Auto Market Weekly Summary: Mid-September Edition
This edition highlights key updates on inflation, credit availability, and the effects of rising energy prices on the auto market.
Bottom Line Up Front
- Diesel prices have crossed $6 per gallon, raising concerns as it impacts the transportation of goods across the country.
- August inflation reports indicate a year-over-year increase in producer prices (5.4%) while consumer prices stable at 3.4%.
- Notable increases were observed in inflation expectations, affecting Federal Reserve decisions on interest rates, expected to rise this week.
Consumer Strain and Economic Outlook
- Negative real wage growth has persisted for five months, with inflation exceeding income gains.
- The 10-year Treasury yield is approaching 5%, impacting borrowing costs.
- Auto loan rates are on the rise, with new-vehicle rates up 35 basis points since July, signaling a more challenging financing environment.
Credit Availability
- In August, auto credit access increased for the fourth consecutive month, reaching its highest level since November 2015.
- Gains were broad-based, but subprime lending saw a decline despite an uptick in the subprime share.
Consumer Price Inflation
- Headline inflation rose 0.4% month-over-month in August.
- Energy prices saw significant increases, with gasoline prices up 27.4% year-over-year.
- New and used vehicle prices saw modest increases.
Producer Price Inflation
- Producer prices accelerated due largely to energy price spikes, with diesel fuel alone rising 24% month-over-month.
- The producer price index for final demand rose by 0.4% in August, pushing the year-over-year rate to 5.4%.
Consumer Credit
- Consumer credit grew by $18.1 billion in July, a notable increase from June.
- While revolving credit saw a slowdown, nonrevolving credit, including auto loans, grew at a significantly higher rate.
This summary underscores rising costs across various sectors and the implications for consumers and the auto market going forward.
