled that. So it was initially supposed to come out in late twenty twenty six, then they delayed it to 2027, and now they've officially canceled the vehicle program entirely before it even went into production. To note, they are not giving up on the technology that they developed for that particular sedan.

Erin Keating:

What they're just acknowledging is the dynamics that everybody else is acknowledging. The EV demand is soft, and specifically, there's not a whole lot of love in the market for paying premium prices for EV sedans, luxury EV sedans. So, they've decided to pull off on that particular segment, and they will come back into the market still with that next generation technology, but we're probably likely to see it come out in an SUV or a compact SUV or even a truck or something like that, but we're not going to see it in a sedan. So that rounds up some of the big announcements that we heard about this past week that I think are worth noting and thinking about. As always, we are so glad that you have decided to spend some time with us.

Erin Keating:

Please check out all of our insights and updates at coxautoinc.com and stay tuned to the Auto Market Brief for all the high notes in our economy and headlines that pop up for us in the industry. And we are continuing with a lot of our bonus episodes, so we're excited to bring you some other guest stars, if you will, from within the Cox Automotive Universe. Please check us out. Subscribe. Share.

Erin Keating:

Thank you for being here. Thanks for joining us on this episode of The Auto Market Brief. To stay up to date with all the latest news and perspectives from our team of experts, be sure to visit our insights hub at coxautoinc.com.