The Auto Market Brief

Gas prices are finally coming down, but how much does that actually improve the total cost of buying and owning a vehicle?

In this episode of The Auto Market Brief, Erin Keating and Jeremy Robb break down the latest economic signals shaping the market, from declining fuel costs and improving sentiment to the ongoing pressures tied to inflation, interest rates, and vehicle pricing.

How much lower gas prices really help:
Gas prices have fallen below $4 per gallon, providing some relief for consumers, but fuel is only one part of the overall cost equation.

Why vehicle affordability remains under pressure:
Even as fuel costs ease, elevated interest rates and higher vehicle prices continue to impact monthly payments and purchasing decisions.

What the latest data says about market performance:
New vehicle sales are holding stronger than expected, while used vehicle prices remain elevated, highlighting the ongoing tension between demand and affordability.

The episode also explores key industry developments, including regulatory focus on pricing transparency, continued investment in autonomous technologies, and signals from subprime lending markets.

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, everybody, and welcome again to the Auto Market Brief. I'm Erin Keating, the executive analyst at Cox Automotive and the cohost of this podcast, and I'm excited to be joined here by our chief economist, Jeremy Robb.

Erin Keating:

Good morning, Jeremy.

Jeremy Robb:

Good morning, Erin. I'm glad to see you that you made it back here for it.

Erin Keating:

I know. We both could we were joking beforehand that we could do a podcast just on our travel woes and what the life looks like for for an analyst and a chief economist in the automotive industry. Right?

Jeremy Robb:

It's so glamorous.

Erin Keating:

Yes. It is. But I'm glad that we were able to at least make this happen every two weeks for our audience to make sure we get everyone caught up on what's happening out there, not only in the macro economy, in our local communities, and then in the automotive industry at large. And I know you've got quite a few things to discuss with us today. We know we have a new chief in charge, if you will, at the feds.

Erin Keating:

I know you're gonna cover off on that and some decisions and or discussion points that came out of that release this week. Some talking about strength in sales, etcetera. Certainly, we have some news at the political geopolitical level that might be impacting some of our thoughts on the future of budgets. And a couple of interesting things came out in just the larger picture of the automotive industry around some Waymo investments, Mexico in the middle of all these discussions with The US on trade coming out with their own EVs. We'll discuss that a little bit.

Erin Keating:

And then, of course, the FTC rulings or letters, I should say, a lot of talks. I'll just discuss a little bit about what I heard at a at a conference this week. So let's kick it off and hear the main the big topics for today. I know that you've got a lot to share.

Jeremy Robb:

Yeah. You know, never a dull moment in the auto industry and the economy and our the situation that we're in. Probably maybe never a dull moment. But Right. You know, the last time we talked, I think to your point, like, the jobs numbers hadn't come out yet and they were actually pretty strong for the month of May in total.

Jeremy Robb:

Not only were they pretty strong for May, they were also revised higher for the last couple of months. So, the three month run rate has been as strong as it's been for quite some time now, which is very positive for Unemployment the economy rate staying down at 4.3. Essentially has not budged in six months. I think it moved one month and then moved back. So, pretty flat there.

Jeremy Robb:

Still have a labor force participation rate that is remaining very low. To age myself, it has not been this low since I was born. It's outside of the pandemic time period when it went really low. So since the early night since early nineteen seventy seven, you know, it hasn't hasn't been that low. And and that just tells you, you know, baby boomers out of the workforce, we still have this wealth effect going on.

Jeremy Robb:

The stock market's hitting new highs all all the time right now. SpaceX is public and, you know, is doing So pretty lots of different factors going on That really factors in the jobs number. When the jobs number came out, we saw bond yields go higher because if jobs are stronger and inflation is stronger, there is much less of a propensity for the Fed to cut interest rates. So the market took that as a hawkish sign before we even got the new Fed Chairman in town, Kevin Wash, who was out this weekend. They had released a brief statement, but then did a pretty nice press announcement.

Jeremy Robb:

If anybody is interested in listening to that, that's worth the time to go back. I think it's about forty minutes, but it's pretty interesting to hear what they said.

Erin Keating:

Right. Yeah. And so I think you've got your market summary coming out today, but there was sort of a big theme with with how he he came out speaking, you know, he was he was the one who said, I don't know if I'm gonna talk to the press all that often, but he did at least make a first statement, which, okay, you know, you've probably expected that. But what what was your sort of headline grabber for spoiler alert for what the headline is for this week?

Jeremy Robb:

Yeah. Well, I think he said it himself something about we've got a task force for that, like in his statement. And I was out running yesterday morning thinking about what am I going to call such and such or whatever. And they outlined they're going to have five new task force to look at some of the things that are really important. The Fed, you could argue, are they behind?

Jeremy Robb:

I mean, they've been behind for a long time. They're going to look at how they use data and how they get into that and what sources of information they're using, especially on inflation and things like that and the Fed's balance sheet and stuff like that. But the thing Kevin Worf said, or the chairman said in the press conferences, we've got a task force for that. And I was like, well, I had titled my weekly summary, There's a New Fed Chair in Town. And then I said, now I'm going call it, There's a New Fed Chair in Town and there's a task force for that.

Erin Keating:

Right. It's out of the mouth. Yeah, not necessarily a bad thing. You know, we know that he wants to be a bit more innovative in how he looks at all of the data, which, you know, is good. I think it's still true, right?

Erin Keating:

We're the only country that has a dual mandate for our Fed, is that correct? So we are constantly, to your point, when you're talking about jobs, we are constantly weighing what does the employment situation look like against what the inflation situation looks like, right?

Jeremy Robb:

Yeah, stable employment and steady prices. And, you know, in the Fed statement, and this, you know, people can take what they want to, Their last line was a statement that said, we will get to stable prices. And that was very clear. I think it was very pertinent that it was the last line. And a lot of people, I get asked this, is the new Fed chair going to cut interest rates because the president wants them to cut interest rates?

Jeremy Robb:

Well, clearly, not, or they had a unanimous decision to hold interest rates steady. And the bias really, the dot plots is to, are they going to raise rates? However, this is really important and I don't think people have talked about it so much. They are telling you they want to get inflation under control by having that statement being very last by everything else that they're saying. And if they are successful over the next year and getting inflation under control, then they can lower rates.

Jeremy Robb:

And so Yes. I think there is a second part to that equation that a lot of people haven't talked about yet. But I they've got to do what they have to do to get inflation under control. It is the number one thing for The US consumer and citizens of The United States and they're worried about, and for a good reason. And we can talk about the stock market and how high it is.

Jeremy Robb:

You know, most of those gains filter through not only to like the high income earners, but to a very small population of people. People are extremely impacted by high inflation, gasoline prices, and all this. And so if the the Fed is successful, the Fed can't do everything. You know, it it is not it's got a few tools to try to like manage the economy. But if they can get inflation more under control, that would be very, very positive for The US economy over the next couple of years and could lead to having lower interest rates, which you know, the housing market really needs and the auto market could certainly Absolutely.

Erin Keating:

So I mean, given what the recent CPI was, I think you've remarked before, but it was up to 4.2%, but very focused on fuel and energy costs. So just out of curiosity, we have this new geopolitical announcement that there is a potential unwinding of the conflict in Iran. So how are you thinking about what that looks like for fuel prices over the next, call it six months and and how that might impact the auto market?

Jeremy Robb:

Yeah. So just a few data points on that. Definitely seen oil prices come down over the last week or so. Gasoline prices month to date are down 8% right now. Now yesterday, there was a headline that they hit under $4 a gallon, but technically, they were 3.999.

Jeremy Robb:

So, you can do the rounding, it's not under 4. But as of this morning, they were 3.97. So, we are now under $4 a gallon as of June 19, which is great for the American consumer. They're going to take that positive. We're already seeing consumer sentiment levels increase.

Jeremy Robb:

Consumer sentiment's up about 3% so far this month. So that's going to filter in to the economy overall. But you've read, you've heard, there's a few things going on also. Worldwide, we've ate through a lot of the stockpiles of oil to try to keep supply moving since there's been very little coming out of The Middle East since early March. And so those stockpiles have to be replenished.

Jeremy Robb:

That's going to take some time. That's probably going to keep oil prices and energy prices somewhat elevated. It's not like we're going immediately back to where we were. And then secondly, now there's probably a risk premium on tankers, on insurance rates, on everything happening there from what happened before. And what what is that worth?

Jeremy Robb:

Is it worth 10%, 20%? I'm not sure. But I do think there's probably gonna be, you know, an inflation component moving oil through The Middle East, at least for some period of time, six months And or a year so that's probably going to add into it. But if we look in the rearview mirror, all the inflation readings, pretty high. The producer prices continue to show that costs are being added in, but it might be where, you know, that's a rearview mirror effect.

Jeremy Robb:

Might be we might have hit the apex of this peak and then start to see some of that good news come through. And and I think, you know, The US consumer could use good news for sure.

Erin Keating:

Absolutely. So speaking of good news, in the auto market, we do continue to see retail sales doing okay. Right?

Jeremy Robb:

Exactly. Retail I I I would actually say on the new car side, they're surprisingly good. And for where they I look at our weekly trends that we pull out. On a year to date basis, we're running right now down 4% on the new car side. But a lot of that was because like, we were so much strength last year in April and early May.

Jeremy Robb:

Right now, we're running up 6% week over week. We're up 10% for this week where we I guess where we were last year on the new And car that's through about the second week of June. Used sales are running down 2% year to date, and they're running a little bit lower year over year too. But they're not low, really.

Erin Keating:

Right.

Jeremy Robb:

I think last year, it's just we're constantly dealing with anomalies, there was just a lot of strength last year in the used car market because people were really worried about these high prices coming through. And so our comp is a little bit higher. And this is kind of interesting. Used vehicle prices overall are up 6% year over year, just the overall. That's a pretty high number.

Jeremy Robb:

Usually, that gets to be like 2% or 3%. So, you know, if we want to say anything about the used market, it could be that, you know, prices have risen to a point where they are maybe pulling or causing a few people to pull back on the trigger.

Erin Keating:

And we saw that through wholesale in the spring. You know, the dealers were really excited about, you know, tax refund season. But, of course, when you're paying more at wholesale, you've gotta adjust your retail pricing. And and so then, of course, maybe that caused some shift as well and a couple new models coming out. So drawing customers back and forth between you know, especially those ones that we've said, you know, traditionally new buyers had started to look in used.

Erin Keating:

And so now you've got this sort of give and take for people making that decision back and forth, you know, consistently weighing the two. So I'm sure that that's causing some numbers to go, you know, up and down in different areas than we'd normally expect.

Jeremy Robb:

It is a giant market. It is incredibly dynamic. And any part of it that changes affects all the other parts too.

Erin Keating:

Exactly.

Jeremy Robb:

And so, you know, it's that's why that's why we get to go talk about this all the time.

Erin Keating:

Exactly. Right. Gives us the job. Gives us something to talk about every day. Absolutely.

Erin Keating:

Well, Jeremy, any last thoughts you wanna leave us with as far as where we stand from a big picture from, you know, the economy as consumers, and then furthermore, how that affects the automotive market. Otherwise, you know, we'll be back here at least, as a team on June 24 doing our midyear review. So we certainly encourage everyone to tune in to hear from the entire team on how we're doing midyear. But anything you wanna give us a little inside scoop on or close us out with here?

Jeremy Robb:

I just would say, you know, lately, I've talked to a lot of people. I'm very cognizant of presenting information. And and there's been a lot of negative stuff, like in the economy, consumer, gas prices, geopolitical unrest, all this stuff. I do think there's a case that maybe things are going to start looking a little bit better. And we've got all the World Cup stuffs here.

Jeremy Robb:

I've been in several airports this week. I don't see things calming down from an anecdotal basis. So there's a possibility that things are going to keep chugging along or maybe even look better. And I think we need to be aware of that possibility too because so many economists, people, everybody in The US is really worried. Not that I'm not a little bit worried.

Jeremy Robb:

I'm just trying to play a little devil's advocate Yeah. And not be so Debbie Downer. But Sure. On the last thing I would say is, you know, big game today. Go USA.

Erin Keating:

Yes. Go USA. Exactly. Well, I mean, into that fact, you know, the World Cup came sort of just in time. We kind of needed everyone to be able to be focused on something fun and easy and exciting and and, you know, geopolitically connected.

Erin Keating:

Right? We're all we're all seeing our big world in the World Cup, and I think that really is you and I talk about when we and that's why we look at consumer sentiment. It matters how people are feeling about things that are happening around them. And so there's nothing wrong with us having some fun events like the World Cup injected into our moods to help us feel a little bit, you know, more excited about the future and happier about the current moment. So well, great talking to you as always, Jeremy.

Erin Keating:

And, yes, go USA. Appreciate that. And again, remember everybody to log in for the midyear review on June 24, which will have all of our team presenting on everything that we've seen up until the midyear and maybe a little prognostication on what's going to go for the rest of the year. But that's it for our big macro session of this particular podcast. Thanks, Jeremy.

Jeremy Robb:

See you next time.

Erin Keating:

Well, I'm so glad we were able to hear everything from Jeremy and inject a little positivity into the narrative because I do think that there is something to be celebrated even if it is just saying go USA. Let's all get excited about that. But some, you know, relatively decent signs towards potential good times ahead. So let's let's stay optimistic. Glass half full.

Erin Keating:

With that, wanted to cover a couple of, topics that have come up over the last few weeks and specifically that are surfacing this past week in the automotive industry. The first one I wanna hit just very quickly because I was able to attend a conference on Tuesday in Washington DC. It was hosted by the CBT News folks, and it really focused on that fair pricing and compliance topic that everyone in the industry is talking about, the the FTC 97 letters that went out to dealers around unfair pricing, etcetera, etcetera. I won't go too much into the details, but what was good to hear from both NADA as well as dealers and compliance managers and so forth is that generally people in the industry feel that this is probably a positive thing for dealers to think about, that really that there may be some bad apples out there, but the intention broadly across the industry is not deceive buyers, to not harm customer relationships, but that rather there is a systemic challenge in being able to make sure that pricing consistency does show up across all of our multichannels and ways in which consumers see our pricing.

Erin Keating:

There was even a whole discussion just around social media. A lot of dealers and salespeople have, you know, the desire to have their personalities out there on TikTok and Instagram and so forth to gather new customers for their dealerships. And there's even some warnings around, hey, you gotta be very careful about what you're putting out through social media because anything that's out in the public, space around pricing can be considered most prominent pricing, and that's where the FTC is really looking. So again, don't don't need to go too close into the details there, but wanted to just make sure that we were, you know, mentioning that this is, of course, a very high priority topic for Cox Automotive. They're looking at marketplaces, etcetera.

Erin Keating:

I know that we are fast at work to make sure that we can do the best for our dealers and working with all our great dealer partners and, automaker partners, etcetera, and that we too have the best in mind for consumers and what they are experiencing through our great automotive franchise system. So that was a a really informative day. Onto more sort of industry topics from a auto manufacturer or automotive sort of perspective. One of the big announcements this week was that Waymo acquired 5,500 acres, from Apple. It's the Apple's, previous proving ground for when they wanted to go into autonomous driving.

Erin Keating:

And it's really exciting. What it means is that it's it's really pointing to the fact that Waymo is pulling, you know, far away and ahead of all other robotaxis, if you will, players in the market that they have built out so much infrastructure already across The United States. But now that acquiring this piece of property, which really allows them to test all sorts of conditions and different driving, places, you know, highway driving, street driving, etcetera, etcetera. They can simulate a lot of that and really try to prove out some more of their technology and and continue to grow and and improve at scale. So that's really interesting news.

Erin Keating:

We did also have some news out of Mexico. So knowing that we're under this whole discussion around the US MCA and negotiations, Mexico has not been sitting on the sidelines. They've been thinking to themselves, you know what? While US is looking at this and while other markets are looking at this, meaning how do we become more centric to our own country? How do we make sure that we continue to keep up our own manufacturing and so that we also don't get left out when trade discussions become a big part of our decisions in the automotive automotive manufacturing business.

Erin Keating:

Mexico actually released their first, homegrown domestically designed, electric vehicle, the Olina Uno. I hope I'm pronouncing that right. They're anticipating that that will get produced and put into market by 2027, and it would be around $8,000. So there it's just another sign of localization. You know, different countries thinking to themselves, let me make sure that I am building up my local power in this particular industry so that I'm not left out to dry if there are more geopolitical risks that come into play, supply chain risks that come into play, etcetera.

Erin Keating:

So big news that they, in the midst of all the discussions at the USMCA, announced this new EV that they've produced domestically or designed domestically for production. And then the last topic I just wanted to touch on because we we know that especially when we're talking with Jeremy, we're talking about what is the, lending landscape look like. We know that more subprime buyers have come in to the system that we know we've seen more negative equity come in to the system. We use lower cash down payments. And and so all of this, you know, adds some risk to the system around lending.

Erin Keating:

And interestingly enough, one of the largest sellers into the subprime market, America's Car Mart, has actually been, as most people know, in some financial straits and headed for default. They've offloaded about 42 stores and have been looking for some reprieve here on their finances. They have actually been given one more week extension to try to find those finances to avoid that default. So just interesting to keep an eye on the market of those that are serving the subprime buyers and how that ends up, looking for the market. You know, we talk about a k shaped barbell, however you wanna, refer to the market, those price sensitive customers, subprime customers versus prime, super prime, and well heeled customers.

Erin Keating:

It's just another sign that we're looking at from the industry to see where are people being impacted. Now, they are a buy here, pay here sales place. And so, you know, people have been, you know, saying, does this mean something more for the buy here, pay here? I think there's also more to be said here around scale. So not necessarily that buy here, pay here has to be the target of, oh gosh, that's what went wrong here.

Erin Keating:

There's also a topic of scale here for America's Car Mart. So something to just keep an eye on. And and, of course, we deal heavily in used vehicles, and it's important for us to make sure that we're seeing how the landscape looks across the, all of the types of dealers that consumers are coming into contact with. So with that, I will wrap up this week's podcast. Again, let's end this on a good note.

Erin Keating:

Go USA playing today, 3PM eastern time. This is Friday, June 19. Also, a happy Juneteenth to those that recognize the holiday. Please make sure that you're always checking back in at coxautoinc.com in our insights section. We do actually also have a new landing site for this podcast where you can look at old episodes, subscribe, follow, share with your friends.

Erin Keating:

And a final reminder that on June 24, we will have our midyear review, and that will consist of the entire economic and industry insights team team's work as well as the representatives who are gonna, represent that work to bring you up to speed on where we are year to date and what we can think about for the back half of the year. Thanks for joining. 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.