Consumer confidence keeps car sales on track—for now

The auto market remained relatively strong in May for buyers and dealers—as the industry buckles up for some potential major headwinds around the corner.

The details: According to Cox Automotive, May saw a rebound in consumer sentiment, stable retail vehicle sales, and falling used vehicle prices, as detailed in the insight company’s Auto Market Report.  

• The Index of Consumer Sentiment has surged 6.1% so far in May, after months of decline—following a robust April in which total consumer spending posted its strongest year-over-year growth since early January.

• Retail vehicle sales (both new and used) have softened in May but continue to outperform last year’s levels, reflecting resilient demand in a constrained market.

• Retail prices for 3-year-old models dipped 0.1% last week, while wholesale vehicle values fell 0.8%—with the Manheim Index showing a consistent downward trajectory for both retail and wholesale segments.

The rise in consumer sentiment (thanks in part to declining fuel costs) might be the most surprising revelation in Cox’s Auto Market report, given the continuing higher unemployment claims.  

Why it matters: The market isn’t just holding steady—it’s signaling that stable demand may endure longer than expected, even with pressures mounting.

Between the lines: Other key market indicators like financing conditions and inventory levels have been a bit more mixed in May.

• Average loan rates for used vehicles held steady at 14.16% in May—but new vehicle rates ticked up higher to 9.62%, in line with broader interest rate trends.

• Supply levels for both new and used vehicles have climbed in recent weeks, though they remain below historical norms.

Bottom line: A bounce in consumer confidence, steady vehicle sales, and easing used car prices suggest that buyers are still active and dealers are still closing deals. That could prove critical as the industry braces for tighter credit, tariff uncertainty, and ongoing inventory shifts.

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