Latest news with #JonathanSmoke
Miami Herald
16-07-2025
- Automotive
- Miami Herald
New car buyers are finally starting to feel the pain from tariffs
Car buyers have been spoiled by the current buyer's market. Car dealers have relied on incentives to combat the expected loss in demand from the 25% auto tariffs President Donald Trump announced in April. "People are buying cars because they think tariffs are coming," one Mazda dealer said. Related: Ford debuts plan to increase sales that car buyers will love Auto sales climbed sharply through the first half of the year as consumers were motivated by the incentives and the need to buy vehicles before any tariff-related price increases. A recent Bank of America note, however, suggests that the good times are slowing as consumer vehicle loan applications declined from their peak in April, "suggesting that 'buying ahead' has largely run its course." Bank of America expects lower-income and younger buyers to feel the most pain, as its data shows that median car payments have grown faster than new and used car prices since 2019. Shockingly, of those households with a monthly car payment, 20% have a payment over $1,000. Image source:Make no mistake: The auto tariffs are extremely expensive. But automakers, at the White House's behest, have chosen to swallow much of the pain for now. "Tariffs remain a major headwind for vehicle affordability," said Cox Automotive Chief Economist Jonathan Smoke. "Even with some trade relief, the added cost – up to $5,700 per imported vehicle – hits the most affordable models hardest, limiting options for price-sensitive buyers." "We are in the early stages of seeing how manufacturers deal with these added costs, but we do not believe that the American consumer can absorb it all." Related: Car buyers have a lot riding on the 'Big, Beautiful Bill' The estimated average auto loan rate rose by 5 basis points in June to 9.94%, according to Cox Automotive. The current level is still lower by 75 bps year over year, but auto loan rates are the highest they've been since December. The average new-vehicle price rose 0.2%, according to Kelley Blue Book, and the typical payment increased by 0.1% to $757, also the highest it's been since December. The average monthly payment peaked in December 2022 at $795 per month. Nearly half of American drivers cite car expenses as the reason they can't save any money, and the average American spends about 20% of their monthly income on auto loans, fuel, insurance, and maintenance. Most financial experts cap the monthly income you should spend on a vehicle at 15%. According to a MarketWatch Guides survey, about 10% of drivers say they spend 30% of their monthly income on driving, while another 12% said they "found themselves living paycheck to paycheck due to the financial strain of their cars." In addition to capping your car payments at about 15% of your monthly take-home, financial experts also recommend shoppers aim for a 20% down payment, a 36- to 48-month loan term, and expenses (including insurance) at between 8% and 10% of your gross monthly income. Experts also recommend that you know your credit score and loan approval amount in advance and that you shop around with different lenders for the best rate. Related: Another luxury car maker is taken down by US tariffs The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
08-07-2025
- Automotive
- Yahoo
Manheim Used Vehicle Value Index Rises in June as Auto Market Continues To Be Impacted by Tariff-Driven Volatility
The Manheim Used Vehicle Value Index climbs to 208.5, up 6.3% year over year and 1.6% month over month, reflecting seasonal strength despite tariff-driven volatility. Retail demand remains solid as off-lease supply continues to tighten, supporting higher used-vehicle values. The used-vehicle market is showing signs of normalization and resilience, outperforming the new-vehicle segment in terms of stability. ATLANTA, July 8, 2025 /PRNewswire/ -- Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were higher in June compared to May. The Manheim Used Vehicle Value Index (MUVVI) increased to 208.5, representing a 6.3% year-over-year increase and a 1.6% rise above May levels. The seasonal adjustment forced the index higher in the month, as non-seasonally adjusted values fell more than usual following the volatility induced by the tariff announcement. The non-adjusted price in June decreased 1.1% compared to May, which now makes the unadjusted average price higher by 5.1% year over year. "Wholesale appreciation trends have been more volatile over Q2 as tariffs really impacted new sales and supply, which impacted the used marketplace as well," said Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive. "The Manheim index has generally been rising since last June, and we typically see the strongest changes for the year in the second quarter as the 'spring bounce' comes to an end. As we move through the second half of 2025, it's likely that some of the reported strength in the market tapers, as the year-over-year comparisons are tougher in the back half of the year. Even so, retail sales continue to run a bit hotter than prior years, and off-lease supply into the market is still on a downward path, two factors which should be fairly supportive of higher values as we move onward." Used-Vehicle Market Demonstrates Remarkable Stability Amid Shifting Supply DynamicsThe used-vehicle market continues to demonstrate remarkable stability and resilience, even as the broader automotive landscape experiences shifts in pricing and supply. While the new-vehicle segment has seen more pronounced swings, the used market has remained consistently strong. "Historically, the used market has been incredibly consistent; but the pandemic disrupted much of that consistency, and starting in mid-2020, we saw much more volatility than we'd normally expect," said Cox Automotive Chief Economist Jonathan Smoke. "What we are seeing in the Manheim Index over the course of the first half of this year suggests we could finally be out of that pattern. Demand has remained steady, but the real change has been in supply. With the acceleration of the new-vehicle market in early Q2, an uptick in trade-ins naturally followed, increasing used inventory. The change in supply-side dynamics is driving the return to normal for the used-vehicle market, and this stability is what we expect to see in the second half of 2025." Weekly MMR Trends Show Elevated DepreciationIn June, Manheim Market Report (MMR) values experienced price declines for each week of the month, with the largest weekly decline occurring in the final week. In that final week, MMR values fell by 0.6%, which was higher than weekly rates earlier in the month. Over the last four weeks, the Three-Year-Old Index decreased an aggregate of 1.3%, higher than normally seen. Those same weeks delivered an average decrease of just 0.6% between 2014 and 2019, indicating depreciation trends were elevated and influenced by higher inventory levels and the volatility from the tariffs over the last quarter. Over the month, daily MMR Retention, which is the average difference in price relative to the current MMR, averaged 99.2%, meaning market prices stayed below MMR values this month, yet they were higher than May levels. Against last year, valuation models were down by 0.1 percentage points (10 bps) for MMR retention, though they are higher than June levels seen in 2022 and 2023. The average daily sales conversion rate rose to 57.8% in June, an increase of over 1 percentage point against last month and higher than normally seen at this time of year. For comparison, the daily sales conversion rate averaged 53.1% in June over the last three years. Luxury Segment Leads Year-Over-Year Price GainsAlmost all major market segments were higher for seasonally adjusted prices year over year in June, with the exception of compact cars. Compared to June 2024, the luxury segment rose the most for the fifth month in a row, increasing by 8.8%, with SUVs coming in the second and higher by 6.0% over the last year. Underperforming the industry-wide increase of 6.3%, both mid-size sedans and trucks increased 2.8%, and compact cars showed the worst performance, coming in down 0.1% against last year. All segments were higher compared to the previous month, with the luxury segment rising by 1.2%, while the trucks segment was higher by 1.1%. Both compact cars and SUVs were higher by 1.0%, while mid-size sedans rose 0.8% in the period. Used EV Values Rebound Strongly Year Over YearLooking at the market by powertrain, electric vehicle (EV) values are showing significant gains compared to last year, partly due to the depressed values seen during the comparison period. Wholesale EV values experienced steep declines in the second half of 2023 and the first half of 2024, reaching their lowest point since Q3 2021 in June 2024. Since then, EV values have rebounded, with year-over-year appreciation trends outpacing those of non-EVs for the past three months. In June, EV values were up 12.1% year over year, while non-EVs rose by 5.6%. Month over month, EV values increased by 1.5%, slightly ahead of the 1.4% gain for non-EVs. This rebound is also supported by a broader shift in the used-EV market. Robb noted, "The used-EV market is becoming more diverse, moving beyond a concentration in just a few models like the Nissan Leaf and Tesla Model 3. This growing diversity has contributed to improved values and a more mature used-EV landscape." The used-EV market is set up for a potentially impressive Q3. "With the EV tax credits for new and used vehicles now set to be eliminated at the end of Q3 and supply levels currently tightening, we could see further strength in the used-EV segments in the coming months as consumers rush to take advantage of the credit before it expires," Robb said. Retail Used-Vehicle Sales Dip in June, While Inventory Remains StableAssessing retail vehicle sales based on observed changes in units tracked by vAuto, initial estimates of retail used-vehicle sales in June were down 1.5% compared to May but up year over year by 2%. The average retail listing price for a used vehicle increased 0.3% over the last four weeks. Using estimates of retail used days' supply based on vAuto data, an initial assessment indicates June ended at 45 days' supply, unchanged from 45 days at the end of May but down one day from June 2024 at 46 days. New-Vehicle Sales Decline Sharply From MayNew-vehicle sales in June declined 4.2% from last year, and volume was down sharply month over month, falling 14.2% from an elevated level in May, a month that had continued to be influenced by the tariff enactment. The June sales pace, or seasonally adjusted annual rate (SAAR), came in at 15.3 million, up 0.3 million from last year's pace and lower than the 15.6 million level in May. Combined sales into large rental, commercial, and government fleets declined 3.8% year over year in June, as a smaller increase in rental fleet sales was offset by continued weakness in government and commercial. Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining new retail sales were estimated to be down 3.0% from last year, leading to an estimated retail SAAR of 12.9 million, down from 13.4 million in May but up from 12.2 million last June. Fleet share was estimated to be 17.6%, down from last year's 18.6% share. Cox Automotive Revisits Used and Wholesale Vehicle Market Forecast and Outlook for 2025As announced on June 25 in its Mid-Year Review, Cox Automotive has revisited its 2025 forecasts. The used market is proving to be much more stable, as expected, with consumers opting for used vehicles due to uncertainty about tariffs remaining at current levels. Cox Automotive projects that used-vehicle sales will reach 20.1 million in 2025, which is an estimated 1.2% increase compared to 2024. Sales growth is expected to remain muted, as retail and wholesale supply will continue to be constrained in the coming year due to lower production during the pandemic and fewer lease maturities returning to the market. With the increased pressure on the cost of new units, used-vehicle values, as measured by the MUVVI, are expected to experience more appreciation in 2025 than seen over the last few years. Before the announcement of tariffs, the forecast had the Manheim Used Vehicle Value Index ending December 2025 up 1.4% from the end of 2024, slightly below the long-term average rise of 2.3%. In March, the forecast was revised upward to an increase of 2.1%, due to the condition of the used retail supply and the anticipation that a greater number of consumers will shift from purchasing new vehicles to used ones. Given the volatility observed in the market over the last quarter, coupled with stronger year-over-year comparisons in the latter half of 2025, the Manheim Used Vehicle Value Index is now projected to be 1.8% higher year over year in December 2025, just below its long-term run rate. Read the commentary for more perspective on the Manheim Used Vehicle Value Index performance in June and Q2. About Cox Automotive Cox Automotive is the world's largest automotive services and technology provider. Fueled by the largest breadth of first-party data fed by 2.3 billion online interactions a year, Cox Automotive tailors leading solutions for car shoppers, automakers, dealers, retailers, lenders, and fleet owners. The company has 25,000-plus employees on five continents and a family of trusted brands that includes Autotrader®, Dealertrack®, Kelley Blue Book®, Manheim®, NextGear Capital™, and vAuto®. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately owned, Atlanta-based company with $23 billion in annual revenue. Visit or connect via @CoxAutomotive on X, CoxAutoInc on Facebook, or Cox-Automotive-Inc on LinkedIn. View original content to download multimedia: SOURCE Cox Automotive Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
New York Times
02-07-2025
- Automotive
- New York Times
Senate Bill Offers Interest Deduction for Buyers of American-Made Cars
On Tuesday, the Senate passed the Republicans' sprawling domestic policy bill with a little-noticed potential boon, allowing some Americans to deduct thousands of dollars in interest on a new car. But the benefits of the deduction, estimated to cost $31 billion over the next four years, may be limited to a narrow slice of car buyers, economists say. According to the available legislative text, the tax break would apply to only some new cars, and most buyers would see far less than the $10,000 maximum deduction. The provisions are limited to new vehicle made or finally assembled in the United States, as part of President Trump's push to bolster domestic manufacturing. The potential benefit comes as another one is set to be taken away: The G.O.P. bill would almost immediately end tax credits for electric cars. At current rates, only buyers with new auto loans of $110,000 or more would get the maximum benefit for interest payments. That is 'very rare,' Jonathan Smoke, an economist at the market research firm Cox Automotive, said last month. The full text of the bill that passed on Tuesday was not immediately available. Mr. Smoke said that only one percent of auto loans in the United States are of that size, often for luxury brands such as Ferrari, Lamborghini or Aston Martin. Most buyers finance much less expensive vehicles. The average car loan is now about $43,000, according to Cox Automotive. For a typical loan, Mr. Smoke said, average buyers could deduct around $3,000 in the first year of a six-year loan, but in reality, most would pay only about $500 less in taxes in year one, with that amount shrinking each year. 'The industry generally is positive about it,' Mr. Smoke said. 'But at the end of the day, it's really not something that changes a decision to buy a new vehicle.' The structure of the bill also limits who can benefit. The deduction begins phasing out for individuals earning more than $100,000 (or $200,000 for married couples). The bill has been sent back to the House for approval, with an aim to reach Mr. Trump's desk by July 4.
Forbes
25-06-2025
- Automotive
- Forbes
Cox Forecasts Slowing Vehicle Sales, Higher Prices In 2025's 2nd Half
Ford trucks are seen at a car dealership in Montebello, California on May 5, 2025. (Photo by ... More Frederic J. BROWN / AFP) (Photo by FREDERIC J. BROWN/AFP via Getty Images) New vehicle deliveries will slow in the year's second half amid higher prices spurred by the tariff-related costs, Cox Automotive said Wednesday in a webinar. The current April-June period 'will turn out to be a relatively strong quarter," Jonathan Smoke, Cox's chief economist, said during the presentation. 'We now face slowing demand.' Consumers went to dealers to buy cars and trucks made before tariffs were implemented by the Trump administration. That 'surge is now in the rearview mirror,' said Charlie Chesbrough, Cox's senior economist. Cox said the seasonally adjusted annual rate (SAAR) for vehicle sales will probably be 15.3 million for June, down from 15.6 million in May and a rate of 17.5 million in March and April. Cox said in a statement that second-quarter deliveries will be 1.7% higher compared with a year earlier. The Trump administration has levied tariffs on imported vehicles as well as steel and aluminum. Tariffs are paid by companies that import goods. Those costs typically are passed on to customers. Tariffs are not payments from one country to another. 'We don't think consumers can absorb it all,' Smoke said of tariff costs. Cox forecasts U.S. 2025 new vehicle sales of 15.6 million to 16.3 million. The company originally projected 2025 sales would total 16.3 million. In addition to tariffs, consumers are dealing with continuing high interest rates for vehicle purchases. Federal Reserve Chair Jerome Powell has held interest rates steady despite criticism from President Donald Trump. 'The new vehicle market is likely to see the return of inflation,' Chesbrough said. Also in the presentation, Cox said the picture for electric vehicles is mixed. A $7,500 tax credit for EVs may end. But EV offerings are expanding. Some said the rest of 2025 will see 'a rollercoaster ride for EVs.'
Miami Herald
19-06-2025
- Automotive
- Miami Herald
Car buyers, dealers are both shocked by latest price trends
Tariffs have been on car buyers' minds as they've headed to lots around the country. The threat of paying an import tax on our favorite Toyotas, Hyundais and Land Rovers has motivated buyers in a way the car industry hasn't seen in years. Auto dealers' customer traffic index rose to 37 from 33 in Q1 last year. Franchised dealers reported a 10-point increase in in-person visits, the largest increase since the metric was introduced in Q3 2022, according to Cox Automotive. Related: Popular Ford newcomer overtakes Jeep in a key area "People are buying cars because they think tariffs are coming," one Mazda dealer said. "The U.S. economy remains fundamentally strong, but the recent tariffs have had a swift and measurable impact on vehicle affordability," said Cox Automotive Chief Economist Jonathan Smoke. During the first part of the year, auto dealers offered incentives to get people through the doors, leading to new vehicle affordability improving to its best level in nearly four years in March. The average price of new vehicles decreased by 0.2% in the month, according to Kelley Blue Book. The average auto payment also fell by 0.2% to $739 per month, a 1.3% decline year over year, and the median weeks of income needed to purchase the average new vehicle fell to 36.7 weeks from a downwardly revised median of 36.9 weeks in February. But new data suggests that the good times are coming to an end. Pricing trends are going the wrong way for car buyers, according to new data from the Cox Automotive/Moody's Analytics Vehicle Affordability Index, After reaching the lowest affordability point of the year in April, the index "essentially flatlined"at that level in May. "The forces that typically drive improvement – like incentives and income growth – have been neutralized by stubbornly high interest rates and stagnant prices," Smoke said. "Without meaningful gains in wages and further easing of rates, we're likely to see affordability limit demand as we move into the summer months." Related: Ford CEO Jim Farley has a strong take on tariffs The estimated average auto loan rate rose by 9 basis points in May to 9.88%, but it was still lower year over year by 77 basis points. Income growth was also strong in the month at 3.4% year over year. The average payment increased 0.2% to $756, marking the highest monthly payment since December, despite a 1.1% decline year over year. The average monthly payment peaked at $795 in December 2022. The number of median weeks of income needed to purchase the average new vehicle held steady at 37.4 weeks. Last year, it took 39 weeks of median income to purchase the average new vehicle, even though prices were 1% lower because interest rates were higher. Due to the uncertainty surrounding President Donald Trump's trade war, dealers have increased incentives to combat consumer sentiment, which has been in the tank since Trump took office. Nearly half of American drivers cite car expenses as the reason they can't save any money, and the average American spends about 20% of their monthly income on auto loans, fuel, insurance, and maintenance. Most financial experts cap the monthly income you should spend on a vehicle at 15%. According to a MarketWatch Guides survey, about 10% of drivers say they spend 30% of their monthly income on driving, while another 12% said they "found themselves living paycheck to paycheck due to the financial strain of their cars." Related: Car buyers notice a disturbing trend at the car lot The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
