12-26-2025 Auto Market Report

Economy:

Job creation slowed: +64K in November, but revisions and a ‑105K October print pulled the 3‑month average to 22K.
Unemployment rose to 4.6%, the fourth straight increase and highest since 2021.
Wage growth is steady at 3.5% YoY: labor force participation up to 62.5%.
Inflation cooling: headline 2.7%, core 2.6% — lowest since March 2021.
Shelter inflation slowed to 3%, easing one of the largest CPI components.

Auto spending up just 1.2% YoY — softest since February.
New‑vehicle affordability improved modestly after three months of declines.
- Average monthly payment: $776 (+1.2% YoY).
Weeks of income to purchase: 36.3, down slightly from October but flat overall.
Affordability gains driven primarily by wage growth, not pricing relief

2026 new vehicle pace eases, with SAAR around 15.8 million, down 2.4 from 2025.
- With the new Fed Chair in May after tax season and rising wages, we see growth.
Used vehicle sales to be +1/-1 in 2206
- With aging cars in driveway pent up demand, we expect growth.
Retail fleet drops due to softer commercial demand.
- With the BBB accelerated depreciation and energy boom, we see growth.
Wholesale values are expected to increase by about 2 percent by year-end 2026.
- With the average age of inventory, the reliable day supply is tight. We see this be the case and more. (Intelligent Acquisition Management – Agile Auto

With the recent rate cuts, affordability improves gradually as relief shows up in early 2026.
Payment‑sensitive buyers return first, especially in entry‑level and mid‑priced segments.
Used vehicles remain essential, with 3–6‑year‑old inventory driving demand & margin stability.
OEM incentives & competition increase requiring sharper pricing discipline.
F&I becomes a core profit engine, especially products tied to payment protection.
Fixed ops anchors profitability, with retention and faster service becoming differentiators.
Digital marketing key as shifting spending toward high‑intent, performance‑driven channels.
EV demand remains uneven, pushing dealers to balance EV, hybrid, and ICE inventories.
Winning dealers operate with discipline, using data to drive stocking, pricing, and customer experience decisions.