The Auto Market Brief

Soaring gas prices, ongoing geopolitical tension, and shifting rate expectations continue to collide with a key spring selling period for the auto market.

From fuel price volatility and interest rate pressure to evolving consumer shopping behavior and industry cost complexities, this episode unpacks the dynamics shaping demand, market resilience, and decision-making across the automotive landscape as we step into the second quarter of the year:

Fuel prices, sentiment, and near-term demand signals:
Oil price increases tied to global conflict are lifting fuel costs and weighing on sentiment, with national averages inching closer to critical thresholds. Despite this, the market has not yet seen a sharp sales slowdown, with regional differences, income dynamics, and timing effects likely influencing consumer behavior.

Consumer shopping behavior and market resilience:
Despite economic pressure, new and used vehicle sales remain relatively strong. Erin Keating and Jeremy Robb discuss tax refunds, the spring sales tailwind, and rising online interest in hybrids and EVs as consumers adjust rather than retreat in response to higher operating costs.

Rates, tariffs, and industry pressures:
With benchmark rates moving higher and tariff impacts lingering, the conversation explores how financing conditions, wholesale market signals, production decisions, ADAS repair complexity, and autonomous vehicle investment are reshaping cost structures and strategic planning across the industry.

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.

Erin Keating:

And as usual, I'm joined by our chief economist, Jeremy Robb. On this episode, we'll get to the latest updates on oil price volatility, rising interest rates, and strong wholesale vehicle values, and what that combination means for the auto market right now. And then, of course, we'll look at how some consumers are responding on the shopping side, plus some key industry developments beyond pricing and rates. Just as a reminder, we did have our Q1 quarterly call yesterday. So, Jeremy, I know that you're going to be covering a couple highlights from that call.

Erin Keating:

But for anyone listening to this podcast and is interested in seeing real details about what we're seeing in the market from quarter one, make sure that you're checking our website, coxautoinc.com under the insight section to find a link for the replay. But Jeremy, welcome. Good to see you. Let us have it. What's happening?

Erin Keating:

We've got a lot going on in this geopolitical climate.

Jeremy Robb:

Yeah. Yeah. You mentioned it. Our our call yesterday, we talked about a lot of things with a lot of different members of our team, you know, kind of espounding on what's going on there. We all everybody is really concerned with what's going on in The Middle East and how it's impacting what's happening across the automotive market landscape and the economy right now too.

Jeremy Robb:

You know, so far this month, we've seen gasoline prices. They're up 34%. They have yet on a national average to tick over $4 a gallon. So we haven't yet seen that. Actually, this morning, they ticked down by, like, 2 hundredths of a cent.

Jeremy Robb:

So just barely, but that's something that we need to, I think, keep in mind. You know, $4 a gallon, when we get above that on a national average, that really is meaningful. And we've started to see consumer sentiment tick down a little bit too. We're down about 7% so far this month also. So we've gone a little bit more negative over the past week or so.

Jeremy Robb:

And, you know, we've kind of been waiting for that. I know you, me, our whole team has talked about what's going on there. It takes time. Consumers, you know, I think part of it's fatigue, but part of it is just like, you know, you can feel the price of the pump pretty immediately, but for it to seep into everything that is happening in in your world, it just takes some time. You know, our some of our analysts have put together some things that looks like it takes about six months to really see a big impact overall.

Jeremy Robb:

That sounds probably right when we look at history and economic shocks from oil and what goes on there. So all of that to say that as of our latest data points, we have not seen a big slowdown in the market, you know. So that surprises a lot of people that we're at we're at a really strong time of the year. March is a really strong month for the new car market with the end of the fiscal year for a lot of the Japanese OEMs and also strongest part of the year for the used market. And we've seen sales trends that are, you know, have been ticking up for the last four or five weeks for both new and used.

Jeremy Robb:

Used is outpacing last year by a little bit. New is under pacing last year by a little bit. So that's that. But then Manheim trends are still really strong there too. And we can look at that every day.

Jeremy Robb:

I looked at it this morning just to confirm, we are not seeing a big slowdown there. So regardless of all the things, and we all get asked this a lot, the data has not yet told us that we are seeing material slowdowns in the automotive market. That could change next Monday morning, but we'll see.

Erin Keating:

Right. I mean, and you said a couple of things in here that make me think about the fact that, you know, we do talk about national averages and like you were saying, the national average for gas is peaked over that $4 mark. But as we know, certainly, like in California, there are people there who are seeing $8 a gallon. Right? So regionally, people might be feeling this differently.

Erin Keating:

Dealers might be feeling this differently in different areas, but we we keep a a highlight of the national averages because that's the best sort of guidance for us to think about. Is that right? Or do have you seen sort of real regional differences in in performance?

Jeremy Robb:

Well, yeah. I you know, $8 a gallon is really expensive. The people that are seeing $8 a gallon are probably more predisposed to seeing it be $5 a gallon. So Right. Does it matter the same to them as a consumer that pays $2.50 seeing it at 4?

Jeremy Robb:

I don't know. You know, that's politics is local. Economics is in some degree local too and how it impacts consumers out there. But that's a real salient point. You know, it's not felt the same way.

Jeremy Robb:

It's not felt the same way across the economy anymore. We know the economy is more driven by higher income level consumers. The stock market, although it's been a little bit volatile lately, it's not come down a lot. So the wealth effect is probably not yet a negative driver of what's happening in the economy. And the people at the top end of the curve, probably not quite as worried about those gasoline prices.

Jeremy Robb:

And that's why it's a very complicated equation to figure out how it's really going to seep into the economy at large.

Erin Keating:

Sure. And today, of course, we're standing on the one year anniversary. I believe it's today or tomorrow is the nope, today. One year anniversary of section two thirty two tariffs being announced in the automotive industry. So we know that sort of from this moment forward, the data is gonna look a little bit interesting year over year.

Erin Keating:

I think we've talked about that a little bit because of the lumpiness of how sales happened last year with the pull ahead. So I assume as you keep an eye on the year over year trends, maybe it's not as relevant as if you are just following sort of week over a week or day over day. You know, as you say, we get to see stuff daily. Are you seeing anything that's telling us from a more weekly or month over month changes that is making us feel confident or less confident? You said new sales were a little bit down, but I wasn't sure if that was year over year or a week sort of on a steady base.

Jeremy Robb:

New sales are down a little bit year over year. And so to your point, when we talk talk about the comp, on a year over year basis, that's going to get more difficult. Those really picked up, as we moved into mid April last year. Everybody was trying to get ahead of those, you know, increases in costs that that perceived real, right, from the tariffs. So I I we're tracking down on a year to date basis in terms of new vehicle sales.

Jeremy Robb:

My expectation is that with all the things going on and with the comparisons getting harder as we move forward because of what we're what we saw last year, that we probably still see that maybe maybe worsening, alright, a bit. And what we're also seeing too, it is it's not quite showing up yet. The interest rates for automotive loans take a while to work in because there's all different kinds of seasonal effects because the new car market is much more tilted towards the end of the month. So I don't I don't try to make much of a read on an interim month basis. But benchmark rates, you know, we talked about this yesterday in the the call too, but the ten year treasury is pretty good barometer of what's going on.

Jeremy Robb:

It was about 4% at the February on the thirty year mortgage rate was under 6% for the first time in several years.

Erin Keating:

Right.

Jeremy Robb:

All that's been erased. The ten year treasury is now close to 4.35% this morning, so that's 35 basis points higher. Anybody that's going to be lending money late this month and April too, they may be, you know, increasing their rates, their buy rates, and that means the rate the consumer is gonna get is a higher rate too. What does that mean? It's gonna make it more expensive to get a loan on a new or used vehicle, and that could curtail demand some too.

Jeremy Robb:

Though I think I think we might see a little bit more of a negative rub on the new car side. The used car side, I think still has some momentum behind it. The market's still a little bit undersupplied and this continued trade down from the inflation and consumers moving there. We've we've seen higher levels of income consumers moving into the used car market for years. Sure.

Jeremy Robb:

So I think that's a little bit more supportive of that market, for a bit.

Erin Keating:

And you mentioned that we're in the spring bounce season, and that's largely due to tax refunds. I know we sort of talked this about this kind of consistently leading into this. Any updates this week on where we stand with tax refunds?

Jeremy Robb:

Yeah. The tax refunds are they're up 11%. The average refund is on a year over year basis. So definitely putting more money in consumers' pockets. We're approaching, I think, 100,000,000,000 that's been put back into the economy from a tax refund perspective.

Jeremy Robb:

We're still tracking under where we were this time last year and two years ago in terms of the number of refunds filed. That means we're probably gonna see more stimulus from that as we move later into the tax refund season mid April, that time point. So that is stimulative for the economy. That's what we call a longer tail effect in terms of the fiscal stimulus coming through. That is maybe some consumers even if they get their tax refunds, they put their hands in their pockets for a bit to try to see where this crisis plays out, but it should be positive for the economy.

Jeremy Robb:

The only thing is, you know, if oil prices stay elevated for a longer period of time, it can quickly eat into what that means. We kinda did some math, and the math says that, you know, if oil prices stay elevated for mainly about two months, it's gonna eat through all the tax benefit gained on a year over year basis. So it doesn't take long for the consumer to be kind of like back to where they were. So let's see where this plays out. But that's two months, you know, the the the tax refunds were expected to be really strong this year.

Jeremy Robb:

They are really strong, very stimulative to the economy, this conflict in The Middle East kind of erasing a lot of that especially Sure. Because it's already probably lasted for longer than many people thought it would.

Erin Keating:

Well, maybe then it's good that we haven't seen as many refunds filed just yet because maybe they'll come just in time for sentiment to change and the war will be announced as done and over and maybe we'll see the stimulative effect after all. One can hope. Well, thank you Jeremy so much for joining us and keeping us up to date on what's happening in the economy. Again, just as a reminder to everyone, Jeremy as well as the rest of the team covered a lot of ground yesterday in our q one quarterly call, and that is available on our website. So please make sure that you can go check that out, see the replay and the deck that we presented and such to get caught up on all the nitty gritty details of where we stand in the automotive market right now as we bring March to a close.

Jeremy Robb:

Thanks for having me.

Erin Keating:

Of course. So we just covered a lot of ground on what's going on with the economy and especially with the most recent conflict that we're all feeling out there, the Middle East conflict and with news dragging on about whether it's going to end soon or not. We did talk about, as I mentioned in the q one quarterly yesterday, what does this really mean for consumers and what are we seeing in our shopping? So just to get you up to speed there, the data on the consumer side shows us that yes, as pricing rose and rises on gas prices, we are seeing some increased shopping behavior. People are starting to look a little bit more seriously at hybrids.

Erin Keating:

And for sure, we've seen a couple of peaks in electric vehicle searches on our websites, Auto Trader and Kelley Blue Book and through our other various channels. And so that makes a lot of sense. I think that the one thing that we wanna do is just level set everyone's experience. People who are in market right now, who are in market automotive shoppers, a, if they're already in the market looking for a fuel efficient vehicle, specifically a hybrid, no question, they're gonna continue to expand their search and make sure they're looking across the entire industry to see what really compelling hybrids are out there. But for sure, those are the people that we anticipate would be a little bit more open minded about electric vehicles and potentially be pushing into more electric vehicle searches.

Erin Keating:

We know that Toyota has recently launched a couple of their new bevs, and that is a brand that is very well known for their fuel efficiency and hybrids. And so we can imagine that that's also helping to push some of that search further into the electric vehicle territory. We might have some, you know, folks out there that are also just starting to search around. Maybe they're not in automotive market right now, but they have heard enough about the gas prices that they're starting to look into things. However, I just like to caution that consumers tend to take some time, as Jeremy just mentioned, to really make some reactive choices based on things like this.

Erin Keating:

I said yesterday in our call, you know, there's lots of genies when you let them out of the bottle, they don't often go back when and those genies are the price gremblins. When we saw tariffs go up, you know, it's very rare that you would see pricing necessarily come back down. We might soften and start stabilizing, but it's rare that you'll see major consumer goods go back down. Gas is one of those genies that frequently makes its way back into the bottle. So it might reset at a little bit of a higher level, but we do, as a consumer, tend to believe that those rates will come back down and that's why you see a little bit more of a lag in those real purchase decisions as a result of seeing gas prices rise.

Erin Keating:

As Jeremy mentioned, what we would expect to see right away is people starting to manage their monthly budgets a little bit more closely. Perhaps they're driving less or maybe asking for work from home exceptions so that they can, you know, attempt to not have to drive as much or maybe even scrimping in other areas so that that they can maintain their ability to drive wherever they need to go for work, etcetera, and maintain their monthly car payments and and mortgage payments. So that's the kinds of things that we expect to see right off the bat. But it is, you know, to be said that we have seen some increases in shopping behavior online. And so, you know, we may see some uptick in electric vehicle sales as a result of this.

Erin Keating:

But I caution that I really do believe that's going to be folks that were already in the market looking for vehicles, not necessarily people rushing out to get brand new fresh big payments on their bills just to avoid temporarily elevated gas prices as it stands right now. So good to just remember that us humans, we, we behave on instinct and mood and sentiment. Yes. But when it comes to really big purchase decisions like a car, we do tend to take a little bit more time. Those decisions are usually stretched out over a couple of weeks, if not months, of researching and knowing that that's something that's necessary.

Erin Keating:

But of course, those tax refunds are coming back in, so we do anticipate that we will continue to see used car sales rise. So that's really great. A couple of other headlines that have made its way into the news cycle this past week that I just wanted to talk a little bit more about is the autonomous vehicles space. We have heard this repeatedly coming up more and more. Different manufacturers are talking about building out more level four autonomy.

Erin Keating:

And one of the big standouts of the news cycle over the last few weeks has been that Uber has really made some big moves. Their largest moves aren't so much to become an actual autonomous vehicle company, but rather to really serve as that platform for all of the autonomous vehicle companies out there. So imagine with their data that they have and their membership or loyalty to people using Uber for the ability to ride hail, That is a real benefit to any company, whether it's Zoox or Waymo or the new Hyundai's, IONIQ five's that are coming out with Motional and so forth to really leverage their system of people being able to reserve vehicles autonomous or not. And of course, for Uber, going and partnering with all of those companies really allows it to get a handle in this vehicle space globally as well as here in The US. So they've been making a lot of moves, again, globally, but also in The US.

Erin Keating:

And in fact, even made a recent investment with Rivian as Rivian starts to discuss that they're going to bring some autonomous vehicles to the market. So keep an eye on what's going on with autonomous vehicles. We really still see it as a playing a big role in ride hailing and potentially offsetting different types of drivers that you would have in, you know, getting from here to there. And it's the entree into seeing more autonomous vehicles get commercialized and bring it to consumers. But Uber for sure right now is making some power moves to see that they get into the conversation and be at the top of mind for individuals who are looking to test out the autonomous vehicles out there.

Erin Keating:

This, of course, could help with a lot of dealers as they need service and repair, you know, when they have customers coming in for service and repair and they wanna be able to offer convenience to customers so that they can bring them back to the dealership to pick up their cars and things like this. So any kind of, you know, pickup and delivery services that could help dealers in the broader ecosystem. And then certainly, we are only seeing these autonomous vehicles in specific geographies, but those geographies start to help us see what's successful and what's not. And we could see a lot more cities pop in, and help with public transportation and such. And so maybe this is another way that people are gonna deal with some of those high gas prices.

Erin Keating:

Maybe they're gonna be a little bit more apt to check out ride hailing services if that will somehow help them keep their expenses down when they need to get from point a to point b. So let's keep an eye on it. Talking about other factors that are actually, know, impacting the automotive industry, and I mentioned we are an anniversary of the date when automotive tariffs were entered into the American discussion. And those tariffs are pretty significant. They are 25% on vehicles being imported, 50% on steel and aluminum.

Erin Keating:

These are very high used commodities that in the automotive industry. And so the industry as a whole for the last year has really been battling against how to absorb these tariffs, how to pass what parts to pass on, etcetera. And something that we've seen a lot from the automakers recently is more and more announcements exporting vehicles that are actually built in America and sending those over to other countries. And yes, most manufacturers do manufacture cars here and export them to other countries, but there is an uptick in activity here. And one of the reasons that might be is for additional negotiating levers with the government if export credits were to be able to come into play.

Erin Keating:

So you could imagine a company like BMW as an example that exports a lot of vehicles, the most amount of vehicles from The US to other nations, would they be able to negotiate that, hey, I'll pay for import tariffs, but then could I get credits in the background for the cars that I actually export, sort of still helping to boost that domestic production, but also relieving the automakers of some of the expenses tied to tariffs. There's nothing in the administration yet that's formalized there, but something again that we're keeping an eye on as far as how this impacts pricing moving forward or at least does this help give some relief to the enormous burden that we've seen with tariffs? Again, we reported it's been about $35,000,000,000 hit the automotive industry in import tariffs last year, and every automaker is looking for ways to gain some of that back. The last thing that I wanted to touch on is ADAS. That is the all of the new technology on your vehicles that is helping you to do lane assist to helping with level one and level two autonomy.

Erin Keating:

It's why we have so many sensors in all of our bumpers and cameras all over our cars now. Very high-tech safety features that everyone really wants that have been baked into most models. But where we're seeing some challenges is that any vehicle that is equipped with these cameras and sensors is really creating a headache for repair and collision shops as well as for dealerships and for insurance companies. So we continue to watch this carefully because independent repair shops don't often have direct access to automaker certified tooling or any kind of calibration tools, etcetera. There's big moves in the market for those independent repair and collision shops to get access to that.

Erin Keating:

It's not restricted everywhere, but there are some markets where that is more difficult for those repair and collision shops to access the automaker specific calibration tools. And it is something that's driving up how many vehicles are actually being totaled by insurance companies labeled as non repairable because of the cost and the expense that goes into repairing vehicles when it involves so much high-tech. This is really an opportunity for dealers who are franchise dealers that have access to all of that tooling, access directly to the manufacturers on how to quickly and easily repair these types of things. But it for sure is why if you get rear ended these days and you're wondering why in the heck can't I get easy repairs? Why can't someone just take that mallet and hammer out that dent?

Erin Keating:

It is because you likely have tens, maybe twenties, maybe even hundreds of sensors in those bumpers in in your car that need to be not only repaired but recalibrated from a liability perspective. You certainly wouldn't want your backup camera to not be calibrated to see how many feet are you really from that car you're reversing into, in a parking spot. Right? So those things need to be very carefully and to exact measurements recalibrated. And that is really causing a lot of distress in the repair industry.

Erin Keating:

And again, probably contributes to a lot of the increase in insurance prices and increase in insurances totaling vehicles. I just wanted to keep everyone aware of that when you're getting confused about the repair bills. It's real. It's significant. And the industry is working towards how do we make this just as easy as we used to see when we would repair just a dented bumper.

Erin Keating:

So keep an eye on that. We're going to continue to see how widespread tooling and calibration comes into play. And we're hoping that as it becomes more normalized, that would actually help insurers better be able to ascertain how much these things cost, and maybe we'd see some reductions in insurance prices. Who knows? But it just adds complexity to this industry we all love so much, and I wanted to make sure we were keeping up to speed on that.

Erin Keating:

With that, thank you all for joining us today on The Auto Market Brief. We hope that you'll join us every other week with new episodes. And, of course, keep your eye out for any bonus episodes when there are very timely discussions that we wanna make sure we're bringing to you live. For now, this is the sign off. Erin Keating, thank you for joining us.

Erin Keating:

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.