The Auto Market Brief

With improved access to credit, cooler inflation readings, and stable inventory, what is the outlook for the road ahead?

In this episode of The Auto Market Brief, host Erin Keating is joined by recurring guest Jeremy Robb, Chief Economist at Cox Automotive, to break down the latest economic and industry trends shaping the automotive market. From improving credit availability and easing inflation to retail spending patterns and wholesale vehicle values, they explore what recent data signals could mean for consumers, dealers, lenders, and automakers.

Why credit availability is an important economic indicator:
Lender willingness to finance consumers has reached its highest level in years. This episode explores what that says about market confidence and why credit conditions can influence affordability and vehicle demand.

How better-than-expected inflation data is shaping the outlook:
This episode covers June inflation data, which came in lower than expected, with headline CPI improving and several automotive-related cost pressures moving in the right direction.

What inventory levels reveal about today's market:
Stable overall inventory levels are largely attributed to inventory discipline among top-selling automakers, with affordability challenges being increasingly driven by broader household finances rather than vehicle pricing alone.

The episode also covers wholesale vehicle value trends, growing EV supply in the used market, labor developments involving Hyundai and the UAW, changes in lending policy discussions, and other industry developments that could influence the market in the months ahead.

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 Cox Automotive 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. Welcome back, everybody, to the Auto Market Brief.

Erin Keating:

I'm Erin Keating, your host and industry executive analyst here at Cox Automotive. And as always, I've got our chief economist, Jeremy Robb, alongside me today. Hello, Jeremy.

Jeremy Robb:

Good afternoon. How are you?

Erin Keating:

I'm well. Thanks. It's a it's a nice steamy Friday morning, I guess, or it's afternoon already. So for those of you out there in the heat waves, stay safe, keep hydrated.

Jeremy Robb:

Hot and in some places, very smoky.

Erin Keating:

Very smoky. This is what I've heard. Yes. A lot of my friends in my former hometown of DC were complaining that the air quality is really bad. So I'm glad down here in South we haven't gotten that yet.

Erin Keating:

Anyway, today, as usual, we always start out with Jeremy. So we're gonna start out with the latest read on the economy and some demand topics. I think we've got some fresh data on credit availability, some different trends for inflation, how retail sales are trending this month so far, and of course, the influence of gas on those sales trends. And finally, some Mannheim values as we move through the summer here. And then in the industry section, for some updates on storylines that are getting our attention, We've got some labor woes mixing into the news this past week.

Erin Keating:

Some interesting things that came came out of the Trump administration on lending, so we'll talk about that. And, of course, just a quick wrap up on the June inventory numbers that were reported out this week. So let's start with you, Jeremy. What's happening in the world of the economy and the market?

Jeremy Robb:

Yeah, I wanted to start off today talking about credit availability, which is something our team puts out every month. It is a super important aspect of the vehicle market overall. And a lot of people pay attention to it, but honestly I think a lot more could and would. Like a lot of people that we talk to about this metric, once they start to understand it, they realize what it's kinda saying. And so, basically credit availability, it's not really saying like are we doing more loans or originating more loans each and every month?

Jeremy Robb:

It's like, are lenders more willing to finance people? Right. Various terms of people. And we've actually been seeing those trends be really strong lately. In fact, our numbers in June climbed to the highest level since December 2015.

Jeremy Robb:

And we're seeing that pretty broad across really all types of lender levels there overall. Got longer term loans are continuing to increase. Overall, it's about 31.1% of all loans are exceeding 72. You think about things like negative equity, subprime. If lenders are more willing to finance negative equity or have more subprime, that is helpful to So, the index a lot of moving parts, in general, just my point is that it's moving higher.

Jeremy Robb:

Some lenders I've talked to recently have stated they're more interested in getting maybe a little bit more aggressive into the lending market. I think that should be good for consumers overall. It also tells you that lenders somehow or some way are probably thinking from a risk modeling perspective, it's a decent environment out there. So, I think that's important You know, things like the Manheim Index play into that. If we go through periods of higher depreciation, it causes people to pull back because they're not quite sure about how the collateral is going to move.

Jeremy Robb:

So, just kind of interesting trend, a great data point with something that gets published on our website. So, anybody can go look at it, but it's really important for the automotive industry.

Erin Keating:

Yeah. I find it really helpful. And actually, if we can pause there for a minute, because I know we're gonna talk about inflation, because this is a question I'm sure you get all the time. I certainly get it is, oh gosh, the Fed fund rate, you know, if it's going up or down and everyone thinks that's like a direct correlation to what an auto loan rate might be. But to your point, like lenders are looking at all sorts of things that are helping them decide, you know, if they're going to loosen credit, who they're going to lend to, etcetera.

Erin Keating:

But they also have the handle on how auto loan rates go, and they don't just necessarily correlate it directly with the Fed fund rate. I thought maybe it'd worth a moment for you to just clarify that for folks of how does the Fed fund rate interact with how lenders do determine their loan rates and what might they be looking at additionally?

Jeremy Robb:

Yeah, the Fed funds rate is really isoteric rate for the vast majority of the economy. It doesn't directly correlate to anything that a lot of people do. It's more about your biggest banks in the world and what they're able to do overall. What that does correlate with typically though, our treasury yields, five year treasury yields, ten year treasury yields, thirty year treasury yields, two year treasury yields, and the like, and how those curves, are they upward sloped? How you would think, are they inverted?

Jeremy Robb:

What does all that mean for the economy? Typically speaking, a lender, and you call it any large lender, would be the bank, a capital finance company, or somebody like that. They're in the spread business, right? They're gonna borrow money at a certain spread. They're gonna lend money at a different spread and they make the differential on that each every month through somebody's payment back to them.

Jeremy Robb:

And so as the Fed funds rate moves higher, which is called saying higher, All sensibly, it could put some upward pressure on benchmark rates, which could like the prime rate or anything like that, could raise the level of interest bank would be paying to borrow more money. And then they're gonna lend all sensibly at a higher amount to consumers over there. And in the credit availability report, what that comes in is something we call a yield spread. What is the spread between what they're lending at and what they're borrowing at for consumers? And that yield spread has been pretty high for a while, but we've actually seen some better news on that front.

Jeremy Robb:

So that's one of the things where in the actual automotive market, can see lending rates start to decline over time through that compression of the yield spread, even if actual interest rates aren't really going up. That is a real significant indicator of a lending company's thoughts on risk, right? If they are going to go with a tighter spread or lower spread, it means they probably think the risks are a little bit lower relative to where they had been.

Erin Keating:

Yeah. No, that's great. And again, I agree with you. The Credit Availability Index is really fantastic. So as we always like to do, push people to that Insights page.

Erin Keating:

You'll find that and more that will help answer some of those questions that people have. So of course, that leads us into the discussion of inflation, inflation, inflation, inflation.

Jeremy Robb:

Yeah, there's a reason I put it in there so many times. We were inundated with inflation reports this week. We got the reading on CPI for June, and all the components of that that come around automotive side and things like that too. Then the other one we got was producer price inflation, and those came out two separate days for the month. But we saw headline CPI came in lower than what people thought it would.

Jeremy Robb:

That was good for the market. People thinking like inflation's going down. The year over year CPI rate in June went down to 3.5% from 4.2%. So, better news there trending in the right direction. Energy cost, you know, we knew that was going to drive the story.

Jeremy Robb:

We had seen it in the Producer Price Index report from the prior month come down because gasoline prices, crude oil prices have been falling in the month of June. So gas fell 9.7% seasonally adjusted in June, had been rising sharply in April and May, still up about 27% year over year, that component of it, but moving in the right direction and providing a big relief overall in that metric there. We saw used vehicles prices decline 0.2% on a seasonally adjusted basis. Vehicle insurance cost actually fell in the month too. It's been a big driver of the overall level of inflation for owning and operating automobile for quite some time.

Jeremy Robb:

So, a lot of those factors moved in the right direction. And if anything, they looked a little bit better than what people had thought for them. So that's good. On the producer side, we also got good news there. It fell in June, down 0.3%.

Jeremy Robb:

It was the first decline we had seen since sometime last year. Almost entirely driven by those energy prices there. Goods were down 1.4% because gasoline and crude petroleum rates were down about 12. But the one thing in the PPI report that's actually pretty interesting. Right now we're seeing gas prices go back up because of the conflict in The Middle East has come back and prices are heading back more towards $4 per gallon.

Jeremy Robb:

That's something we have to factor into inflation expectations. But the other thing, even though the overall PPI number is coming down, we're still seeing components from the AI spend manifest themselves as pushing prices a little bit higher from thinking about things like chips and electronics related sectors and all. So, that's one of those things where some big picture thinkers about broader inflation terms have said AI might be inflationary at first and then becomes deflationary. A lot of it is driven because they're all driving up the cost of chips and everything alike, they go into producing all these huge components that are needed in data centers and to process all of that. So just kind of a bigger picture aspect of overall inflation and where that is, but it's getting better.

Jeremy Robb:

I'll be interested to see the CPE data when that comes out, maybe next week. I don't know the top of my head when it is.

Erin Keating:

Yes. There's a lot of data. And the PPI index or the producer's price index, I think there was also some conversation to your point, like, AI is driving up inflation, and it's like those chips and everything. People don't realize that when you find out that your iPhone, you know, they've announced that's gonna be more expensive, and laptops gonna be more expensive and things like that because they're pulling chips to the the AI infrastructure versus, you know, putting them into consumer products, which, of course, then makes consumer products go higher. So yeah.

Erin Keating:

Somebody just is there.

Jeremy Robb:

And they're building out those products and your iPhone might operate its own singular LLM model at some point. Right? And so it's got to be more robust to do that too. It's just another arrow in the quiver of the inflation story and how it pulls out across the economy.

Erin Keating:

Yeah. And it really holds to what you were talking about in the mid year review is just remember, like the whole share of wallet is being impacted. You know, lot of people like to look at the vehicle price, automotive price, you know, the average transaction. And oh, gosh, it's so high. But yeah, just remember, like all of these things are more expensive because of inflation and Yeah.

Erin Keating:

You really eat away at that household budget. So how about retail sales though?

Jeremy Robb:

Yeah. They rose in June overall. I won't spend too much time on it, but it is an interesting storyline. Gas station spending has been really driving that number higher. And we've talked about it a lot, consumers spend more on gas, it means they spend less on other things.

Jeremy Robb:

So the big story retail sales are still higher overall in June, but only by 0.2%. Gas station spending remains up 20% year over year, but was down 5.3% versus the prior month. So pulled that down. But they also break out automotive dealer and parts spending and things like that. And we also saw that was a bright spot for the month, some of the strongest gains we've seen since last summer and rose for the second consecutive month.

Jeremy Robb:

So a lot of that is moving as expected. I think the aspect of the auto side is pretty interesting and see where some of that plays out. We saw pretty strong rates of sales in June on the new car side. So I guess we shouldn't be too surprised at the strength of that component of the the report.

Erin Keating:

We still haven't seen the finals of the World Cup yet. So I know you and I talked about this last time. It's like, sometimes it just you just need a couple of good things out there in the atmosphere to make you make your spirits rise and get the country all singing from the same song sheet. USA is no longer in the World Cup, but still, it's a pretty big finale this coming Sunday, and it still has a lot of people feeling good. And America two fifty celebrations continue this month, and so hopefully hopefully that signals that July will still be an optimistic month.

Jeremy Robb:

We were all watching it from a bus the other day traveling, and it was pretty funny. Everyone everyone had their cell phone out watching. I was like, man, it'd be great if somebody invented something like a big screen where we could all watch it together. You know, it's just funny. Everybody's like individually tuned in.

Jeremy Robb:

Everybody's at a differential in time of five seconds.

Erin Keating:

Yeah. Exactly.

Jeremy Robb:

You know?

Erin Keating:

So Yeah. I had it playing in my car while I was driving to the airport. Talk about distracted driving, but I was I was more listening. But traffic was really bad. So whenever there was something interesting it's interesting.

Erin Keating:

Even when The US isn't playing, everyone seems to always still have, like, a favorite in every match, which is kind of

Jeremy Robb:

Oh, yeah. Absolutely.

Erin Keating:

So who who are pulling for? You wanna you wanna admit it? Who are pulling for on Sunday?

Jeremy Robb:

I don't know. The team I really wanted to be in, it lost the other day. So Who would that? Just gonna enjoy it from a atmosphere of whomever somebody wants to win, I wish you the best.

Erin Keating:

Yeah. I hear you. Yeah. I think I'm I'm rooting for Spain only because Mbappe got pulled out a little early, and I would have loved to see Mbappe and Messi continue to battle it out for the golden boot. But, you know Yeah.

Erin Keating:

I mean, Messi, yes. Okay. He's the GOAT. But Mbappe, I think, is gonna end up being pretty fantastic. But nonetheless, I'm excited.

Erin Keating:

We got an f one race in the morning and World Cup in the afternoon. It's gonna be a good Sunday as far as

Jeremy Robb:

Yeah. You know? It's nice and hot. If it was to stay inside and watch the TV.

Erin Keating:

Exactly. Well, I think you also wanted to just touch on Manheim pricing trends. I did. Month movie was out. So what's going on there?

Jeremy Robb:

Yeah, that just came out this morning. And the reason I wanted to talk about is because wholesale values have been really strong this year for most of the year. We started off the year strong. We probably tempered the rate of growth seen because of the Middle East conflict, like the tax refund story was really what was driving a lot of that. But we've seen a lot of things like older vehicles, the inflationary trends in those, the index trends, how we monitor those prices, they've appreciated more than they normally do.

Jeremy Robb:

In the first half of July, we've seen prices come down quite a bit more than they usually would. And so, on the surface, a lot of people, it looks negative, this is the whole reason I want to talk about it. But, I don't really foresee it as negative. Mean, it's really, they're just values are like anything. And so, if they get too far above trend, then they typically will correct and get back more towards trend.

Jeremy Robb:

That's, in my opinion, what they're doing now. We're still up 2% year over year as we move through the back half of the year. I think there's some reason to think on a year over year basis, we'll see some strength there too. So values are coming down, maybe a little bit more than they normally do. A lot of that is just getting us back towards where we were, and we haven't talked about EVs much this time, but EVs made up over 4% of all the vehicles comprised in the movie, but we curtail and curate that data set so that it matches things, we can really measure pricing trends.

Jeremy Robb:

But it was the first time it ever had been at 4.1% overall. So, a sign of continuing off lease supply into the marketplace overall. So, small but growing.

Erin Keating:

Yep. Well, I was just with a big group of independent dealers this morning, and I'm sure that they will welcome the news that they can maybe access and acquire vehicles at a slightly lower price. So for them, it's probably good news.

Jeremy Robb:

Yeah. And they seem to be pretty from the data we've seen, independent dealers seem to be pretty interested in EVs.

Erin Keating:

Yeah. We had a whole discussion on it.

Jeremy Robb:

They're the supply they can get their hands on.

Erin Keating:

Funny what a year or two can do for that discussion because I will tell you two years ago when I was speaking to the same group, used DVDs were were not a thing and not a conversation you were interested in having. But now available inventory and good, and the gap between that and an ICE vehicle is is really starting to trim, starting to get smaller. Definitely Definitely. Good things for people to look out for. Yeah.

Erin Keating:

Well, that was a bunch, actually, considering we thought it might be a little bit of a light conversation. I think we covered a couple of things and maybe offered additional edification on some topics. So anything else that you want to tell us before you sign off for the day?

Jeremy Robb:

No, I don't think so. Know, we're in the middle of the summer. A lot of things, regardless of the data that keeps coming, things slow down in the summer. People leave. They go on vacation.

Jeremy Robb:

They do other things. They're thinking about getting their kid back to school. And by and large, those trends show up sometimes as the summer doldrums. But I think it just means things are treading water and, you know, fairly look pretty normal overall. So.

Erin Keating:

Sounds good. Well, in that case, then why don't you get off to your summer weekend and thank you so much for making time for us today and we will talk with you in two weeks.

Jeremy Robb:

Sounds good. We'll see you soon. Great to be here.

Erin Keating:

Okay. So now just to talk about a couple of things that are coming up in the industry, storylines that again are getting our attention right now. First topic I want to talk about is some labor woes. You know, haven't heard a ton about the UAW. We know that they're coming up on reelections here.

Erin Keating:

But if you may remember, a little over a year ago, might even be closer to two years ago, there was a federal monitor that was assigned to the UAW to look after the accusations around Sean Fain, the president, and how he had potentially been trying to use his position to secure financial benefits for his fiancee and her sister. And then he retaliated against the vice president, Richard Boyer, who supposedly refused his request. So they assigned a federal monitor to that case. What the new news is is that federal monitor has gone back to the Department of Justice and has said, I do, in fact, think that I've found enough here for you to now turn this into an investigation. So the latest news with this is that the Department of Justice has now opened a grand jury investigation into the allegations around UAW president Sean Fain.

Erin Keating:

And it should be pretty interesting because it lands just months before a real contentious leadership election is set up. And it raises fresh governance concerns for a union that's really trying to build on recent organizing momentum and gains. And it's just a little bit of a bummer that it pulls them back into this area of people thinking that potentially the union is corrupt or that there's misalignment in the judgments of those that are running the UAW. So not the best thing for them right now. We'll see where it goes.

Erin Keating:

It doesn't necessarily mean that anything is actually going to happen as a result of it, but they have opened that grand jury investigation. Further far, over in South Korea, but with one of the major manufacturers we have, Hyundai, they are actually dealing with a labor disruption there in South Korea. So it's not a US factory strike. But in South Korea, unionized workers staged a three day partial strike from July 13 to the fifteenth after wage talks had stopped. And additional action is now planned to begin on July 20.

Erin Keating:

And in the meantime, a short rolling strike is going to continue, but it's unlikely to really materially affect The US dealer inventory on its own, especially because South Korean imports are actually still up in June. But because Korea does produce nearly half of Hyundai's global volume and more than a million export vehicles annually, the risk really is to watch whether this continued disruption starts to show up in July import flow or any kind of broader global supply chains. So those two are our labor stories for the week. The next thing is and I just I picked this up out of an article that I was reading, and I went and spoke with some of our folks on our lender team just to say, you know, hey. Have we heard about this at all?

Erin Keating:

But the Trump administration put out some notice that they're pressuring banks to be more closely scrutinizing lending to undocumented immigrants, arguing that deportation or job loss risk could impair borrowers' ability to repay, even though this lending remains legal. So for automotive retail and lending, the practical concern here is that tighter underwriting around immigration status could reduce access to auto loans for some first time and non prime and used vehicle buyers, especially in markets with large immigrant populations, which really just adds an incremental pressure to demand while prompting a lot of lenders to revisit their credit policies and documentation requirements. We do know that we heard about the Tricolor Bank failing earlier this year and last year, and we know that that or we believe that that was tied up a lot with potential loans that were at risk in a largely populated area with immigrants, and that when the deportations happened, obviously there was some significant challenges there. So nothing has been proven out there exactly, but just something to kind of bring up because I know that this is a continuing discussion and we continue to have deportations and such. And so we'll be keeping an eye on whether this ends up putting any kind of pressure on the auto market.

Erin Keating:

But right now, it feels like it's it's just a notice out there and something that was floating around that I felt was interesting enough to bring forward for the week. And then the last thing I'm just gonna touch on is the inventory story. So, again, as a reminder, coxautoinc.com. We publish all of the data points that Jeremy referenced earlier in our conversation. And, of course, what I'm about to talk about, we have our June new vehicle inventory story as well as our used vehicle inventory story up on that page.

Erin Keating:

But June new vehicle inventory remained remarkably stable and at 2,820,000 units. Days supply increased a bit, just up to 80, as the sales pace cooled just a little bit from May's stronger level. But remember, May did actually have more weekends and more selling days, which also included, of course, Memorial Day. So we don't see that as much of a challenge that it was slightly slower than May. And in fact, as you know, we hit 16,500,000 in June.

Erin Keating:

So we're not too terribly worried about what the pace was, but it is what drives day supply. And so day supply did increase just a bit. And as usual, the inventory remains a story of key brands like Toyota and Lexus and Honda having very lean inventory. They always run on lean inventory, we know that, but it really shows why their pricing has been able to hold. They are also on the low end of incentives, Very low, actually.

Erin Keating:

I believe Toyota came in around 3.4% of ATP, which is a very low incentive. So clearly, they're being able to push inventory without having to subsidize those purchases at all. While we do have a different story, things like Stellantis brands, which is also has been the story for the last year and a half, we've talked about the Stellantis Brands, but they continue to work through elevated stock levels, even though their incentives have remained relatively disciplined. And this was something really interesting to me as I was looking through the data. I mean, as an example, Dodge is really sitting on a ton of old metal, so model year '25.

Erin Keating:

But their incentives are still remarkably low considering what their day supply is. So it'll be interesting to see if they at all get the hurry up and feel like they need to actually start clearing some of that inventory. But right now, it's staying pretty static, and their incentives are pretty disciplined. And despite headlines around the $50,000 average vehicle prices, we still see that the largest concentration of inventory and sales activity remains in that 30,000 to $40,000 range. So it just reinforces that affordability challenges are increasingly tied to broader household finances rather than runaway vehicle pricing.

Erin Keating:

24% of the inventory to be exact was sitting in that $35,000 range. So the average transaction price is looking backwards. It's looking at everything that sold the last month. It is definitely reliant on product mix. But don't be dismayed.

Erin Keating:

We still know that a lot of the transacting is happening at that $35,000 sweet spot. So as Charlie said, mid is in in our mid year review. So that about wraps it up for industry headlines that have been coming at us this past week to keep you posted on. Remember to check out all of our insights, as I mentioned before, and our updates at coxautoinc.com. Stay tuned in to the Auto Market Brief for the high notes in our economy and the headlines that pop for us in the industry.

Erin Keating:

We do now have our own landing page on the Cox Auto website. We do also put this out on all typical podcast streams, so we ask that you subscribe, that you share, that you like, and please let us know if there's anything you'd like to hear us talk about or if you have an interesting person to come join us on the show. We look forward to seeing you next week. Thanks for joining us 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.