All Things Used Cars ++

 

ECONOMIC

• Inflationary pressure continues to squeeze consumers, with several components of car ownership running hotter than the 5‑year CPI average of 4.9%. Consumer confidence slipped again in May as higher energy prices weighed on household sentiment. The Conference Board Consumer Confidence Index fell to 93.1, remaining below its long‑run average. The Present Situation Index dropped to 121.2, while the Expectations Index ticked up slightly to 74.4, still below the recession‑signal threshold of 80 for the 16th straight month.
• One‑year inflation expectations held at 6.2%, and nearly half of consumers expect higher interest rates over the next year. Two‑thirds of households report cutting back spending due to rising prices. Auto purchase intentions softened slightly month over month, though used‑vehicle purchase plans continue to rise on a six‑month moving average.
• GDP growth was revised down, with Q1 real GDP now at 1.6%, reflecting softer consumer spending and weaker inventory investment. Real final sales to private domestic purchasers grew 2.4%. PCE inflation accelerated to 3.8% year over year, driven by a 5.5% jump in energy goods. Core PCE rose 0.2% month over month, with the annual rate at 3.3%.
• Personal income was flat in April while spending rose for the 15th straight month. The personal saving rate fell to 2.6%, its lowest level in four years. Real disposable income declined for the second consecutive month and is now 1.1% lower than a year ago.
• Housing continues to cool. The Case‑Shiller National Index rose just 0.7% year over year, the slowest pace since 2023. More than half of tracked metros posted annual price declines. Chicago (+6.1%), New York (+4.0%), and Cleveland (+3.0%) lead on the upside, while Seattle (‑2.5%), Denver (‑2.0%), and Tampa (‑1.9%) show the steepest declines.

AUTOMOTIVE

AUTOMOTIVE (Dealer‑Relevant)

• MMR had the sharpest decline of the year last week with retention down and efficiency soft.
• EVs rose 0.6%.
• Newer cars softened while older cars held steady with Sports Cars and Luxury stable.

• Trucks/SUVs declined 0.13% last week. Full‑size pickups softened; 11‑week run of appreciation.

• Used Car April was down 13% from March down 5% year over year
• Days’ supply: 43 days with an Average listing price: $26,342, up 3.0% year over year and up $25,533 from January.
• New‑vehicle SAAR improved to 16.1M in May, but the market remains unsure of the near-term supply due to the DRAM bottle next ahead that would be as much as 1 to 3% supply so roughly 1 t 3 million vehicles. (The Automotive Advisor Team is watching that closely) (Lease Buy Out??)

TAKEAWAYS (Dealer‑Focused)

 

• Affordability drives everything. Consumers are strained, but still in market—just more price‑sensitive.
• Remember Brand loyalty and Dealer Loyalty has been down since Covid.
  • Brand down 13% to 50% / Dealer loyalty down 12 points.
  • Shoppers choose segment + payment, not brand and over dealer.

TAKEAWAYS

• Affordability is the market. Consumer strain is real confidence is slipping, savings are falling, and real disposable income is negative year over year. Yet used‑vehicle demand remains resilient.
• Wholesale softness = dealer opportunity. Retail prices are holding while wholesale values fall, widening spreads and creating margin for disciplined buyers.
• Used retail dynamics matter. Cars are softening earlier than usual, trucks and SUVs are losing momentum, and small pickups plus full‑size crossovers remain the most consistent performers.
• Brand loyalty has structurally reset.
  • Brand loyalty has fallen from 63% pre‑COVID to ~50% today.
  • Dealer loyalty is down 12 points. Shoppers are no longer loyal to brands—they’re loyal to affordability and segment fit.
• Inventory strategy drives outcomes. Matching segment + price point + local demand is what drives traffic, leads, conversions, and profit in the post‑COVID market.

How to WIN:

• Used inventory strategy is the lever: For you, the Right inventory/Right Amount / Right Price.
• Speed = profit. NADA says now more that in the recent past, dealer profitability is tied directly to how fast a used unit moves from acquisition to showroom to out the door, physical or digital.