12-18-2025 Auto Market Report

Economics

Inflation is cooling in the latest print: headline CPI about 2.7 percent year over year and core about 2.6 percent, which strengthens the case for additional rate relief and improves consumer sentiment.
Growth has looked better than feared in some near-term trackers: Atlanta Fed GDP Now was recently around 3.5 percent for Q3 2025, revised to 4%
With rates drop and wage growth stays positive, payments improve, 2026 can see a positive rebound in retail.

Used vehicle demand is stronger than last year, with sales pace running ahead of 2024.
Inventory levels are tighter year over year, keeping the market in better balance.
Faster sales and leaner supply indicate a healthier used vehicle environment than 2023 and 2024.
Seasonal demand patterns remain normal, with no signs of a sharp demand breakdown.
Market conditions favor disciplined operators focused on turn and inventory quality.
Wholesale prices in 2025 are declining more slowly than in recent years, indicating reduced depreciation pressure.

2026 new vehicle pace eases, with SAAR around 15.8 million, about 2.4 percent below 2025.
- With the new Fed Chair in March and rising wages. I don’t see this.
Retail new sales slip slightly, while fleet drops more due to softer commercial demand.
- With the BBB accelerated depreciation provision. I don’t see this.
Wholesale values are expected to increase by about 2 percent by yearend 2026.
- This I agree with.