Auto Market Update

Week of July 2, 2026

Economic Update

• Oil prices continue to decline as shipping through the Strait of Hormuz normalizes, easing one of the market’s biggest inflation concerns.
• GDP was revised higher to +2.1% for Q1, signaling a stronger U.S. economy than previously estimated and reducing the likelihood of near-term Fed rate cuts.
• Inflation remains elevated, but lower gasoline prices should begin providing relief in upcoming inflation reports.
• Consumer income and spending both increased 0.7% in May, although spending continues to outpace income over the longer term, keeping pressure on household budgets.
• Housing remains weak, with new home sales, housing starts, and building permits all declining, reflecting continued affordability challenges.
• Despite broader economic pressures, automotive demand remains resilient, supported by several years of pent-up replacement demand.

Wholesale Market

• Wholesale values softened for the third consecutive week as seasonal depreciation accelerated.
• The 3-Year-Old MMR Index declined 0.4%, continuing a normal seasonal correction.
• MMR Retention fell to 99.20%, its lowest level of 2026.
• Wholesale inventory increased again and is now 12% higher than a year ago, providing dealers with more buying opportunities.

Segment Trends

• Trucks and SUVs led June’s depreciation, with every truck segment declining simultaneously for the first time in nearly five months.
• Full-size pickups experienced the largest price declines.
• EV values fell 1.1%, ending a 16-week streak of appreciation.
• Near Luxury and Premium Sport Cars remained among the strongest performing segments.

Retail Pricing

• Retail prices declined only modestly while wholesale values fell more rapidly.
• As a result, wholesale-to-retail spreads continue to widen, creating stronger front-end gross opportunities for disciplined buyers.
• Non-Luxury Spread: $4,385
• Luxury Spread: $6,426
• Used vehicle prices remain elevated. CARFAX July Used Car Index, 3% increase in June, following a sharper 3% jump in May. Up 2,475 on average from January
  • The average retail price of a used vehicle is approximately $25,500 nationwide.
  • The price increase adds approximately $44 per month to the average payment.
  • Bain and Company Study, not ease in sight
  • Cars: Up approximately $1,350 over the past six months.
  • Pickups, luxury vehicles, and SUVs: Up approximately $1,500 since the start of the year.
  • Vans and minivans: Up approximately $2,000, reaching an average retail price of $23,689.

Dealer Takeaways for the Second Half of 2026

• Affordability continues to drive consumer demand. Focus acquisition on vehicles with the strongest payment-to-value proposition.
• Wholesale values are softening, but retail pricing remains relatively stable. This creates favorable buying opportunities for disciplined operators.
• Avoid chasing inventory. Continue buying consistently rather than reacting to short-term market swings.
• Manage aging inventory aggressively. Holding costs continue to increase while depreciation accelerates.
• Protect inventory turn over volume. Cash flow and inventory velocity remain the foundation of profitability.
• Take advantage of widening wholesale-to-retail spreads by purchasing clean, retail-ready inventory before competition increases.
• Strengthen F&I and Fixed Operations. As front-end margins normalize, back-end gross and customer retention will become even more important profit drivers.
• Continue investing in used vehicle operations. The post-COVID market has permanently shifted toward operational discipline, inventory intelligence, and data-driven decision making.

Bottom Line

The second half of 2026 is shaping up to reward disciplined operators. The economy is stabilizing, wholesale prices are creating better acquisition opportunities, and retail demand remains resilient despite affordability pressures. Dealers who consistently buy the right inventory, control reconditioning costs, maintain inventory turn, and execute disciplined operational processes will continue to outperform those waiting for the market to return to pre-COVID conditions.

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