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Auto Market Update

 

Economic and Consumer Update

The March jobs report came in stronger than expected, but the underlying indicators point to a cooling labor market rather than continued strength.

Hiring is slowing, not collapsing.

• • Job growth has averaged only 68,000 over the past three months
  • Wage growth eased to 3.5 percent, the lowest since 2021
  • Labor force participation fell to its lowest level since 2021
  • Long term unemployment continues to rise

At the same time, the consumer remains active but increasingly cautious.

• • Retail sales rebounded, helped by vehicle sales
  • Consumer confidence ticked up, but future expectations declined
  • Inflation expectations jumped to 6.2 percent

Bottom line: The consumer is still in the market, but more price sensitive and more selective.

Retail Automotive

Affordability is now the dominant force shaping buyer behavior.

New vehicle inventory is building, but not moving efficiently.

• • New vehicle days supply at 73, a five year high
  • High priced units are aging the fastest
  • Sub $30,000 inventory now just 13 percent of supply

Consumers are shifting, not disappearing.

• • Nearly new used vehicles up 24 percent year over year
  • Strongest demand around the $20,000 price point
  • Older vehicles also gaining share

Wholesale conditions are tightening fast.

• • Wholesale used vehicle prices just hit their highest level in nearly three years
  • The Manheim Index jumped 6.2 percent year over year
  • Auction lanes are packed with dealers competing for inventory
  • Days supply on dealer lots is shrinking quickly

Powertrain trends continue to favor practicality.

• • Hybrids remain the most balanced segment
  • EV supply continues to outpace demand

Dealer Takeaways

This is an affordability driven market.

• • Demand is intact, but buyers are adjusting to stay within budget
  • Used and lower price point vehicles carry the most momentum
  • Higher priced new inventory will continue to age without a deliberate strategy

Focus areas:

• • Lean into used, especially nearly new and sub $30,000
  • Stay disciplined on high priced new inventory
  • Prioritize hybrids where supply and demand are aligned
  • Manage aging inventory tightly as days supply rises

Bottom line:

The market is shifting, but the opportunity is still there for operators who stay close to the data and make disciplined decisions. Consumers are more selective, wholesale conditions are tightening, and new inventory is aging faster at the top of the price range. The stores that will outperform are the ones that stay focused on affordability, strengthen their used car strategy, and make every acquisition count. This is the moment to slow the noise, study your numbers, and align your inventory with what your customers can and will buy. Dealers who take a thoughtful, consistent approach will find stability and growth even in a changing market.