Key takeaways
- Sales mixed: December new light-vehicle sales rose 13.8% month over month but fell 2.3% year over year; SAAR improved to 16.0M but remained ~5% below a year earlier.
- Fleet strength: Fleet sales up ~15% in December (rental +17%, commercial +15%), lifting fleet share to 17.2% from 15% a year ago and helping offset softer retail.
- 2025 finish: Full-year sales up 2.4% vs. 2024, with momentum cooling into Q4.
- Prices and incentives: ATPs rose back above $50,000; up 0.8% y/y. Incentives reached 7.5% of ATP, the 2025 high, still slightly below December 2024 levels (7.9%).
- Economy: December jobs +50k with downward revisions; unemployment dipped to 4.4% but remains higher y/y; wages +3.8% y/y outpace inflation.
- Credit and sentiment: Total consumer credit growth slowed; revolving credit fell, nonrevolving rose. Consumer sentiment signals diverged.
- Rates outlook: Limited market reaction; futures imply the next potential Fed rate cut around June 2026.
Sales and market performance
December’s selling pace improved sequentially: new light-vehicle sales rose 13.8% from November, aided by one extra selling day. However, sales were 2.3% lower than December 2024, and the industry’s SAAR reached 16.0 million, up from 15.7 million in November but about 5% below the 16.8 million pace a year earlier.
Fleet activity provided an important lift at year-end. According to industry tracker Bobit, total fleet sales rose about 15% in December, with rental deliveries up 17% and commercial sales up 15%. Fleet’s share of total market volume increased to 17.2% from 15% in December 2024, helping mask softer retail demand.
For 2025 overall, Cox Automotive estimated sales finished up 2.4% from 2024. Growth slowed into the fourth quarter, easing from nearly 5% at the end of Q3 to roughly 3% by year-end, indicating cooling momentum.
Pricing and incentives
Kelley Blue Book reported that average transaction prices rose more than 1% in December, moving back above $50,000 and ending 0.8% higher than a year earlier. Incentives averaged 7.5% of ATP in December, the highest monthly level of 2025 yet still slightly below December 2024’s 7.9%. Cox Automotive said a detailed December ATP report is forthcoming.
December’s combination—APTs above $50,000 and the year’s peak incentive share—highlights how dealers and manufacturers balanced discounting and margins during the holiday period. The modest y/y ATP increase suggests price pressures have moderated compared with earlier in the recovery from supply shortages.
Labor market and broader economy
The December jobs report showed the U.S. added 50,000 jobs versus expectations around 66,000. Revisions subtracted from prior months, with November down by 8,000 and October revised to a 173,000 job loss, pulling the three-month average to negative 22,000. Despite the softer trend, the unemployment rate ticked down to 4.4% from 4.5% in November, though it remains 30 basis points above year-ago levels.
Participation metrics were little changed and slightly below year-ago readings. Wages rose 0.4% m/m and 3.8% y/y, continuing to outpace inflation. Cox Automotive noted the jobs picture matters less for December unit sales than for what it signals about consumer confidence heading into tax season, with refunds expected to rise meaningfully this year.
Credit and consumer sentiment
Consumer credit growth slowed in November. Total consumer credit rose $4.23B after a revised $9.24B gain in October, missing expectations. Revolving credit fell $2.04B following a $5.40B increase in October, while nonrevolving credit rose $6.27B (vs. $3.84B), driven primarily by student loans—signaling that overall financing appetite has not collapsed.
Sentiment was mixed to start the year. The University of Michigan Consumer Sentiment Index increased 2.1% in early January to 54.0, with improvement among lower-income households and easing tariff concerns; the 1-year inflation outlook held at 4.2%, and the 5-year edged up to 3.4%. By contrast, Morning Consult’s daily index fell 3.2% since late December to 95.29 and is 6% lower year over year.
Rates, markets, and policy
Financial conditions showed limited reaction to the employment data. Cox Automotive reported little bond market impact, and fed funds futures did not imply another rate cut until June 2026. Upcoming inflation prints will be critical to shaping expectations for the Federal Reserve’s next move, and the industry is watching for the appointment of the next Fed chair.
Implications for auto retailers
- Retail demand watch: Stronger fleet likely masked softer retail in December; monitor showroom traffic and close rates closely as incentives normalize post-holidays.
- Pricing discipline: With ATPs above $50,000 and incentives elevated but below last December, fine-tune mix and promotion cadence to protect margins.
- Credit strategy: Revolving credit softness and stable nonrevolving trends suggest focusing on finance approvals, term optimization, and subprime risk controls.
- Tax-season readiness: Prepare inventory and marketing for potential lift from larger refunds; emphasize payment affordability and certified/used value.
- Inventory allocation: Given fleet strength, coordinate with OEMs on fleet vs. retail mix to avoid cannibalization and support residual values.
- Macro monitoring: Track upcoming inflation and jobs data that could shift rate expectations into spring selling season.
What to watch next
- Detailed December ATP report from Cox Automotive.
- January retail pace absent December’s extra selling day.
- Consumer sentiment trends into tax season and any refund-driven demand.
- OEM incentive posture relative to December’s 7.5% of ATP.
- Credit approval rates and lender appetite, especially for near-prime and subprime tiers.
Cox Automotive’s weekly update was compiled by interim chief economist Jeremy Robb. The company plans additional reporting on December transaction prices and will continue tracking sales, pricing, incentives, and macro developments as new data arrives.
