The Numbers Look Fine. But Fine Isn't the Whole Story.
If you’re a GM or dealer principal, May probably felt like one of the weirdest months in recent memory. The first 20 days felt like February. Then the last ten days went on a heater, and you closed out with decent numbers.
Here’s the problem with that: if your store needed a late-month sprint to make the month work, and you still didn’t make much money, what happens when that sprint doesn’t come?
On the surface, demand is holding. The April SAAR was revised up to roughly 16 million units and May came in around 16.1 million. But underneath those totals, the market has split in a way that total numbers won’t show you.
The Selective Market Has Arrived
This isn’t a weak market. It’s a selective one.
Hybrid sales are up nearly 40% since the Middle East conflict began, running at a pace roughly six times stronger than EVs. Gas station spending is up 25% year over year. Consumers who are watching $4 gas and a tighter monthly budget are making deliberate choices about what they drive next.
Cars priced over $65,000 have doubled their market share in the last six years. Cars over $85,000 are up 500%. The top end of the market is where most of the volume growth has been. But that growth doesn’t apply evenly. If your store is weighted heavily in high-end trucks and SUVs and you’re not selling to that top 10% of consumers, you’re fishing in the wrong pond.
Used prices are up more than 5% year over year, and wholesale values remain firm. But used sales are down 3.6% month over month and down 8.2% year over year. Volume and pricing are telling two different stories.
Wondering how your inventory mix stacks up against where demand is actually moving?
What Delinquencies Are Telling You Right Now
Auto loan delinquencies are creeping up, and it’s worth watching closely. About 85% of the market is prime borrowers, and those borrowers are largely fine. The delinquency pressure is concentrated in the 15% subprime segment.
But taken together, the trend is moving in a direction that will eventually prompt lenders to tighten underwriting standards. More money down, tighter debt-to-income requirements, better payment-to-income ratios. Nobody knows if that’s six weeks or six months away, but it’s coming.
For dealers, that means the window to close deals on customers who are currently qualifying is narrower than it looks.
What to Focus on Going Into Summer
The labor market is still the buffer holding everything together. Over 200,000 jobs a month, unemployment near historic lows. As long as people have jobs, they make car payments. But the job mix has shifted toward healthcare, government, and hospitality, meaning wage growth isn’t keeping pace with what buyers are feeling at the pump and at the dealership.
Three things worth acting on now:
- Audit your inventory by segment. If you’re carrying too much high-price, low-fuel-efficiency inventory, you’re fighting the current buyer instead of working with them.
- Get ahead of the affordability conversation. Dealers solving the monthly payment problem proactively, by leading with fuel-efficient inventory and running equity scenarios before the appointment, are converting buyers that others can’t.
- Watch your used acquisition cost. Used prices are firm, but volume is softening. The spread between what you’re paying at auction and what buyers can afford to finance is tightening.
The dealers who out-execute these conditions are the ones paying close attention to their own data, not just the macro headlines.
See how your store is positioned against where the market is actually moving.
