Sponsored by Agile Auto

 

 

Economy

• Economic growth continues, although the pace has slowed. Real GDP grew at a 1.5% annualized rate in the second quarter, down from 2.1% in the first quarter. However, consumer spending and private fixed investment combined grew at a stronger 4.2% annualized pace, showing underlying demand remained healthy. BEA
• Employment remains supportive of consumer demand. Employers added 162,000 jobs in August, while unemployment held at 4.1%. Average hourly earnings increased 3.1% over the past year. Continued job and wage growth provides support for vehicle purchases, even as affordability remains challenging. BLS Employment Report
• Household income improved, but spending was restrained. Personal income increased 0.4% in July, and disposable income rose 0.4% after inflation. Consumer spending increased 0.2% in dollar terms but was flat after adjusting for inflation, suggesting consumers remain cautious about expanding purchases. BEA Personal Income and Spending
• Inflation continues to pressure household budgets. Consumer prices increased 3.4% over the year through July, with core inflation at 2.5%. Energy prices were 14.7% higher, including a 24.6% increase in gasoline. August consumer inflation data is scheduled for September 11. BLS Consumer Price Index
• Business costs remain a concern. Producer prices rose 0.4% in August and 5.4% over the past year. Diesel prices jumped 24.1% during the month, creating potential pressure on transportation and vehicle delivery costs. BLS Producer Price Index
• Interest rate relief remains uncertain. The Federal Reserve held its benchmark rate at 3.50% to 3.75% in July, with three officials preferring a quarter point increase. For dealer planning, that supports continued discipline around financing assumptions, floorplan expense, and inventory holding time. Federal Reserve
• What this means for dealers: These indicators suggest consumers still have reasons and resources to buy, but limited room to stretch their budgets. Inventory aligned with local incomes, affordable monthly payments, and reasonable ownership costs should remain a priority.

 

Automotive

• New vehicle demand strengthened in August. The sales pace increased 3.3% from July, while available inventory declined for the third consecutive month to 2.68 million units. Days’ supply fell to 73, its lowest level since April 2025.
• Affordable inventory remains the tightest. The average new vehicle listing price reached $49,486, up 1.9% from a year ago. Vehicles priced at $30,000 or less carried just 54 days’ supply, compared with more than 90 days for vehicles above $60,000.
• Supply varies considerably by brand. Toyota stood at 33 days, Lexus at 36, and Honda at 41. Nissan improved to 67 days, while Stellantis brands, Buick, and Lincoln continued to carry some of the highest inventory levels.
• Used retail demand improved as supply tightened. Used retail days’ supply ended August at 44 days, down from 46 in July. Dealers continued to report difficulty finding affordable used inventory.
• Wholesale depreciation requires attention. The Manheim Used Vehicle Value Index declined 0.9% from July but remained 0.4% above August 2025. Three-year-old vehicle values fell 1.8%, compared with typical August depreciation of 0.6%. Older, more affordable vehicles showed stronger value retention.
• EV performance remains mixed. Wholesale EV values were 4.5% above last year but fell 4.7% from July. That monthly decline reinforces the need to evaluate current trends alongside annual comparisons.

 

Takeaways

• Buy for the customer’s payment. Align vehicle selection, price, mileage, and acquisition cost with what buyers in your market can afford.
• Protect gross through faster decisions. Greater depreciation in younger used vehicles makes disciplined buying, pricing, and aging management essential.
• Source affordable inventory carefully. Stronger value retention supports demand for older vehicles, but reconditioning costs and reliability must remain part of the buying decision.
• Manage each store and segment individually. Differences in supply, demand, and depreciation make national averages only a starting point for inventory planning.
• Keep moving. August sales and tightening retail supply show continued demand despite weaker dealer sentiment. The opportunity is to stock the right vehicles and act quickly as conditions change.