Auto Market Update

 

Economic

The U.S. economy continues to show resilience, but growth is becoming more measured.

• Even with the recent counter measure against Iran for continued misbehaviors this week, the market seems to have already surrendered most of the oil war premiums.
• Consumer sentiment improved 3% in June, supported largely by gasoline prices that are approximately 11% lower than a year ago. While consumers remain cautious, confidence continues to recover.
• Consumer spending remains positive, although spending growth has slowed over the past several weeks, suggesting consumers are becoming more selective with discretionary purchases.
• Employment remains healthy. The unemployment rate declined to 4.2%, although job creation continues to be uneven and prior months have seen downward revisions.
• Inflation within automotive is no longer being driven by vehicle prices. Instead, insurance, maintenance, and repair costs continue to be the primary contributors to automotive-related inflation. Vehicle pricing itself has become largely neutral over the past year.

 

Automotive

The used vehicle market remains remarkably stable heading into the second half of 2026.

• Manheim Used Vehicle Value Index increased 2.1% year-over-year in June and finished essentially flat from May (+0.1%), demonstrating continued wholesale price stability.
• June experienced a larger-than-normal seasonal decline (-1.3%), but Cox Automotive attributes this to a normalization following a stronger-than-usual spring market rather than weakening demand.
• Weekly MMR values remain stronger than historical averages across nearly every model year, indicating wholesale demand continues to outperform normal seasonal patterns.
• Sales conversion at Manheim remains exceptionally strong (57.5%), while wholesale days’ supply remains near normal seasonal levels at approximately 27 days.
• Retail demand continues to hold:
  • New vehicle retail sales are down approximately 3% year-to-date.
  • Used vehicle retail sales are down only 2% year-to-date, despite difficult comparisons against a strong 2025.
• Inventory conditions continue to favor used vehicles:
  • New vehicle days’ supply has tightened significantly.
  • Used inventory remains at healthy, normal seasonal levels, supporting pricing discipline.
• Electric vehicles continue to recover in wholesale value:
  • EV wholesale values increased 12% year-over-year, while traditional internal combustion vehicles increased approximately 1.7%.

 

Dealer Takeaways

1. Continue buying confidently. Wholesale values remain unusually strong for this point in the year and used inventory levels remain balanced. The market continues to reward disciplined acquisitions rather than conservative buying.
2. Stay focused on inventory quality, not quantity. Stable pricing means profitability will increasingly come from purchasing the right vehicles—not simply carrying more inventory.
3. Don’t expect large wholesale declines. While normal seasonal depreciation has returned, the overall wholesale market continues to outperform historical averages, limiting downside risk on properly purchased inventory.
4. Watch consumer affordability. Improving sentiment is encouraging but slowing consumer spending and higher ownership costs (insurance and repairs) make pricing strategy and inventory selection more important than ever.
5. Use store-specific intelligence. As the market normalizes, dealer performance will be determined less by overall market appreciation and more by acquiring the vehicles that historically deliver the highest turn and gross within each dealership’s unique market.

 

Agile Auto Perspective:

The wholesale market remains healthy, retail demand is steady, and inventory levels are balanced. Dealers that continue making data-driven acquisition decisions, focus on their Core Inventory, and price vehicles to current market conditions should be well positioned for a strong third quarter.