Auto Market Weekly Summary

Key Highlights

• In February, year-over-year inflation and core inflation decreased.
• Consumer credit, excluding mortgages, experienced slower growth in January.
• Access to auto credit improved modestly in February, but channel and lender trends were mixed, according to the Dealertrack Credit Availability Index.

Inflation Trends

Inflation decelerated in February, with headline inflation declining to 2.8% year over year and core inflation declining to 3.1% year over year.

• According to the Consumer Price Index (CPI), headline inflation decelerated substantially to 0.2% in February from 0.5% in January.
• Core CPI, which excludes food and energy, also saw a larger deceleration with an increase of 0.2%, down from a 0.4% gain in January.
• Shelter costs decelerated to a gain of 0.3%.
• Transportation commodities less motor fuels decelerated substantially to a gain of 0.2%.
• Used-vehicle prices increased by 0.9% following a 2.2% gain in January.
• New-vehicle prices declined by 0.1%, and motor vehicle parts declined by 0.5%, following an increase of 0.8%.
• Motor vehicle insurance decelerated to a gain of 0.3% from 2% in January.

Consumer Credit Trends

Consumer credit excluding mortgages saw decelerating growth in January, according to the latest report from the Federal Reserve.

• Consumer credit expanded by $18.08 billion following growth of $37.05 billion in December.
• Revolving credit slowed to a gain of $8.99 billion after a $20.86 billion increase in December.
• Nonrevolving credit increased by $9.10 billion, down from $16.19 billion in December.

Auto Credit Accessibility

Access to auto credit improved modestly in February, but channel and lender trends were mixed., according to the Dealertrack Credit Availability Index.

• The approval rate increased, the subprime share increased, terms lengthened, and negative equity increased.
• Down payments increased, and yield spreads widened, negating some of the positive effects.
• Credit access improved for new loans not from captives and all types of used loans but tightened slightly for new loans from captives.
• Credit access in February was looser than a year ago and was looser across all channels, with the most improvement in new vehicle sales but the least improvement in independent used sales.
• Credit access tightened for captives and credit unions in February but improved for auto-focused finance companies and banks.

Auto Loan Performance

Auto loan performance was mixed in February as severe delinquencies declined but defaults increased.

• 60-day+ delinquencies declined in February for the first time in three months but were up 1.9% year over year.
• In February, 2.09% of auto loans were severely delinquent, down from 2.11% in January but up from 2.04% a year ago.
• 7.73% of subprime loans were severely delinquent, down from 7.83% in January and 7.99% a year ago.
• Defaults increased by 5.1% in total in February and were up 8.8% year over year.
• Defaults of subprime auto loans increased by 6.3% and were up 4.8% year over year.
• The annualized default rate for February was 3.42%, higher than January’s 3.33% and last year’s 3.13%.

Consumer Sentiment

Consumer sentiment is down again so far in March.

• The initial March reading on Consumer Sentiment from the University of Michigan declined 10.5% to 57.9, the lowest reading since June 2022.
• The index was down 27.1% year over year.
• Views of current conditions and expectations both declined, with expectations declining the most.
• Expectations for inflation in one year jumped to 4.9% from 4.3%, and expectations for inflation in five years increased to 3.9% from 3.5%.
• Consumers’ views of buying conditions for vehicles declined to the lowest level in more than two years as views of prices deteriorated, but views of interest rates improved.

Jonathan Smoke

Chief Economist

Jonathan Smoke leads Cox Automotive’s economic and industry insights team, which tracks key metrics and trends impacting both the wholesale and retail markets for vehicles informed by the proprietary data from the company’s businesses and platforms. For 28 years, Smoke has focused on translating data and trends into relevant actionable insights for the industries that represent the biggest purchases that consumers make in their lifetimes: real estate and automotive. Smoke joined Cox Automotive in 2017.