Auto Market Update
Trade Policy:
- Supreme Court struck down most emergency tariff increases but in the short term, effective tariff rate only dropped from 12.7% to 8.3%.
- Markets expect tariffs to be rebuilt through other tools with auto, steel, and aluminum tariffs remain in place.
- Biggest risk is uncertainty in tariff structure, complicating planning for dealers and OEMs.
Consumer:
- Savings rate fell to 3.6%, lowest since late 2022.
- Higher income consumers are showing the sharpest sentiment declines, especially those earning above $100K.
- Overall sentiment improved month over month but remained below last year.
Housing:
- Interest rates are at ta 4 years low under 6%.
- Housing starts up 6.2%, highest since last summer.
- Builder sentiment remains weak at 36, below breakeven levels.
Auto Market Challenges:
- Wholesale prices are rising fast as we head into the tax season.
- Are expected to be up 14% year over year.
- Used vehicle retail values accelerate to a few weeks behind but to catch up.
Bottom Line for Dealers:
- Headwinds: inflation pressure, strained consumers, policy uncertainty.
- Tailwinds: better affordability, stronger tax refunds, easing credit conditions.
- Cautious optimism as showroom traffic improves.
