Federal agencies have now provided the latest updates which had been earlier delayed due to the government shutdown. The latest reports mostly deal with September but some numbers allow us to better understand the situation in the auto market as we approach the last weeks of the year. Among the main updates are: vehicle sales, pricing trends, consumer sentiment, income and spending as well as early December indicators like gas prices and unemployment claims.
Vehicle Sales Show Weak Monthly Growth
New light vehicle sales rose by just 0.4% in November compared to October, according to the Bureau of Economic Analysis. Fewer selling days during the month may have limited gains. Sales were also down 7.3% from a year ago, reflecting one fewer day of business compared to last November.
The yearly sales are still rising by 2.7 percent compared to 2024 despite the slowdown. That growth, however, has decreased by almost 5% in the end of the third quarter. SAAR stood at 15.6million, higher than 15.3million in October. This is a low figure compared to the 16.5 million rate recorded last November.
In November, fleet sales had a better performance in comparison to the retail segment. Statistics indicate that fleet volume increased by 18 percent annually due to a 45 percent growth in rental sales. Stellantis, Hyundai, and Kia were the top gains in fleet activity in the month. The year to date rental fleet sales have improved by 16%. Commercial fleet sales are in the meantime down 6, and government fleet sales are reduced by 14.
Fleet vehicles made up an estimated 16.8% of total sales in November, while retail sales made up 83.2%. Compared to last year, fleet share increased by 1.5 percentage points.
Vehicle Pricing and Incentives Move Slightly Higher
Early pricing data for November points to a small increase in average transaction prices. The average was $49,814, up just 0.1% from October and 1.3% from the same time last year. The average manufacturer’s suggested retail price also rose, leading to a price-to-MSRP ratio of 95.8%. This is slightly below October’s 96.0% level, suggesting more discounting.
Incentives also rose. The average discount grew by 3.3% in November and made up 6.7% of the transaction price. Year over year, the dollar amount of incentives is down nearly 14%, though as a share of the average price, they are down only slightly.
Gas Prices Fall, Consumer Sentiment Improves
Gas prices dropped below $3 per gallon for the first time since 2021. On December 5, the national average fell to $2.98, marking a 2% decrease from the same time last year.
Consumer sentiment is showing slight improvement. The University of Michigan’s index rose to 53.3 in early December, up 4.5% from late November. One-year inflation expectations dropped to 4.1%, the lowest level since January. The five-year outlook also fell to 3.2%.
Morning Consult’s daily sentiment index moved slightly higher, gaining 0.1% in early December. At the same time, initial jobless claims dropped to 191,000, beating forecasts. This marks the lowest weekly figure since the fourth quarter of 2022. However, ADP’s private payroll report showed weaker job growth, especially among smaller firms.
Income, Spending, and Mortgage Trends Stay Steady
In September, personal income rose by 0.4%, the same as in the previous month. The growth in consumer spending was 0.3 indicating that income growth is still slightly better than spending. Within the last one year, income growth is 5.2%, and expenditure growth is 5%.
The prices according to the PCE index increased by 0.3% in September and are currently up 2.8%compared to a year back. The PCE, the essence of energy consumption, without considering any food, was subject to identical monthly and annual patterns.
This week, Freddie Mac had mortgage rates that were at 6.19%. That is a drop of 4 basis points compared to the last week. Rates have fallen by 66 basis points since December of 2024. Reduced rates are contributing to monthly low payments, although the home prices are increasing, but slightly.
Key Data Ahead: Inflation Report and Fed Meeting
The next release of consumer price data is scheduled for December 18, which is a week after the Federal Reserve has its meeting to determine the interest rates. A number of analysts think a cut of 0.25% is coming, however, the opinions of the Fed officials are still divided on this point. A slower increase in the labor force and a drop in inflation expectations could be factors influencing the decision. The markets will be very attentive.
