Latest / Market Pulse / Auto Market Trends: Affordability, EVs & What’s Next

Transcript

Auto Market Trends: Affordability, EVs & What’s Next · Market Pulse

0:00
.
0:01
Welcome to the Market Pulse podcast from Equifax,
0:05
where we break down the latest economic and credit insights to help you navigate
0:09
today's business landscape.
0:15
Welcome to the Market Pulse Podcast. I'm your host, Emmaline Aliff,
0:18
leader of the Equifax Advisors. As a group,
0:21
the advisors identify economic considerations and leverage data and analytics
0:26
to translate into industry insights and recommendations for you.
0:30
The goal is to support our clients during economic uncertainty while uncovering
0:35
growth opportunities and consumer and commercial credit risk.
0:39
Today we're focusing on how macroeconomic forces are impacting the auto market.
0:44
I'm pleased to welcome our guest, Jeremy Robb,
0:46
chief Economist at Cox Automotive,
0:48
who is a leading expert on the auto industry As chief economist,
0:52
he oversees Cox Automotives enterprise level economic outlook,
0:56
monthly forecasts, client advisory, media briefings,
0:59
and the strategic integration of data drawn from across the company's extensive
1:04
retail and wholesale platforms. Welcome, Jeremy.
1:08
Before we jump into our main topic,
1:10
we'd like to level set with our brief economic update from economist Justin
1:15
Begley. At Moody's Economics.
1:17
Global Economic Uncertainty has spiked. Once again,
1:21
thanks to the ongoing conflict in the Middle East,
1:24
oil prices have jumped about $30 a barrel since the conflict began,
1:27
and the price of regular unleaded gasoline has increased by about a dollar per
1:32
gallon. Freight costs have also spiked as a Straight of Harmuz,
1:36
which is a key choke point for the shipment of energy.
1:39
Agricultural and industrial goods has been essentially closed.
1:44
Traffic through the stray is down by about 90%. Since the conflict began,
1:49
the supply disruptions have reignited inflation fears putting central banks on
1:54
watch.
1:54
In the US the Federal Open Market Committee kept the Fed funds rate unchanged
1:59
between 3.5% and 3.75%.
2:03
At its March meeting last week.
2:05
The Fed has kept the policy rates steady for the last three of its meetings as
2:09
it watches how the US economy adapts to earlier rate cuts,
2:14
tariffs. And of course, the more recent supply shocks like tariffs,
2:19
an energy shock is,
2:20
is a hit to supply and monetary policy makers can do little to head off
2:25
any of the resulting inflation.
2:27
Monetary policy is really a demand side instrument, therefore,
2:32
the policy makers have to determine whether or not it's
2:37
prudent to wait and see how things shake out.
2:39
And that seems to be what the Fed is doing. For now, though,
2:43
the worst effects of the tariffs are likely behind us in terms of inflation,
2:46
the severity and duration of the oil supply shocks are
2:51
at this point unknown. Inflation expectations, though always important,
2:57
have therefore become crucial to watch the effects of high tariffs and energy
3:01
price shocks are coming after five years of above target
3:06
inflation. And while expectations remain anchored at this point,
3:10
if businesses and consumers start to embed higher inflation into their
3:15
own decision making, the Fed will be forced to once again tighten policy.
3:20
Thank you, Justin. Welcome, Jeremy. Happy to have you back.
3:23
And I know we've had you featured on our Market Pulse webinar recently
3:28
in, in January. And then also I had the opportunity to,
3:32
to hear some of the great things you had to say at you know,
3:35
the Auto Week in Las Vegas.
3:38
So you're really looking forward to our conversation today in part of our
3:43
podcast.
3:44
Yeah, thanks for having me. It's you know,
3:47
I know we talked just about a month ago.
3:50
That month has gone by really quickly, , and here we are you know,
3:55
and into March now with everything happening in the automotive space and lots of
4:00
things around the world happening too.
4:01
But we're also right in the middle of the tax refund season which is really a
4:05
fantastic time to talk about what goes on in the automotive market.
4:08
Yeah, it, it is a fantastic time. And so, you know as we, as we head into this,
4:12
one of the things that I found particularly interesting is when we were going
4:17
into the Auto Week I gave a presentation and we had an extension of that.
4:22
So it was, it was submitted six weeks before my presentation,
4:25
and during that time period,
4:26
there were 35 substantial changes that I would've made across the content
4:31
. So just over six weeks. So I, I imagine all,
4:35
all the things you're gonna talk about today,
4:37
how much things could have possibly changed since that time as well.
4:41
So yeah, I think if any of us learned anything from last year,
4:45
it was you need to be nimble mm-hmm .
4:48
And your thinking and not just 100%
4:53
dialed into exactly one view of what's going to happen when you talk about
4:58
what's, what's going to happen in the future.
5:01
Because things change pretty quickly right now in the environment that we live
5:05
in, especially in the automotive space.
5:07
Absolutely. So, why don't we get started here because, you know,
5:10
a lot of things we've been hearing and and I've heard you talk about it as well,
5:14
is the K-shaped economy and how behavior has been playing
5:18
out. And of course, that means a lot of things across industries,
5:21
and I imagine you have your perspective on what it means for auto that I'm
5:25
really looking forward to diving into.
5:26
But when we look at that macroeconomic picture through the lens of Cox you
5:31
know, automotive data, along with you know,
5:33
any form of consumer credit health that we watch through our Market Pulse index
5:38
and credit trends, you know, we see you know, deeply bifurcated you know,
5:43
k-shaped with some expansion and divergence on the tails, especially. And,
5:48
I saw some things published with you know,
5:50
a dealer track credit availability data, you know, showing, you know,
5:53
a two year high. And I know, you know, if you go back in time, it may not have,
5:56
you know, been that necessarily, but maybe you can help us, you know,
5:59
as the chief economist reconcile and then expand it wherever you'd like to go.
6:03
With respect to you know, understanding how that could be with you know,
6:07
tightening consumer wallets or loosening of credit.
6:10
What are some of the behaviors you're observing?
6:13
Yeah. there's a lot going on. You know,
6:16
affordability continues to be maybe like the number one thing that people talk
6:21
about in the United States as it relates to consumers,
6:25
specifically when we talk about big ticket items like purchasing a
6:30
vehicle or a home or something like that. They're very interest rate sensitive.
6:36
You know, inflation acts just like stock market returns,
6:40
do they, it compounds you know your,
6:44
your 401k the stock market, you want that to compound every year.
6:48
The problem is that inflation does the same thing and but we want it to
6:54
happen at a lesser pace.
6:56
And we haven't seen a lesser pace for several years now. You know,
7:02
actually the average rate of consumer price inflation over the past five years
7:06
has been 4.9% on average.
7:09
We started to come down some in 2024 2025 we
7:14
rose back up. A lot of that was due to the tariffs out there and that,
7:18
so that continues to put pressure on consumers.
7:22
A lot of people think that as we move through the first half of this year,
7:25
we'll continue to see impacts from tariffs.
7:28
And we are seeing that especially on the new vehicle side with pricing and
7:32
things like that. And then might,
7:34
maybe it gets a little bit better as we move into the back half of this year.
7:39
And, and then going off from there one of the things that you think about the K
7:43
shaped economy I've done quite a bit of work on this and what it means for
7:49
consumers in terms of how much they're spending on owning their own
7:53
automotive or auto automobile.
7:56
Having private mobility access every month.
8:00
It shows that the highest end consumers are, are really pretty good,
8:04
you know and, and that may strike some people as,
8:09
as odd given where all inflation has,
8:12
but those people have seen their incomes grow a lot,
8:15
and most of them are benefiting from a wealth effect from a stock market that
8:19
even though lately it's been a little bit more volatile,
8:22
it's still very high related to long-term trends.
8:27
That's giving people a lot more money and assets and things like that.
8:31
So the wealth effect is alive at, well, especially on the new vehicle side.
8:35
And you can see that because like,
8:36
even though we know the average new car is somewhere around $50,000 there's
8:40
really, you know, quite a,
8:42
a strong level of demand or demand supply balance in vehicles that
8:47
are, you know, $70,000 or above that too. So the,
8:52
the top end pretty good, the middle part of that curve,
8:57
and the k you know, they are feeling impacts of inflation overall.
9:02
They have had some, some decent income growth but it's, it's not,
9:07
it's not great for them.
9:08
And then the lower ends have really felt a lot of that impact of that growing
9:13
inflation. And that, you know, in a, in a lot of ways, it,
9:17
it really cuts that consumer out of having their own vehicle.
9:21
Now more than ever,
9:22
when we look into the total price of having a vehicle with insurance
9:27
and maintenance and repair costs and all of that when we talk about like dealer
9:32
track credit availability and,
9:34
and it expanding some of it is a little bit nuanced in how
9:39
that works.
9:39
So if we see that lenders are more willing to finance
9:45
lower down payments or negative equity or longer loan terms,
9:50
that actually expands credit access.
9:52
So it may be like lenders are showing a little bit more willingness to go down
9:57
into maybe what we would call a subprime customer that helps expand credit
10:01
access and helps that index rise at the time when we're seeing
10:06
some of the stress on the consumer overall.
10:11
Yeah, that's, that's really helpful. It sounded like the,
10:13
you you mentioned and rattled off a number of economic you know, you know,
10:17
either policies or statistics and all roads seem to lead to
10:22
the point of affordability and, and how that will play out, whether it's
10:28
you know, tying into the, you know,
10:30
credit availability or the monthly payments or,
10:33
or even things like insurance like you described, so mm-hmm . I,
10:36
I appreciate that.
10:36
And we are also seeing the wealth effect directly in our in our wealth and asset
10:41
data. And, you know, we,
10:43
we have some things that we'll be looking to compare notes with you as we
10:47
release those upcoming in the next month or two. But let's,
10:50
let's go ahead and and, and shift then and start,
10:53
we're gonna start drilling a little deeper into you know, you know,
10:56
things here from the general nature that we were just talking about,
10:59
but let's jump into the shifting wholesale pipeline. So, you know,
11:03
some of the things we've seen is that there's, you know,
11:05
some traditional pipeline of, you know, three year leases. It, you know,
11:09
could be fundamentally changing or the recent expiration of the federal EV tax
11:14
you know credit aggressively cooling you know, with,
11:17
especially as it relates to the, the new pure EV market. And, you know,
11:21
we're seeing, and you know, and a lot of this stuff is,
11:24
is things that I've observed from,
11:26
from your talking around volume surging with respect to hybrids,
11:30
or what about the secondary market?
11:32
So there's a lot of things that are occurring in this space,
11:35
specifically as it relates to that pipeline.
11:37
What are we expecting over the next 12 to 18 months as we are looking at various
11:42
policy shocks ripple through the system?
11:45
Yeah. we are expecting a lot of changes. But a lot of those,
11:49
a lot of the impacts we've seen from the last several years all stem from the
11:54
pandemic, believe it or not. You know,
11:56
sometimes we're still talking about the pandemic and people are like,
11:59
is this still a thing?
12:00
But for the automotive market and for the used vehicle market,
12:03
it's very much a thing when we did not produce or
12:08
ever make those new vehicles in 2021 and in 2022,
12:13
and then we got more normal in 2023, those calendar years, right?
12:17
That pulls supply out of the entire used vehicle ecosystem at
12:22
large, and it will never be replaced. It's, it's never coming back.
12:27
It, historically speaking,
12:29
the number one input into the used vehicle market was an off lease vehicle.
12:34
You could see that the three-year-old was the highest mix of vehicles in the
12:38
wholesale market.
12:39
It's the highest mix of vehicles typically in the used retail market.
12:43
And so back in 2021 and 2022, we had lower new volume overall.
12:48
And OEMs were really centered on selling those vehicles where they made the most
12:52
money. That also meant they didn't lease many cars.
12:56
So we didn't get many leases on the new vehicle side. Back then,
13:00
most leases are three years old,
13:02
so that really pulled vehicles that would have come back off lease starting in
13:07
2024 down. So the wholesale market,
13:10
the used vehicle market overall started to see that number one supply input
13:15
declined a lot in 2024.
13:17
It was low all last year through 2025.
13:21
And now in Q1 of 2026,
13:23
we're just getting to the point where it we're starting to come out of our,
13:28
our bottoming period, if you will,
13:30
and we'll increase a little bit in the second quarter of 2026.
13:35
We'll increase quite a bit more in the second half of 2026,
13:39
because back in 2023, we started getting more normalized,
13:43
new vehicle sales leasing rates rose a little bit.
13:48
But the thing that really happened back in 2023 and in 2024 and in 2025
13:54
were those federal tax incentives really drove a lot of EV leasing.
13:59
And we saw EV and plugin hybrid lease rates on the new car
14:04
side that were running hotter and higher than traditional hybrid or
14:09
ice vehicle rates. And that culminated to last year,
14:13
in 2025 when we actually saw for the full year,
14:17
pretty much ev lease penetration rates be over 50%.
14:22
So that means that a lot of EVs are gonna come back to the
14:27
market.
14:28
We're gonna start to see those increase in share in terms of like their
14:33
share of all lease maturities coming back some this year.
14:37
But it will grow this year in 2026.
14:40
It will grow again in 2027 and 2028.
14:43
So once we start seeing a lot more of these EVs come back to the marketplace,
14:47
they're gonna stay there for,
14:49
for quite some time and be a much bigger part of the whole ecosystem. And,
14:54
you know, that could be kind of a counterbalance to what we've talked about with
14:58
affordability,
14:59
because EVs have depreciated more than some other vehicles have.
15:04
And so we've seen last year that consumer adoption rates for
15:09
used EVs grew.
15:11
If that holds in 2026 into 2027, that would be great,
15:15
because there's gonna be more of these vehicles to come back to market.
15:19
Yeah, that's very very interesting,
15:21
especially with the direction of where I wanted to to go.
15:23
You kind of you're kind of leading me into my questions. And this specifically,
15:28
I'm, I'm, I'm curious,
15:29
because you mentioned a lot of things around like tax refunds the, you know,
15:33
vehicles and I've read and seen that $15,000 vehicles the most in
15:38
demand thing right now, both on the the lower ends, but also people who,
15:42
who may not want to you know, pay, you know, the,
15:45
some of the higher prices that they've been experiencing. But let's get these,
15:48
let's take these macro forces down to the showroom specifically as we're
15:52
starting to get into looking at, you know, what,
15:55
what are some things we may expect or what can people do about it with respect
15:59
to that, you know, massive wall that could exist for, you know,
16:02
a large segment of buyers. And we know tax refunds, you know, as I mentioned,
16:07
and you already were describing that with them being a little more,
16:10
they may bridge that that gap a little bit. But, you know, high financing costs,
16:15
interest rates, et cetera, you know, some potential concern.
16:18
How does the some of that potential fragmentation you know,
16:22
alter how a dealer structures deals or, you know,
16:26
partners with lenders on a daily basis?
16:28
Yeah. Well,
16:29
it makes the relationship between dealers and lenders all all more important.
16:33
It's always important, but, you know,
16:36
for the dealer to transact and get that car to move much of the time they
16:40
need a lender that is willing to finance that vehicle for that customer.
16:46
And no two customers are the same, right? They have different desires,
16:50
different down payments, different, you know, financial impacts and all that.
16:54
So looking at all that, it means,
16:56
it's a lot of work on the FI department really to go out there and,
16:59
and look through that. You know,
17:01
the good part about it is that pro a lot of dealers a lot of lending
17:06
institutions and a lot of finance companies are leaning into using some of these
17:10
AI tools, you know,
17:12
and those AI tools help them chew through some of these scenarios that
17:17
speed up and,
17:19
and like really grow the expansion of being able to look at wider
17:24
options down the road. But you know,
17:28
you still got to like meet a consumer where they are in terms of the payment,
17:33
right? Can they, can they make that work?
17:36
We've seen things where people are extending terms out. The,
17:40
but the problem with extending a term to get the payment lower is that a lot of
17:44
times if you go from a 72 month to an 84 month or something like that,
17:48
you're also gonna have a higher interest rate. Mm-Hmm.
17:51
So that may negate part of the part or all the benefit that you may
17:56
seen from going at a, a longer term. So there's just a lot of things to look at.
18:00
But I do think it is, you know,
18:03
lot not lost on me that some of the ability with the systems and tools we have
18:07
from a technological standpoint help us better
18:12
you know,
18:12
meet a consumer where they need to be and look at a range of options more so
18:17
than we've been able to before.
18:20
Yeah, that's I think that's really you're really helpful, especially as you're,
18:24
we're thinking about you know, consumer stretching their wallets and, you know,
18:28
trying to make that affordability. There's, you know,
18:30
clever things that are being done with respect to you know, terms financing,
18:34
deal structures putting people in different vehicles. But on the,
18:39
on the other side of that, there's the opportunity for leveraging data. And,
18:43
you know, of course, you know, we we're, we have a lot of you know,
18:46
data at Equifax from, you know, various things that we,
18:48
we bring and incorporate,
18:50
and we've already talked about the shifting risk profiles,
18:53
and we've seen and observed that specifically in our data, you know, such as,
18:56
you know, some new, some newer trends in this space in particular,
18:59
like rise in synthetic fraud rise in credit abuse those types
19:04
of activities. Given your focus on you know,
19:08
some of the aspects about, you know,
19:10
these economic concerns and strategic integration of data,
19:13
what do you think is a takeaway that you know,
19:16
both lenders and dealers can have with trying to balance moving metal
19:21
with managing those hidden risks?
19:25
Yeah, that's a difficult question, you know for sure. That's why.
19:30
I wanted you to answer it, .
19:31
Yeah, there's, there's a lot. The thing is,
19:35
and this kind of relates to what I was talking about just before,
19:38
like having some of these tools that we have that are more advanced,
19:42
they're faster, you know,
19:44
those are helpful in terms of looking at a whole picture of the consumer,
19:48
looking at what the consumer's, you know,
19:51
scores have been in the past from a financing standpoint, or their,
19:55
their credit file, right? Thinking about where they may be in the future,
20:00
you know, even with some of this fraud that is ratcheting up,
20:04
which is probably also a byproduct of,
20:06
of these advances in technology that we have. And,
20:09
and then make it more difficult for people or businesses to really know,
20:15
you know, is it real or is it not real? That kind of thing.
20:18
There's all kinds of processes being put in place to try to you know,
20:24
rein some of that in, if you will. And be diligent on that.
20:28
It just means that really every day you gotta stay on your toes, you know, and,
20:33
and you have to, you really need to build your,
20:37
your system in terms of how you're going to finance a customer,
20:41
help this dealer look at this credit bureau or something like that.
20:45
Your system needs to be,
20:47
be almost updated every year now to,
20:50
to put into place how are, are you,
20:53
your teams going to pull some of this information you haven't seen before
20:59
and utilize some of these tools to help you make
21:04
better decisions with the data that you have in front of you each and every day.
21:09
You know,
21:10
my team at Cox Automotive we use ai we talk about it
21:15
weekly have people trying to like, look and see what we can do with it.
21:19
It's basically changing the way that we work.
21:23
I can't imagine that it's not changing the way lenders, dealers,
21:29
you know, groups of people and teams are working as well,
21:32
but no one's got the playbook written yet on it either.
21:36
So we've gotta be in a space where we're open to adapting
21:41
and adopting these new tools and also rewriting how they
21:45
integrate with our past to stay on top of what's going on right
21:50
now.
21:52
Yeah, I couldn't agree, agree more with you about the, the aspects of ai.
21:55
There's been a lot of movement that has occurred there.
21:58
And so I think at least knowing where you stand is probably the,
22:01
the thing now is to say, we're exploring it, we're doing this, but of course,
22:05
you know, time will tell with respect to the overall impacts. But let, let's,
22:10
you know, you mentioned all the things we've been talking about.
22:12
I wanna understand also what is the impact on the dealer's lot in particular.
22:17
So if we think about those factors, like what do you,
22:20
what's gonna dictate who wins and loses on inventory mix and pricing strategy?
22:26
Yeah. you know, the,
22:28
the vehicle market has changed a lot over the past several years. You know,
22:33
we talk about the influx of EVs there,
22:37
that's one component of it. You've got this, you know, plugin ev,
22:42
vehicle volume that's different to,
22:45
you have to charge those vehicles. So, you know,
22:47
dealers have had to get used to this, but we're also seeing still a lot of,
22:53
a lot of adoption and growth in the hybrid market.
22:55
Your traditional hybrid market, very, very strong marketplace overall.
22:59
And we're still seeing that ice marketplace decline a little bit.
23:03
Some of what's happened on the new car side is that really we pulled back in
23:07
terms of new car sar, our, our estimates for this year,
23:10
that it's gonna be down a little bit on a year over year basis,
23:13
but you think about it impacts affordability, where consumers are,
23:18
how high these new car prices are, you know, that we're,
23:22
we're in this market where that may limit what new vehicle sales
23:27
are happening.
23:28
But it's also like basically putting more demand into the used marketplace.
23:33
We've seen more higher income or upper middle income
23:38
consumers moving down the chain into the used vehicle space. You know,
23:42
that helps. Things like depreciation, it slows down depreciation curves.
23:46
When you have high demand,
23:47
you usually have prices that are stickier on the upside on that kind of thing.
23:52
And then you've got situations where, and this matters too,
23:56
like, you know, you think the,
23:58
we're talking about the total cost of a vehicle and insurance costs have gone up
24:02
a lot. Maintenance and repair costs have gone up a lot too.
24:05
And a lot of consumers have put that cost that, that, you know,
24:08
fixing that vehicle the big piece off for a while
24:13
they're maybe at a point where they can't do that anymore, right?
24:16
Or it just doesn't make financial sense in the realm they are.
24:19
And so maybe they need,
24:21
it's time for them to go change out and get get a new to them
24:26
used vehicle,
24:27
or maybe they're going to use some of their tax refund money to spring for that
24:31
big repair in the car too. So you know,
24:36
anytime we structurally increase the price of a new vehicle
24:42
I contend that we create a new used vehicle customer.
24:47
And last year when we had some of these tariffs and they're, you know,
24:50
impacting the price of vehicles in 2026 still from that because it
24:55
operates on a big lag effect. You know, you, you increased demand on the,
24:59
the used car side.
25:00
And so the used car market from a supply standpoint continues to suffer a
25:05
little bit from those off lease maturities we were talking about.
25:08
But there's a lot of demand there still,
25:11
and it's a really robust part of the marketplace.
25:13
And I expect that that's gonna continue to be that way for, for quite some time.
25:19
Yeah. I, that, that makes sense.
25:21
And it is it the curiosity here then as we drive into like the, now,
25:25
what the first thing I'm, I'm interested,
25:27
but is understanding how you're gonna spend your tax refund .
25:32
? Well, I don't know if I'm getting one.
25:34
We'll see if I do you know I have a daughter
25:39
that's a freshman in college,
25:41
so that I very well may go to something like that.
25:45
So I don't have any, any big plans.
25:48
I will tell you in our data that at Manheim though mm-hmm .
25:52
We are expecting to see a very strong impact on the mm-hmm.
25:55
The used vehicle market. And,
25:58
and that's coming through in terms of demand on the wholesale market,
26:01
and then pricing levels too.
26:03
So I believe the industry is very bought into expecting to see
26:08
a, a strong, a strong spring market.
26:11
And one thing we haven't talked about it explicitly,
26:14
but I think matters a lot for tax refunds this year.
26:18
Was that part of the increase that a,
26:21
a lot of consumers are gonna see are from those salt deductions mm-hmm
26:25
.
26:25
Typically those really are more applicable to a little bit of a higher
26:30
income consumer.
26:31
And a higher income consumer has a little bit of propensity to file their tax
26:36
refund later in the tax refund cycle or tax return cycle.
26:41
So that could extend the time period that we see this benefit
26:46
from tax refund season against where we typically see it in other years.
26:51
Yeah. I was hoping to get a new guitar, but I'm paying for college as well.
26:56
.
26:57
.
26:58
Yeah. So what I thought I,
27:01
you brought up a couple things there as you were as you were thinking about that
27:04
from an impact standpoint. It's just, you know, the,
27:07
which made me think about some of the high level you know, how,
27:11
how do you recommend bringing in these macro concepts to micro
27:16
day-to-day execution? And I, the reason I'm asking you is most people, like,
27:21
if they ask me about that question, I I send them your way, .
27:24
And so I'm just curious where you where would you,
27:26
where would you take that besides, because you can't send 'em to yourself.
27:30
.
27:30
The thing about macro trends is that seasonality is
27:35
real. You know, there are,
27:37
there are times of the year that are stronger times of the year that are weaker.
27:41
The new car market is the weakest in January, typically every year. You know,
27:46
it gets better as we move into March.
27:48
March is the fiscal year in for a lot of these Japanese brands,
27:53
you know, Toyota, Honda, Nissan.
27:55
So that usually makes March a pretty big time of year.
28:00
I say that not to talk about what's happening right now, but to say, you know,
28:04
you need to maybe center your focus on the, over the next quarter.
28:09
Like what are some of the big trends that are happening?
28:11
Like we're in the spring market, it's tax refunds, we've got this,
28:14
usually get this big push from Asian brands, right?
28:18
Summer sometimes tends to be we have another like push into the August timeframe
28:24
kind of like end, end of summer, back to school, whatever for whatever reason,
28:28
you know, that can be a stronger point too.
28:30
And then usually in Q4 is a little bit weaker. And so, you know,
28:35
it's really hard to plan your strategy and tactics around a year out
28:40
because of,
28:41
I think we all have and the dealer community has gotten really good at this too
28:46
to be nimble, you know,
28:48
especially over the last year with all of the tariff administration,
28:53
you know, anything that could come at you kind of any, any day.
28:56
And we've seen that already this year in 2026 too. You know,
29:00
everybody has learned to adapt to that as best they can,
29:04
but having a viewpoint over knowing where we are in the cycle
29:08
within a annual period, really getting geared up for, okay,
29:13
over these next three months, I think these things are gonna matter a lot to me.
29:18
You know,
29:19
and really working that into your own process as kind of
29:24
a guiding force I think is something that could, could help a lot of dealers
29:29
out there. So being a little bit more intentional and practical with your
29:35
strategy like almost quarter by quarter.
29:39
Hmm. That's, that's such a great recommendation. Especially, it's,
29:42
it's kind of like a health check. It's like you, I mean, you, you,
29:45
they recommend servicing vehicles at a certain interval, you know, should,
29:49
should service their portfolios the same way. Yeah. Yeah.
29:52
So when we look at you thinking about, you know,
29:56
relying on solely on legacy metrics or other like 30 day supply model
30:00
doesn't seem like it's enough anymore based on the things you were describing,
30:03
the amount of iterations that, that are recommended,
30:06
especially leading into things like incorporating ai et cetera.
30:11
And, and there's so many things that can happen from like the, you know,
30:15
industry first analytics tools.
30:18
And so when we think about where that is, like what,
30:21
are there any types of data that you recommend looking into know whether it's
30:25
like exact recommendations? I'm not sure if that's the you know,
30:29
specific detail that we need, but it's more like,
30:31
what are the types of data to look into or any forward looking indicators that
30:36
could be brought into that regular ongoing process you described?
30:40
I've been in the data and analytics side of the automotive business
30:45
for six or seven years now. At, at Cox Automotive before,
30:50
before I, I came, I was kind of doing it for Nissan son.
30:56
Anyway, my point is, you think about over the last like 15 years, you know,
31:01
we have really as an industry kind of broken the,
31:06
the mold of everything that we can look at.
31:10
And over the past couple of years, that's sped up a lot.
31:13
Our team has developed a lot of things related to lease equity.
31:16
I know a lot of dealers have had that and the ability to look at it within,
31:20
like what is on their books.
31:22
But we kind of have an industry view of it that helps guide, you know,
31:27
a lot of things like,
31:28
like how many vehicles are gonna return to market off lease versus being bought
31:32
at residual value, things like that.
31:35
We did the same thing on the retail loan side where we kind of mine retail loan
31:39
equity and see what those trends do.
31:41
And we hear dealers talk about trade-in or negative,
31:44
negative equity rates of trade-ins and, you know,
31:47
we can kind of like push that back to where it fits into some of the things we
31:51
see too.
31:52
And I just say it because basically we're all awash in data.
31:58
We have to have information.
32:00
A lot of the things we've built are very informational.
32:03
I think a lot of the things, whether it's dealer groups, lender groups,
32:07
risk groups,
32:07
anybody in automotive or business over the past five years have developed a lot
32:12
more tools to look at things. But you, you need,
32:17
you really need to stay on top of all of them or look at the ones that matter
32:22
more either to your specific business dealer, lender, whatever,
32:26
new car used car, you know, high end vehicle, low end vehicle,
32:30
things like that. What matters more credit me,
32:33
whether it's credit metrics or day supply or turn
32:38
rates or interest rates. There's all kinds of things.
32:42
And then use these newer tools like AI or things like
32:47
that to really help you synthesize that information.
32:52
You know, and I think a lot of us are still trying to figure out
32:57
the best application for that, which ones matter the most. But right now,
33:03
you know, we, you can't just look at one thing.
33:05
You kind of gotta look at it all and you can run, you can, you know,
33:10
you can run kind of statistical models in your own business to say, you know,
33:14
these things correlate better with my customer base.
33:18
But as we probably think about it with all these EVs coming
33:23
back on the used car side, you know your customer base may change some or your,
33:27
your vehicles that you have for sale may change some of the next couple of
33:30
years. So, I, i, not to sound like a broker record, but I think being, you know,
33:35
kind of quick on your feet and nimble using some of these analytical tools that
33:39
we have are just really paramount for your everyday
33:44
managers out there to help you guide where your business is going.
33:48
Yeah. I, I would say it's more of a,
33:50
something I wanna listen to on repeat versus a broken record.
33:54
because That point hits home to a lot of these things. And,
33:58
and so I, you, you mentioned something about you know, things, you know,
34:02
coming off lease, et cetera.
34:04
And so I'm specifically interested in the potential electric vehicle wave
34:09
that might happen. And, you know, how, how are,
34:12
how do you think that's a strategy should pivot potentially to be able
34:17
to successfully price, turn, or profit off of the, you know,
34:21
incoming incoming amounts of used vehicles that are,
34:25
that are expected and especially now that buyers can they
34:30
aren't necessarily able to rely on the federal tax incentives to offset some of
34:33
the costs like in the past?
34:35
Yeah. really good point there.
34:38
I talk with a lot of big dealer groups and I had one of them
34:43
publicly traded not too long ago. At the end of it, say, well,
34:47
so you're basically telling me I I have to go sell used EVs.
34:52
And I was like, yeah, I mean, kind of, you know,
34:57
if if you're not moving towards that this year and into next year,
35:02
you're really going to kind of be trying to work with a little bit of a hand
35:08
tied behind your back. And I say that from a supply standpoint, you know,
35:12
the supply into your newer used vehicles
35:18
anywhere from a two to 4-year-old has historically been driven by that off lease
35:23
product. Off lease is starting to come back this year,
35:28
but it's really, the growth is going to be driven in the EV market.
35:32
And we just talked about lease equity, you know,
35:34
lease equity for traditional ice vehicles and hybrid vehicles is actually a lot
35:38
higher than it is for EVs.
35:41
So there's maturities in like lease maturities and then
35:46
there's the return rate.
35:48
How many of those actually come back to some type of wholesale environment?
35:52
And that is driven a lot by those lease equity rates.
35:56
And so having higher ice hybrid lease equity rates mean those return rates will
36:01
be a little bit lower,
36:02
also means they're gonna be higher for EVs with that negative
36:07
lease equity. So you're gonna see a lot more of those. You know,
36:10
consumer education is a big thing.
36:14
There are a lot of dealer groups that have been against this.
36:17
There are certain parts of, you know,
36:19
the United States where you have to travel a lot and
36:24
you know, EVs probably aren't like the best option for that,
36:27
or the weather's really rough or something like that. I,
36:30
I totally understand that, and I'm not, I'm not saying that by any means.
36:36
But as someone that had one of those original leafs you know,
36:40
back in my days at Nissan that got about, you know,
36:44
65 miles on a charge on a good day the vehicles that are
36:49
coming back now are vastly different than those.
36:54
And there a lot of 'em are Teslas, you know, they've got a lot more range.
36:59
But, you know most u ev used EVs,
37:02
if they're getting somewhere around 200 miles, that's pretty good for people.
37:07
It'll get you a lot further than you thought it would.
37:09
The battery health has typically shown that it's held up a lot more.
37:14
And the data we have so far right now also shows that those batteries
37:19
are lasting for quite a bit longer than a lot of us thought they were going to
37:23
when they were originally made,
37:24
which means that the car is going to be around for longer now,
37:29
the car doesn't need as much servicing,
37:31
which is part of the reason that dealers maybe not,
37:36
not be so, you know,
37:38
high on it because they can't get that consumer to come back and do oil changes,
37:43
things like that. But they do choose through tires pretty quickly.
37:47
And, and they will need, you know, those tires done more. And,
37:51
and so I think there's the industry we just kind of,
37:55
this is coming whether we like it or not, and, you know,
38:00
there's gonna be winners and losers out there and,
38:02
and there's gonna be pockets of the us where it can be adopted
38:07
more in pockets where it's adoptive less,
38:10
but you generally see it like the spiderweb, right?
38:13
Growing across an adoption, even in,
38:16
in places where it hasn't been so high before starting to grow. But it just,
38:21
it takes time. And, and once this starts coming,
38:26
like I said, in 2026, we're gonna be,
38:28
we're gonna see at least through 2028 very high levels of,
38:33
of off lease maturities for EVs.
38:36
Yeah. It's, it, it, yeah, I, I agree with that. And it becomes,
38:40
it becomes interesting, you know,
38:41
I have a friend who purchased an ev maybe a year ago,
38:45
and then they moved locations and at the new apartment that they live at,
38:49
they did not have a charger.
38:51
And so it was a very interesting situation that it wasn't one of those things
38:54
just like, what is the infrastructure set up?
38:57
You talked about the distances where things are, et cetera. It's a very,
39:00
it's very complicated as we're moving through some of those things as,
39:03
as infrastructure continues to build. But yeah, ahead, look forward to,
39:06
to seeing it as well. So I, I'll close out with you know,
39:11
I I guess you described the, you know, the environments you know,
39:15
could potentially improve for the second half of the year.
39:18
What leading indicators should dealers be watching to ensure that they're
39:23
positioned to capture that momentum as it as it potentially arises?
39:29
Yeah, I mean, you know, it's, it's early March.
39:33
We're gonna continue to see tax refunds come in. You know,
39:38
as we talked earlier in the podcast,
39:40
consumers have a lot of demands for where their tax refunds are gonna go. So,
39:44
you know, we're expecting to see pretty good translation from consumers to
39:49
vehicles new and used in terms of the purchase rates that
39:54
will be really key to watch,
39:56
like how those ratchet up over the next several weeks.
40:00
So seeing like what happens with tax refunds, are that,
40:04
is that translating into what extent over rates
40:10
from other years because it's seasonal, right? So, so do,
40:14
do we see that translating to vehicle sales that I matter a lot?
40:19
One of the things we had just started seeing that really is gonna matter a lot,
40:23
you know, the fed cut rates three times last year.
40:25
So the Fed funds rates coming down,
40:28
not expected to see the Fed cut again until June,
40:31
and then the second half of the year. Some of these things with like the,
40:36
the Supreme Court ruling against the tariffs,
40:38
if we see a lesser impact on the economy from tariffs,
40:42
meaning that we see lower levels of inflation, that takes time to come through.
40:47
If you start to see that in the monthly data though and how people talk about
40:52
that, especially in the second half of the year,
40:55
I think that does free us up for seeing a little bit more you know,
41:00
fed cuts to the downside mm-hmm . In terms of rate impacts.
41:04
And that's the stuff it takes,
41:06
it takes a bit when the Fed cuts to see it into mortgage rates or to see it into
41:12
used or new vehicle interest rates, how that transpires.
41:15
But those are things that really keep your eye on. And, you know, just a,
41:20
about a week or so ago,
41:21
we saw the 30 year mortgage rate go under 6% for the first time since
41:26
September of 2022. And that doesn't sound like that long ago,
41:30
but it's three and a half years ago. Yeah. Now. So we've had these higher rates.
41:35
And, and one of the really interesting things about automotive is that,
41:40
you know,
41:41
there's probably a lot of pen up demand for people to move
41:46
houses, right? Or to buy a house or something like that.
41:49
And there's a lot of correlation between buying a vehicle and when
41:54
you move and home. So if we see mortgage rates,
41:59
you know, continue to come down a little bit, drive a little bit more activity,
42:03
and the mortgage side, people moving, things like that,
42:06
that's probably fairly simulative for the automotive market as well.
42:11
Well that's about what we had today. So I do really appreciate your time.
42:16
Hopefully we can check back in midway through the year to see some of the things
42:21
and,
42:21
and do some comparisons of what modifications would you recommend at that time.
42:25
So I wanna thank you again for joining us today,
42:29
and for our listeners who would like to learn more, where can they find you?
42:34
Yeah, we have our, our Cox Automotive Market Insights Newsroom page.
42:39
That is the best place to go. We publish a lot of things every week.
42:44
Me I have a team, all kinds of stuff that we put out there.
42:49
You know, we do regular things. At the end of this month,
42:52
we're going to do a webinar for about an hour and then we do
42:57
quarterly calls on the Manheim Index and things like that.
43:00
So whether you dial in and can go and listen to that a lot of people just
43:04
download the presentations that kind of stuff. We know that too.
43:07
But we're out there really every week trying to bring the best
43:12
information available in the automotive market.
43:14
And I would encourage everybody to just go read up on that as much as you can.
43:19
Yeah, I, I would encourage it as well.
43:20
You're definitely obviously a go-to resource for us as we explore those topics
43:25
as well. So thank you so much for joining us again, Jeremy.
43:29
Yeah, thanks for having me. I appreciate it.
43:33
The information and opinions provided in this podcast are intended as general
43:37
guidance only, and are subject to change without notice.
43:40
The views presented during the podcast are those of the presenter as of the date
43:44
This podcast has recorded and do not necessarily reflect official positions of
43:48
Equifax.
43:50
Investor analysts should direct inquiries using the contact desk box on the
43:54
investor relations section@equifax.com.