Moody's Talks - Inside Economics - The Curious Case of the Vehicle Market

Episode Date: July 24, 2026

Nowhere is the economy’s resilience more evident than in the vehicle market. To break this down, the Inside Economics team is joined by colleague Mike Brisson, and the brain trust at Cox Automotive, including Jeremy Robb, Chief Economist, and repeat guest Jonathan Smoke, Chief Strategy Officer. The group weighs how the recent escalation of the Iran War is impacting gas prices and consumer decisions around new and used car buying, including EVs and hybrids. They also discuss how tariffs have (or haven’t) affected vehicle prices over the past year and consider auto lending as interest rates rise. Following the stats game, the experts give their forecasts for vehicle sales. Questions or Comments, please email us at [e-mail]. We would love to hear from you.  To stay informed and follow the insights of Moody's Analytics economists, visit Economic View. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Inside Economics. I'm Mark Zandi, the chief economist of Moody's Analytics, and I'm joined by one of my trusty co-host, Marissa Dina Talley. Hi, Marissa. Hey, Marcia. Well, we had Chris here for a moment, a bright, shiny moment. Hopefully he finds his way back onto the podcast. I think he's having some technical difficulties.

Yeah, he'll be back. He'll be back. But it's okay. We've got a lot of guests. We've got Mike Brisson. Mike, good to see you. Good to see you, Mark. Thanks for having me back. Absolutely.

Weren't you on last week? Second week in a row. Yeah. Second week in a row. Yeah. Hot streak. Oh, that's right. And you're hailing from, where are you hailing from?

Upstate New York. Yeah. Syracuse, New York. Cerrocus. The Canada, the New York City. Oh, is that right? Must be a little chilly up there because it's a little chilly here in Philly or it doesn't feel summer like in Philly.

Feels great. It's not snowing. We're good. Right. Right. Well, hopefully that's a long way off into the future. And two other guests got Jonathan Smoke. Hey, Jonathan.

Hey, Mark. Jonathan is a regular on Inside Economics. I think, Jonathan, I think you're the, of all the external guests you've been on the most, I believe. But this is like four, five, or six or seven or something. I think it may be seven. And I either, it's either a tie or I hold the record. So I'm expecting my green jacket sometimes. Why green?

I don't know. That just seems like a, you know, a color. Could be yellow, could be gold, could be, I don't know. You know, inside economics doesn't have colors. Does it, Marissa, do we have colors? I don't think we do. Not really. I mean, we have Moody's blue, you know.

Moody's blue. There's Chris. He's looking dapper. Better than ever. Good to see you. Good to see you as well. You know, we, we, We had started this a few minutes ago and had to pause because of Chris's technical difficulties.

But Brissa was saying, and I didn't hear it, you have a smoke joke in the honor of Jonathan Smoke, no? Well, now it's ruined. Oh, it's not ruined. It was a perfect, I think it was a perfect introduction to Jonathan's smoke. Because I said something like the weather is great here. Yeah, no smoke in the area. Yeah, no smoke in the area. And then what was the joke?

I can't remember. Smoke is on the podcast. Smoke is on the podcast. No smoke in the air, but smoke is on the podcast. Oh. Oh. It was better the first time. Mike, do you think that's funny?

I don't know. What are you doing? You killed it by explaining it. Yeah. I think I did. I'm sure I did. I'm sure I did. And we have another guest, Jeremy, Rob.

Jeremy, good to see you. Good to see you, too. Great to be here. And Jeremy and Jonathan joined. is from Cox Automotive. And Jeremy, you took Jonathan's job? You know, what's the intrigue there? Sounds like there's a lot of drama between you two.

There is. Yeah, we continually like to duke it out with each other and see what happens. So, no, I have known Jonathan for 10 years. I met him. Is to know Jonathan, to love Jonathan? I'm just asking. You get there, you know? It depends on how much you like me, either.

The smoke gets in your eyes. John,ton, you must have grown up with all those jokes. Oh, yeah. Yeah, you know that. Right, right. You've heard them all. You heard them all. The economist joke.

Because, John, you used to be chief economist. Now they kicked you upstairs and, like, you're running a whole show or something. Derek talks out about it. Well, the economics team, I've been a part of the strategy team, and Jeremy was a part. of the economics team. And I was promoted at the end of last year to chief strategy officer, which is, in fact, what I always wanted to do with economics is to make good business decisions for the longer term. And Jeremy's definitely a big part of the team. But yes, he's taken the rain and controls our forecasts and has the keys to the kingdom with all of our great data.

Well, I want to come back to Jeremy's background, but I do want to point out that John Jonathan, you've been a, we've worked together for, I don't know how many years, at least 20 years. Over 20. Yeah. 20 years. And you come to the vehicle industry, honestly, from the housing industry, right? I mean, you were. First in home building and then eventually at realtor.com.

Right. And, you know, there's just so many similarities, certainly now, between the two industries. It's incredible. Yeah. Yeah, I remember coming to Cox almost 10 years ago, people in the real estate. business. We're like, are you crazy? Why are you leaving that industry to go to automotive? But yes, the similarities, incredible similarities between the two and the ties to the economy. And, you know, you and Moody's long term have always had the tools to be able to figure that

out. And Mike and I have been working very closely together since just before the pandemic on the affordability index. And so my reach into and connection to you guys is, is very deep and long. Yeah, and it's great to have you on the podcast again. And so, Jeremy, you've been at Cox for 10 years? I've been here for eight years. Eight years. And joined in 2018, I've been on Jonathan's team officially for four and a half years, I think, something like that.

Fantastic. Yeah. And did you grow up in the auto industry? or no um i so i went to van derbilt i have a degree in music and economics music and economics yes yeah i went to an arts academy for high school up in michigan oh so cool played the trumpet um and ended i could tell you were a trumpet player i knew that oh yeah yeah yeah you there's some sitting right back here maybe you saw them is that what it is yeah so um but yeah i um and for people out there you you if you if you if you're you if you're

if you're not on YouTube and just listening, and Jeremy's got the coolest, is that, like, where you work on most days? I mean, when I'm not traveling, which is not really that often, but yeah, this is my home office.

I had a normal office that most people would consider being normal. And the pandemic hit, and my wife worked at Nissan at the time and got sent home, and she was like, oh my gosh, you cannot be around us.

You're way too loud. And so we built out this area up above the garage. And it is really cool. Can I just, stop for a second and turn back to Mike and say, Mike, are you seeing this over here? And, you know, because, you know, I'm going to look at Mike's background. Every single time. I tell you the same thing. I tell you the same thing. I want the focus on me. I don't want people looking over here, over there. Right here. But I look at at Jeremy, I get this warm, fuzzy feeling right away. I look over you. I feel the Spartan, you know, you know, come on.

Do you want me distracted or do you want me working? Which one? Well, as you can tell, I'm distracted. by the lack of distraction. I know. I'm just saying, Jeremy, I love your office. I just love your office. Thank you.

Good to have you aboard. So let's get to the meat of the matter. There are a lot of things going on this past week. Not a lot of economic data, but a lot of changes in the economic world. There's tariffs. The president has announced a new-rounded tariffs to supplant the reciprocal tariff.

that had been struck down by the Supreme Court. We talk about that. And obviously, very important to the vehicle industry and very curious to hear about, you know, how the tariffs are kind of playing through the industry because it's hard to see it in the data on vehicle prices. There's the war. The Iran War, obviously.

That's kind of revved back up again. And now we've got oil hovering around $100 a barrel for Brent and gasoline prices, which obviously are very key to the vehicle industry, or moving north again, not south, which is unfortunate. And then interest rates, interest rates are up, long-term rates are up a lot. I just saw the third-year fixed mortgage rate is 6 and 3 quarters percent, maybe even higher, I think we could be headed towards 7 percent. So a lot going on there.

And obviously the interest rates matter to the vehicle lending that goes on, key to sales. So a lot to go on. Go on there. So maybe let's talk about the interest rates first. Chris, they've moved up quite a bit. The 30 year, excuse me, the 10-year treasury yield before the war was hovering, I think it was in the high three, so it was close to 4%. And last I looked this morning, here we are on Friday, July 24th. I think. think it is 6.7 percent. So up 0.7 percentage, point 70 basis points, you know, since the war started. What do you make of all that? You know, what's going on? You know, why are they up and more are they headed? The more, I think you referred to both the 10-year treasury and the more.

Oh, I'm sorry. Four, it was close to four, and now we're at four-70. Sorry. Yes, that's right. I mixed and matched. It was as I'm on to do. You're just keeping me on my toes. Yeah, exactly. You caught me. Yeah, up a lot. And I think it just goes to a lot of the uncertainty that's out there around the future here. Of course, we have, in addition to the war and kind of some changing or evolving expectations around inflation, you have the government debt issuance out there.

And that's certainly in the background. I think what's interesting is that the inflation expectations have actually remained pretty anchored, right? So if you look at the 10-year or five-year break-even, right, investors are kind of looking through this and saying, well, inflation's going to get back down to the Fed's target over time and kind of average out over this period. So really the increase that we're seeing is due to this uncertainty premium or the worry that investors have, there's just a lot of uncertainty around this forecast. So, you know, if you look at the 10-year yield, it's up treasury yield. It's up 70 basis points.

And what you're saying is that none of that is related to increased inflation expectations. That if you look at the break-evens, that's looking at the difference between 10-year yields and the yield on a 10-year treasury inflation protected security. That difference is the so-called break-even as kind of a forecast that bond investors have for future inflation over the 10-year period, that's kind of sort of gone, I mean, it's gone up and down and all around during the war, but today it's sitting very close to the Fed's target and not any different than what it was pre-war. And so that doesn't explain any of the increase in the 10-year treasury yield, that all of the increase goes back to the term premium, the difference

between long and short rates. And I guess also real short-term interest rates, too, because that goes to Fed policy, monetary policy. Sure. Yeah, that makes sense to me. I mean, I get, you know, new Fed chair, Kevin Warsh, has been very vocal about price stability, kind of very hawkish, so-called hawkish tone. Market investors have now fully are anticipating a rate hike by the Fed, and that's now embedded in 10-year treasury.

So that explains, you know, I think roughly half the end. increase in the 10-year yield since the war started. But the other half is an increase in the term premium, the difference between short and long rates. And so what do you ascribe that to? Yeah, I think that's uncertainty, right? You think that's what it is? It's the uncertainty? Yeah, it's just, so maybe, so you could think about the, so you're right, in the, in the very near term, investors are assigning higher, probably of a rate hike. I just looked it up this morning. There's a meeting next week, right? There's about a 35% chance of a hike. next week, according to investors, but that shoots up to 80% by September and 90% plus by the end of the year.

So investors are all in on at least one hike, probably two or three, if you look out at the, if you trust the futures data. So that suggests that it's, you know, it's really about this uncertainty around that forecast, right? We may believe that inflation is eventually going to come in, but there's just so much uncertainty around it that that drives the term premium upward. I need more as a bond investor to be compensated for that uncertainty risk. Oh, so you don't ascribe any of the increased concerns about increased treasury bond issuance or safe haven status? I think that's part of it, but that was already in play prior to the war, right? So, right? Why would that drive it up now over the last three,

four months is what you're saying. Yeah, unless now you have investors saying, well, the, the war costs themselves are going up, so maybe that's going to drive additional deficits in the future here. So that could play into that risk framework, but I think it's more about just plain old uncertainty. Got it. Hey, Jonathan, have auto lending rates also pushed up here with the increase in treasury yields? Well, Jeremy can speak to what we've seen in the most. recent data, but generally this year, actually, rates have fallen. They've gone the opposite.

And the, I mean, one of the things that we certainly have seen historically is what consumers pay often diverge from what's going on with the Fed or even with the 10-year, because it's all based on spreads. And we had historically widespread on auto loan rates for most of the last several years since since the supply chain crisis. And they have completely come in. If you're a super prime borrower today, there's essentially no spread relative to what we think is the closest proxy, which is the five-year to compare it to.

Oh, that's so interesting. So despite the increase in treasury rates, both short and long, the short because of the expectation for a Fed rate hike, and long because of the uncertainty and the increase in the term premium, you're saying auto loan rates have come in, and that's because the difference between auto loan rates and the treasury yield was extraordinarily wide,

now has narrowed. But that's fascinating. We are seeing this month because of treasury yield rising, we're seeing a little bit of an increase in the overall rate. It's like the new rates up. Oh, you are. But four basis points, not much, and the use is up to. Okay.

But that spread compression is driving a lot of the lower end rates, especially for those higher tier consumers. It's also really helping drive our credit availability on just the total, you know, willingness to lend overall signaling that, you know, a lot of lenders are showing you they're willing to get more aggressive in that space. So spreads have compressed but not enough to fully offset the increase in the treasury yield. So the auto loan rates, you're saying, is pushed up a little bit here, but not a lot. You're saying basis points.

Not a lot. Yeah. And to Jonathan's point, they've been coming down from a spread, like relative to the spread for the highest-tier consumers for the last several months. Right. And you're also saying that in terms of auto lending, it's not only about the rate, it's about the credit availability, the kind of the underwriting standards. And they've been, you're saying they're easing and they've been eased. Yeah, our credit availability index in June hit a high level that it, a level it hadn't been back to since 2015. So what's going on?

Why? Why is the, why have the spreads kind of come in and why has credit availability? availability increased. What's going on? Is it loan quality? I mean, I thought auto loan quality was, it's okay, but it's not, it's not great. So what's behind that? What's going on? Like many things, it's complex, but I would say, I would say there's certainly appetite for auto. Part of what drives stronger appetite for auto is the lack of appetite for housing or the, or the ability to issue loans because a lot of the largest banks play in both markets and they need to have loan originations and revenue coming from somewhere. And when when mortgage is

weaker, there's there's a shift to auto that can be in play. And while the loan performance from my perspective has been, I would describe shaky on the delinquency side, the actual default rate has not followed what has happened on delinquency. And because of vehicle values, which is a determinant of what the total loss potentially is, it's actually a super attractive environment. You are not seeing auto ABS or lenders in this space reporting issues. They're fairly strong. I know Mike probably deals with them directly, probably even more that we do. ABS being the securitization market. So a lot of these loans are securitized and you're saying there's a lot of demand from investors and the securities, and that's keeping the rates down.

allowing for this credit. And you're also making it's an interesting point. You're saying the banks, they, you know, if they're, if they're not making mortgages, they got to be making, they got to be doing something or at least to generate some kind of growth and earnings. And so they said, okay, we're going to ease up on our underwriting on the auto industry to try to generate more lending activity there to offset the fact that we're not making many mortgage loans, but particularly in this high interest rate environment. That's right. Is that right? Mike, is that all, Does that all resonate with you? Definitely.

Yeah. So we have real lending and the auto space has been negative. So nominal lending has been less than 2% for almost two years now. So the outstanding balances have been very low. And this is, we saw the jump in June, 2.4% in lending, in total balance is outstanding. It's the largest jump since early 25. So we're seeing a lot of pent-up demand, I think, for lenders saying, well, we're ready to lend. They tighten lending standards coming out of 22 and into 23.

And now they're saying, well, this is a good investment. So Jonathan hit on the reasons why it's a good investment. But the demand really isn't there from the consumer side. That gets into the affordability question. Is there the demand out there to change over to a new vehicle, to get into a new used vehicle, And so you see, look at the sluice, which has its own problems, but the senior loan officer survey. And you can see that there's a lack of demand. Sluice, that's senior, just so everyone, so you're saying sluice is your shorthand way of seniors saying the annual officer survey from the Federal Reserve Board.

Right. Yeah. And so you see that. And the lenders are saying, yeah, we're ready to lend to auto. Let's go. We're loosening lending standards. But then the consumers also in that survey, there's a limited, demand for it. And interest rates are elevated, especially compared to pre-pandemic. And then you also

have the lack of affordability in auto just over total cost of ownership, too. Okay. So, Jeremy, though, given where rates are and where they seem to be headed here, the auto loan rates can't defy gravity forever, right? I mean, would you expect rates to start pushing up here or not? Oh, yeah. I mean, obviously they can't, I mean, you're borrowing at one, one lending at another, right? You're going to borrow what the market is as long as we're originating more loans. The loan base, to Mike's point, I think it's down about 3% year every year. So there's the total amount of loans out of auto loans out in the marketplace. It's been declining.

And because of the high interest rates, a lot of consumers have just pulled back from that. But there is demand at the margin. And I think that's where a lot of a lot of the things. things that are happening in the automotive market now. We have this pent-up demand. We have people that are seeing a repair bill of $4,000 or $5,000 that are, you know, it's like, I'm not going to do that. Maybe I didn't want to go get a different car, like a new used car. They'll get into that. Maybe they'll take out a loan to do that. And it's a really dynamic market overall, you know. And the thing, I think one of the key things that lenders are focused on now, now that we had 20,

25 had pretty normal depreciation patterns for the marketplace and used vehicle values. And this year is also, you know, fairly normal too. Is they're more comfortable with the outlook of how their collateral is going to perform, right? Which makes them feel a little bit better. And, you know, we've had a lack of supply into the used marketplace for years with lower off-lease maturities and things like that. So it's the supply side for all portfolios is, you know, not, it doesn't look like it's going to be oversupplied for a while. And those things I think are actually, you know, like monetarily bullish for the lending environment. And one of the things I think that might play into how lenders are seeing things on a macro scale.

Got it, got it. Hey, before we move on, and Marissa, let me just throw it back into your court. Anything else on the interest rates that you've observed or want to call out? that we haven't talked about so far? Just kind of an open, just to fill in any blanks? Not really. Just noting that the recent run-up in like the 10-year treasury rate was accompanied by a drop in markets over the past few days.

Markets are up a little bit this morning. Equity markets. Equity markets. That's right. Right. And we've seen them not be compatible in the past on news. But with the tariffs, with the sort of new front in the Iran war, we've seen markets fall and we've seen rates go higher. Right, right. Okay. Okay, let's, the other, you mentioned the big development is the war in Iran. That does seem to be going in the wrong direction here. I mean, meaning that the hostilities have flared up again. And we're seeing, you know, prices, oil prices.

gasoline prices start to rise again. This also, so maybe, Chris, I'll turn back to you just to talk about this in a broader macro sense. You know, where do you think this is all headed? I mean, are we going back to, I mean, if you look at it in terms of gasoline prices, we were below $3 a gallon before the war. We got as high as $4.50, I believe, during the height of, you. the conflict back a couple months ago had receded when it looked like we were going to get an end to the war or the hostilities. But now we're now north of four again. Where do you think we're headed here on oil and gasoline prices?

Good question. Of course, depends on if there is some new agreement. I'm not seeing a lot of movement in that direction. So my sense is things are going to get worse here. I will continue to see prices rise. And now you have. of not only the straight of Hormuz, but the straight of... Well, the Red Sea. I just said the Red Sea, yeah. Okay, good. Bob something. That's also under threat here, and you're seeing tankers being diverted, you know, around Africa now, so that's clearly going to add to the cost.

Right, right. I mean, we're still assuming, and Jonathan and Jeremy, I'm going to ask you the same question, but we, you know, where your mind is on this, but we're assuming still that the incentives for some form of agreement on this, on reopening the straight, forget about all the other things related to the war and those objectives. They feel like they're not likely to happen, but on the most likely scenario with regard to the straight is that it will, the parties will find a way to come to terms. because the incentives are so strong.

In the case of the U.S., I mean, you know, we have an election dead ahead and affordability is the number one kind of issue on many voters' minds. And, of course, for the Iranian regime, they need the revenue that's generated from their shipments of oil. So we're still assuming that in the next few weeks before Labor Day, we get an agreement Chris, do you think that's still a reasonable assumption? Well, judging from the quivering your voice, I'm guessing. Right.

I mean, reasonable from our irrational expectations standpoint, right, both sides have incentive here to make some type of deal to come to some type of an agreement. So that certainly is logical, but, you know, logic is not the only factor here, right, there. So I think as a baseline assumption, sure. It's still okay. But I think that the risks have widened here, certainly. Right. And just to flesh that out just a little bit more in terms of the logic behind those assumptions on the baseline is that with the straight closed and now with the Red Sea being that being disrupted, we're just not producing enough oil globally to meet. demand even at these higher prices. And that means that global inventories of oil, which are already

very leaner, getting leaner to the point we're getting to kind of what I think they call like minimum viable inventory, which means that you can't go below that. Otherwise, you get some, you know, real physical supply issues. And so that feels like we're going to get to a place where we can start to see prices spiking and actual physical shortages for different types of refined product. and that would be that would be fodder for a recession, I think. Certainly forget about the election. That would be that would be fodder for recession.

And that's coming dead ahead. We don't know precisely where that point is, but it feels like we're getting there. And we're assuming by Labor Day, we're there, and that's why we get an agreement. So that's kind of the forcing mechanism to get these guys to figure it out and to, you know, reopen the straight. Jonathan, what do you think about all this? You know, obviously gasoline prices are another kind of key, I would think, right? Variable in the decision about purchasing a vehicle, or at least in terms of what vehicle I'm going to purchase. So, you know, how are you guys thinking about what's going on in the Middle East?

Oh, wait. I mean, we follow your updated forecast and scenarios every month. You know, I have to kind of point out that because of... the drama in the Middle East that keeps going back and forth, it's like every month the assumptions on what do we have peace, do we not have peace, seems to be going back and forth, back and forth from that perspective. But we certainly follow the logic that you're, that you are baking into the baseline forecast. But, you know, I was in your office in May when we, We were there with a group of the Conference of Business Economists, and we were on the precipice there of concern globally.

There were lots of stories of issues that were happening related to farming and the planning season, related to reserves being gone and depleted and governments issuing controls. We were right on the precipice. Then we got peace. Then everything was moving in the right direction. and now it's like deja vu all over again, but now it's even more dire, I think. And on the one hand, I've been cautiously optimistic through it all, but on the other hand, this doesn't seem to have a clear outlet of coming to resolution.

It is important. Gas prices are important. They drive consumer sentiment. They play a huge role in total cost of ownership that Mike mentioned. the average vehicle on the road today is 12 years old. So most consumers are not substantially insulated from that volatility and price. That's why you have those heuristics of a penny in the average gas price, you know, produces an enormous economic impact on consumer spending.

I would say we've mainly seen a positive impact in the vehicle market in the short term because the higher gas prices have been driving demand for used EVs, which was one of the main concerns on vehicle values coming to the year. We have an incredible increase in EVs at end of lease driving most of the growth that we have in the used vehicle supply. And if there weren't demand for those vehicles, that would be a negative for used vehicle values. But instead, we see incredible demand for used EVs because of the price of gasoline. It feels like the vehicle industry is like top, weird. That's why I am buying. You're telling me.

Podcasts all the time. Yeah, it's like interest rates are up. Oh, well, that's so, they're not going up over the auto industry. Everything's okay. Gasoline prices are up. Oh, don't worry about it. We got EVs to sell you. But at some point, there's got, the gasoline prices have to have some negative consequence, no?

Well, they are. They have, I mean, they're having negative consequences. consequences on part of the market and positive consequences on other parts of the market. Okay. And that's what balance, it balances itself out. Uh-huh. The, the, the auto market is so dynamic. The new market, the used market, and all of it.

Um, and we see it through all the wholesale, the used data. It's, it's pretty phenomenal. Um, but it is having a negative effect on like big trucks, SUVs. Those vehicles are declining in value a little bit more. But, um, it's pushing used EVs. higher off a lower base. They definitely had depreciated more than other products had. So they're normalizing in terms of their retention value where they would normally sit.

And then it's helping things like, if you think about it, I think you said this when you're opening, right, but your average consumer is not buying a car every month or every year. So it's like the price of gas moving up over the last quarter doesn't really go into the calculus for a consumer that's not really in the market to buy a new car. But if you are in the market to buy a new to you used car or a new car, then that is going to have an impact on, you know, outside of your certain circumstances, what you want to do. And the hybrid market is so vast now relative to a few years ago. There's a lot of products that can, people can find there that fit what they want to. They're not the biggest SUVs in terms of. They're not the biggest SUVs

in trucks still, but there's good size hybrids, a lot of Toyotas, a lot of Honda's, you know, very popular products that people are getting into. And that is part of the equation of what's happening on total used prices when we look at that too is that influx and hybrids. Okay, so yeah, interesting. So what you're saying, okay, gas prices are up, that, you know, face value, that's not good. I mean, it's driving up the cost of operating a car, but you're saying You've got a, it's a very diverse vehicle market with lots of options, more so than in the past. We've got this EV hybrid option now that we didn't have, last time, oil prices, gas prices were going north to a significant degree. And that just shifts to demand.

The demand is just moving from over here to over there. And the net of all that, at least so far, is that, you know, it's not had an material impact. on overall sales of vehicles. So I got that right, roughly right? Mm-hmm. Yeah, okay. Yeah. And you got these other dynamics in the loan market, too,

that have kind of cushioned the blow, too, allowed the market to adjust as well and keep loan rates down and credit availability high, and that's also, in the face of all this, allowed the vehicle industry to kind of maintain sales. Correct. But I do, you know, and I don't think any of you, Jonathan didn't mention this before,

when we, you know, the oil shock, the price shock to consumers in the spring. Like we were gangbusters in the marketplace before that started because of those higher tax refunds. I mean, the valuations of where prices move relative to where they normally move were much stronger. I think that's all gone now. And so now these higher prices, like from a macro perspective, I get much, much worried, more

worried that consumers aren't going to be able to front them now. So now I think the negative correlations that we could see that play out in different parts of the economy. So just again to restate it, to get it clear in my own mind, you're saying we're now getting to a place where interest rates and gasoline prices

and we'll talk about other dynamics or maybe having broader kind of macro consequence which will reverberate back on the vehicle industry, right? Because up till now we had these tax refunds that offset the financial blow from the higher gasoline prices and grocery prices, but the tax refunds are in the rearview mirror. We still now we're left with these higher gasoline and grocery prices. That's cutting into purchasing power.

That could affect spending more generally, which could mean jobs. And that obviously would come back on the vehicle market. So you're saying I'm now getting, we're now at a point where you're getting worried about the implications of all that. That's what you have. And then add our prior discussion that the spreads. that were historically wide or now historically narrow, there's no room.

No room. If we also have interest rates going up, that suddenly is a more concerning factor too. Yeah, got it. Hey, Mike, on the gasoline prices, this is done fair question, but I'll ask it anyway. Is there like a bench in your mind a kind of a level of gasoline prices where you say, oh, this is going to be a real problem,

you know, for vehicle industry in the, economy. Again, we're at $4.10, I think. We had gotten high as $450 briefly. Just for context, the all-time high was during the Russian invasion of Ukraine back in 2022. We got the five bucks, I think, on the nose for a gallon of rigloat-le-leaded. Do you have like a threshold in mind, or is that just too simplistic a way of thinking about things? I don't think it's too simplistic because I know personally when I'm going and looking at the pump, if I see $450, if I see $5, I get bothered. it's and then you know what's going to cost more. So I don't think it's too simplistic.

But I do think those even numbers. So $450, $5, you do start to cut back in other places. Gas is $5 a gallon. I really need to cut back over here. I really need cut back over there because I know it's going to cost a lot more to fill my tank. So those even numbers are somewhere that places that I look. I don't have one that we looked at empirically that's going to be, oh, consumers are going to stop spending on anything but fuel because they're worried about their budgets at this number.

I am worried about the second jump, though, in prices being more impactful than the first jump because consumers are, fool me once, shame on you, fool me twice, shame on me. And you get to that point, say, now I don't know if it's really going to come back down. We're in a place where it's happened to me twice. I've got to start cutting back now.

I've got to make sure that I have a cushion, and I'm concerned about consumer spending coming down as a result of those gas prices and oil prices going up. So that is concerning just from a consumer in general. The auto market usually is more pro-cyclical with the labor market rather than with fuel prices. So as a labor market starts to hurt, I think this is what Jeremy was getting at too,

that's when you start to see the people pull back from those larger discretionary but necessity items. So a vehicle is a necessity to get to your job. But if you're worried about your job, you don't want to go buy a new vehicle because you need that job to pay for your vehicle. And so those are the kind of the dynamics I think it is are going to play out. The gas prices hit the consumer, not the auto market first.

Consumer, self-spending, that hits the labor market. Labor market starts to hurt. That's where the auto market really starts to feel the pain. Got it, got it. Hey, Marissa, this is, I know you, when I was out in Southern California about a year ago, you were driving me around and you're, you've got an EV, right? I do, yeah. Yeah, Jonathan and I were speaking about it.

a little bit before we started recording. So I had a little smug chuckle to myself when I drive by a gas station. I was going to say. Because obviously, you know, California gas prices add a dollar on top of whatever the national average is at least. Yeah, but I'm very, I'm very happy. I'm driving an electric vehicle right now. I don't want to take anyone's stat, but what share of the. the vehicle stock is a EV or hybrid.

Do you guys know? Jeremy, do you know? You should know this, Jeremy. I'm just saying. Jonathan, if he doesn't know this, I've, you know, I don't know what you. You're talking about the total car part. Yeah, yeah, yeah. Outstanding.

It is a tiny fraction. Is it still tiny? It's still tiny? Yeah. That's right. The used market. It's only about 3% of used transactions right now are EV. and the new market now this year is somewhere around 6%.

So you put that in terms of the car park, you're still talking. Nothing. Low single digits. Oh, interesting. Okay. I suppose in California it might be higher, but surely higher. It is much higher.

Yeah. Yeah. But now, for Marissa's point, I drive an EV2, and this is something that is not lost upon me. And I think you guys know this. The price of electricity has been going a lot higher also. Right? So it's not, you don't get the same like for like differential in terms of charging up your car, whether it's at home or somewhere else, vis-a-vis a gas price than you had before.

Okay. So let's move on to tariffs. And after we have this discussion, we'll come back and play the stats game. And then we'll end the conversation, kind of thinking a little bit more broadly about what this all means for the industry and for the broader economy. But the tariffs, you know, you. You know, the confusion I have here is they don't seem to have shown up in the vehicle industry at all. I mean, like, in vehicle tariffs, they're, they've been, they're not inconsequential. Correct me if I'm wrong, but of all the imports that have suffered, the tariff increases, the vehicle industry is like at the top of the list. I mean, some pretty significant increases in tariffs. And yet we have not seen it show up in prices for vehicles, at least not to a significant degree. So what's going on, Jonathan?

What, you know, what, how do you explain all this? So first, from the industry paying it, the tariffs are real. We were ground zero because it was Section 232, which has never been challenged, applied to not just vehicle imports, but also parts. and steel and aluminum, which is the largest single input into the automotive sector. And so there's been a real increase in costs. But not all vehicles are imported. And what we have been seeing is the market has tightened year over year and exactly what has been from an inventory, what's being delivered to dealers lots,

and what's down are imports. And imports itself are a complicated mix of mostly expensive luxury vehicles from Europe and then the most affordable vehicles. So you simultaneously are reducing when we already have affordability limiting demand in the market. We've taken off the most affordable vehicles out of the mix. But as you were saying, if all of that was happening, what would you expect to see is significant inflation in new vehicles, but we have not. We have barely any inflation in the average new vehicle price. But it's because we've got a complicated mix of other things, other forces that basically are preventing that from flowing through to what the consumer. is feeling. And one is, well, first of all, the OEMs did not want to stand out in a highly

polarizing political environment and raise prices. So they immediately started pulling every lever that they could other than raise prices. And one of those levers is to cause dealers to share in the pain of the added costs. And so we've seen far more inflation on the invoice of what is being delivered to dealers. And basically that has caused margins to deteriorate for dealers. And the pain is being kind of shared on that front, even though we don't see it show up in the average transaction price for the consumer. Jeremy, I don't know if you have other color. You want to add to that to demonstrate it. Yeah. I would just say it's like, we kind of saw two things.

So the onset of the tariffs early last year when that it was announced, we had a lot of consumer demand to try to get in front of the higher price increase, right? And that demand saw higher new car sales. It allowed dealers and OEMs to lower incentives. They didn't have to, you know, like, incentivize much to push those sales through. And so that helped them out a little bit at that point of time. We got towards the end of last year, and we still saw okay demand overall happening, but incentives still stayed lower, right? So the, the, the, they weren't feeling it quite as much. This year, we started to see that invoice price to dealers push up to, so the spread between what a consumer is paying versus dealer is paying is pretty low.

The interesting thing about that is like it's actually just going back towards its pre-pandemic level. And that's a lot of things in the dealer world when you look at like what they call gross per units, like what are they charging versus their price and all that. They got really elevated in 2022 and 2023 with higher pricing. And now they're starting to come back down on some and see that. And then the market's just really, it's super dynamic. You know, a lot of OEMs late last year that we were talking to, if they had the capacity to turn on or manufacture a little bit more product in the U.S. for a certain make model combination relative to it being manufactured somewhere else, they would do that. Right. And,

and get around having to do that. And all those things at the margin, like the industry's felt a lot of pain, but it's allowed things to sit where they are. And then you've got these dynamics, which we could spend the next 15 minutes talking about, about how prices are changing because of the mix shifts with hybrids and things like that in the model.

Yeah, so not only do we have tariffs, we had massive regulatory changes, including the end of all of the subsidies and credits that we're supporting the shift to electrification. And that, from a mixed perspective, depresses prices too, because the most expensive vehicles were electric vehicles previously. And we're having more hybrids,

which are generally smaller vehicles, and in the mix, actually keep the average price from going up. Just here's another example of the industry's just amazing ability to adjust. Yeah, it's actually a really good case study of resilience of the American economy in the face of all these shocks. I mean... Well, and there's other things that probably aren't on your bingo card at all, also that I think contribute to this lack of inflation on new vehicles.

Because three letters have been on the minds of dealers pretty much all year long as the number one issue in the industry. And that's the FTC cracking down on average. deceptive advertising. And I believe that puts more power in the hands of the consumer. And in fact, at this moment, combining that with the massive shift that's going on with online shopping from the old days of the internet to AI mode basically means consumers have a lot more power to get to the best price on a vehicle. And everything else being equal, that keeps inflation down. you're taking costs out of part of that process. And that's an interesting factor.

And meanwhile, you may not have noticed, but Carvana has bought new vehicle dealerships around the country and are selling new vehicles for the first time. And so when you look at the price trends and the data that we see, one of the biggest decliner's year over year is Jeep. Guess who's being very aggressive with pricing with Jeep? And Jeep happened to be one of the most oversupplied vehicles. So you've got all these nuances of the structure of the business from a regulatory standpoint, AI impacting online shopping.

And then the hyper-competitive nature of a market that is not growing actually causing consumers to be better off at the end of the day. You're right. Some of those things weren't on my bingo card, as you say. I mean, the FTC, can you explain that? I mean, why would that keep prices down? So the FTC issued a letter earlier this year to 97 large dealer groups and basically said, we have determined you've had bad behavior of advertising one price and then the consumer gets there and finds a different price. And we're cracking down on you.

There were a couple of high-profile dealers that have had multi-million. actions against them, and just on the heels of the FTC jumping in, many states have jumped into. And so as a result, I would argue that dealers are changing their behavior. We see it in terms of what they're doing and what they need to do on their websites and on websites like AutoTrader and Kelly Blue Book. And all things being equal, that definitely puts more power in the hands of the buyers. and I think keeps prices from otherwise likely being higher. Because the price we measure, the price that we pass along to Mike every month for the average transaction price is the bottom line price that the consumer paid for a vehicle.

And if fees and other things are no longer a part of that mix, that price is not going up as much as it otherwise would have. Got it, got it. And the one thing that, Jeremy, you said that just to call out is the margins that the dealers are enjoying, that they, they got, they served during the pandemic because there was a massive supply shortage because it couldn't produce cars. So margins gaped out. And now what you're saying is they've just essentially normalized and that's kept prices down even. in the face of terrorist. This is dealers that have taken it on the chin,

but in a sense that they've only, their margins come back to where they were pre-pandemic. But would that also suggest, Jeremy, that, you know, going forward, that's going to be, you can't go to that well anymore and that you would start to see pass through to consumers in the form of higher prices. Is that fair to say?

I would absolutely think so. I think dealers, like, we see it, we hear it in terms of where they say their business and all. They don't, you know, prior to the pandemic, I worked out of OEM before. You know, a lot of different OEMs have different models of how they make money. You know, some of them have a very low front end gross, if you will, like the cost they pay versus the cost to the consumer.

They make it up on the back-in F&I products, assurance warranty, things like that they would go to. So that's different in the industry, but overall, we rose a lot. lot with the increase in prices that, you know, you had mentioned. We've come back to normal, but we're still down year over year. So dealers are still feeling compression in terms of their profitability. It's a little bit better on the used car space, but they're not, you know, really happy about that either. And so I don't think that it's at a level where they can absorb any more of that increased cost and the invoice passed along before they have to,

you know, raise prices. And, you know, we haven't mentioned it yet, but that plays right into where used vehicle prices are now relative to where they were this time last year. They're up about 7%, which is a pretty big number relative to where they normally are on the retail side. Got it, got it. Hey, I want to come back after we, I want to play the game, the stats game, and then come back and get everyone's kind of explicit forecast. So I'm going to, you know, put you on the spot and get some explicit forecast around, you know, vehicle sales and prices and anything else that we want to forecast. But on the stats game, you know, as everyone knows, we each put forward a

stat. The rest of the group tries to figure that out with clues, questions, deducted reasoning. The best stat is one that's not so easy. We get it right away. One that's not so hard if we never get it. And we always begin with Marissa. It's tradition. Marissa, what's your stat? My stat is $311,447,000. Is it people? Nope. Is it vehicles? Yeah, total car park. It's very close to that number. Is that right? When you say car park, give me the total amount cars that are out there. It's licensed and in operation. It's not that. Is it related to the vehicle industry? Tangentially, yeah.

That's your breaking the rules. Most directly is it related to the vehicle industry? Not directly. Not directly. Okay. It's not cars. Like robo taxis or anything like that? Mm-mm.

No? It's not directly related to vehicles. Robotaxies. Where'd you get that? What the heck? What do you know? It was like a few. I'm trying to think of what it could be.

That's like related. 300 million. Robotaxis is up there? I didn't know if it's in the future. That's the progen. It's up to over a half a million rides. Yeah. It's what, 21333?

Robotaxis. Is it housing related? No. Is it related to the economy? I'm just asking. Yeah, yeah. It's related to something we were talking about at the top of the discussion. Oh, oil reserve.

Yeah. Yeah. Yeah. Yeah. Is it the SPR? It's the SPR. Yeah. Yeah, so, yeah, it's the number of barrels of oil left in the strategic petroleum reserve as of a week ago.

And I think I read we're getting close to that so-called minimum viable inventory level in the SPR as well. Is that right? Or do we have, is there more room to maneuver there? Do you know, Marissa? Well, I don't know because I don't know what that level is. But this is the lowest it's been since April of 1983. Wow. And we've released about 100 million barrels since the war started.

Right. Right. So it's fallen almost 25% just since the war started. Right. I also heard that the infrastructure of the strategic petroleum reserve is also aging. So it may at the available level may actually be lower than that because we haven't really invested in keeping up the end of the reserve. So we're at a critical level. Wow.

That was a good one. Very good stat. That's a great one. Hey, Jeremy, since you're new to the podcast, do you want to go next? Yeah, sure. I have two if we have time. They're very related to each other. Yeah, sure.

Far away. Yeah. You're taking away from Mike's time. They're interesting. Mike might be a little annoyed. I'm okay with it. Go ahead. The first one, these are things we publish.

I'll put it that way. So it's 59.3%. it's related to the vehicle industry yes 59.3% Mike, it's something we publish do you have any idea what that would be

59.3% Is it Ron Auto Credit? No. Sales? Related to sales? Related to prices. Prices. Is that the average retention value?

No, but you're pretty close actually. Yeah. Not that though. It's related to the Mannheim Index. I'll put it that way. That's the used vehicle price index. Yeah. Is it something related to the composition of the index?

In terms of price. Yes, it is. In terms of price. Is it the value increase since prior to the pandemic? No, but you're thinking the right way. Jonathan, do you know the answer to this question? Is that? No.

I hate this, but he's stumping me too. Oh, really? I couldn't give them all my stats. So, yeah. We give up, Jeremy. Yeah. So this is the, in the Mannheim Index, we published. We started in the last several years, we put out EV prices and non-EV prices as well as seasonal

adjusted prices and non-seasoned prices. And it's the premium of EV values in the wholesale market relative to the non-EV values. That sounds high. didn't realize it was that much. Wow. And they've been going back up this year because of the increased values relative to gas prices. Really? Oh, that's interesting. Is that lower than it was a few years ago, or what does that look like over time? It's ebbed and flowed, so a lot of it is dependent upon the vehicle values there. So back, and you think about it in 2016, 17, 18, there were basically three cars that were in that. It was a Chevy bolt and, a new.

Nissan Leaf or sometimes a Tesla. And that kept that value a lot lower than the index overall. And then it rose a lot in 2022, 2023. And now it's been coming back down. But this year, because of the appreciation in EVs relative to non-EVs because of gas prices, it's come back up a little bit. Interesting. I know we produce an index that looks at the same thing. And it's not as high. But we can control for battery size and the vehicle and the MSRP. And so we're controlled. a lot for that change and shift, and so that appreciation looks a lot different. So it's just different methodologies

can look at it and see different things. Yeah. There's still a premium, but you're saying it's not quite as large if you correct for these compositional effects. It's almost negligent depending on which way you look at. Oh, Mike's right. Today's UV is a heck of a different vehicle than the timeframe Jeremy is describing. Got it, got it, got it.

Jeremy, what's your second stat? Okay, it's negative 7,500 $4,44. Negative $7,544. Well, that sounds like the EV tax credit. Yeah. It does. It should. Uh-huh.

Because it is. It's not. So it's this thing, but that's the whole reason I wanted to share it, like, just for sake of time. We built, we have something called kale that measures lease equity. And so when your lease is maturing, you can buy out that lease at residual value, but we have a metric that says. what your car is worth relative to what you can buy it out at.

And it's been declining over time. The long-term run rate is for that metric to be like negative $1,500. EVs are running negative $7,544. The industry overall is sitting at about positive $450 right now. But the whole reason I shared it, Marissa, is totally what she locked onto. There's a reason it's that number, right? It just shows you the market will sniff out incentives and things like that and get to what the real number is. And it relates to Marissa's decision about her EV at the end of its lease.

Yeah, I mean, that's the, I was saying before we got on the podcast that my buyout offer on my vehicle is about $10,000 higher than the car's value right now. And that's come in a little bit in the past few months as EV values have come up. because of the war, but yeah, it's definitely not a good deal to buy, if it might be. Interesting. Well, let's do one more. Jonathan, do you want to go? Do you want to give a stat? Yeah, I'd love to.

It's related to the topic, but it's not our data. So it's definitely mnemonics that exists in Data Buffet. I'm going to give a pair. See, Jonathan's a really good salesperson for us. 13.3% and 7.9%. 13.3 and 7.9%. Is this a recent statistic? It came out at the end of June.

The newest version of this is coming out next week. Oh, I think, isn't this the one I used last week? It might be. It could be. No, it's not New York Fed. All right. Oh, it's not. But it's something that Mark hates justice equally.

Oh. Oh. Or doesn't put a lot of credence in, especially. I should know this. Survey data. Consumper survey data. Yes, it's survey data. It is part of consumer confidence.

Michigan, University of Michigan. It's actually the conference board. Is it intention to buy autos or homes? Lans to buy an automobile. Oh. 13.3% is plans to buy new and 7.9% is plans to buy used, both of which are the highest that they've been in that survey since May of 2019. Really? Which, by the way, was the highest mark ever.

Explain that to me. It's pent up demand. It's the story Mike's been telling from last podcast. to this one that the auto market is okay. And the car buyers that actually drive retail vehicle sales, both new and use, or more of that upper K. And it's a function of like credit is actually not that bad. And if you skip the last trade cycle during the supply chain crisis,

you're dealing with the oldest vehicle potentially you've ever owned. And you're suddenly going up against multi-thousand-dollar, maintenance and repair bills when you drive in to get to get work done, that's actually where the highest inflation has been in total cost of ownership. So it's just that weird combination of things that add to the resilience of what we're seeing in the vehicle market. This is the, you said the conference support survey. Yeah. Okay. So it's soft, but it's not like on the floor like the University of Michigan survey. So that's right. Yeah. Michigan doesn't have a similar intent question. Instead, they ask, do you think it's a good time to buy or not?

Right. That's fascinating. Well, that goes to the, let's move on in, because we're getting a little long in the tooth here in the podcast. The forecast, so vehicle sales, and correct me if I'm wrong, but new vehicle sales annualized rate is 16, 16 and a half million. Is that roughly right? Do I have that roughly right? I mean, that's kind of sort of where we've been, kind of sort of where we are. Okay. We think that the long run, sustainable level of fundamental demand is about 16 and a half. 16 and a half.

So, and we're actually undersupplied, which is eerily similar to the housing market. Yeah. Yeah. Right. And so what's your expectation, your forecast for vehicle sales this year and for next year, under your baseline, which I'm assuming is, consistent with ours, you know, no, no, no, no, it was kind of a soft economy, but a non-recessionary economy. Jeremy?

We're at, uh, our outlook for this year right now is 15.8 million. Really? Okay. Yeah. So we're, we're a little bit lower. We, we've actually been discussing, um, you know, we're going to take that higher or not. So there's, there's some factors when you get into looking at the year-over-year comparisons. So that you can just like scratch your head a little bit about the second half of the year. You know, we had some, the EV tax credit ending in Q3 of last year drove some additional sales into that period. So that those year-over-year comps in Q3, July is probably going to be pretty good, but the rest of the time you don't know.

And then see where the year ends. And it goes back into what we're talking about before with the consumer and gas prices and how long all that plays out and, you know, does it impact the market overall. And, you know, a lot of what we have said, too, which we didn't talk about here, but we think the new car market is increasingly influenced by the wealth effect from the stock market. So, you know, and that is having, you know, it's, you know, like down a little bit maybe in the past week or so. but all those factors kind of play into where we think the year may end up being this year. Well, okay, so so far this year we're above $16 million, aren't we? Yes, I think we're writing about $16. You're assuming a pretty soft second half of the year, sounds like.

To hit the $15.8, it would be softer, yes. Okay. Mike, we're more optimistic than that, aren't we? Yeah, we're, I mean, I think our second half is pretty soft, too, but we're ready. at 16 for the full year. Right at 16. We're pretty close to where they are. But, our second half, pretty level.

But we're in, but, I mean, to get to 158, you'd have to have 15. You've got to be in the mid 15s, you know, somewhere. We're not that. I think we're 15.9 for the first half, maybe. But yeah. Okay. You can, you can disagree with these guys, you know? We're splitting hairs here.

We have friendly conversations all the time. But remember the supply component. Right. What has been year to day? delivered to vehicle dealer lots. Right. This is a 6% decline. And so the supply has actually shrunk.

We don't have high supply. It's not leading to more incentives and discounting. So it's constrained. You're saying, okay, so you're saying we're supply constrained? We are. We've lost all the affordable imports. Right. And we've dramatically dialed back the EVs.

And those two alone lead you to a small market, even if every smaller market, even if everything else was held in. And it's not. We're talking about rates going up. Yeah. So demand is weak or demand is okay, but it's kind of on the soft side because of affordability. And supplies even weaker is what you're saying. And presumably then you're saying, we're going to. see some less incentives and more price increases here. No? Well, incentives are pretty flat year

every year. They definitely have not been up. No, no, I mean, going forward here, I mean, looking forward. You know, we're looking towards the end of the year into next. No? It's remarkably disciplined. There's no pockets of oversupply. And, you know, 25 years in housing and auto, the most important things is the relative position of demand and supply. And it's pretty balanced. Okay, but you're saying we know demand is, and it's like the housing market, demand is weak because of affordability. People just can't afford because of the surge in prices and everything else that happened during the pandemic. But you're saying there's the supply side of the market is obviously also constrained for lots of different reasons and that the supply is

more constrained than demand here in the second half of the year going into next. And the implication of that in the housing market, the implication is that we're not seeing price declines, you know, kind of pricing is flattished up a little bit. And that's what you're saying, kind of sort of the same thing in the vehicle market. That's what you're saying. Yeah, that's exactly what we're seeing in our price. Interesting. And part of it's driven by all the tariffs we were talking about before. Like we've seen, you know, the lower supply come in. We see lower new model your units on the ground right now by their half of what they would normally be. Like we'd normally be sitting at about 10% of the model year 27s right now

on the ground. We're at 4%. So we haven't seen those come into the market either. It's really slowed down the like how the vehicles come into the marketplace. And all of that is actually supportive of the used vehicle market too from a valuation standpoint. Got it. Okay. All right, let's let's end it this way. If you're wrong, how are you going? How are you going? going to be wrong, Jeremy? How are you going to be wrong? I know you're never wrong. Mike, Mike is never wrong. But if you're wrong, how would you be wrong? Would the market be weaker in terms of sales and pricing or stronger in terms of sales and pricing? I think the market would be stronger. We would continue to perform as it's performed, maybe in Q2 throughout the rest of the year

without seeing any hiccup at all in an environment where you are somewhat constrained on inventory, right? And that would be hard to do, I think. But that's how we would be wrong, as if it's stronger. Jonathan, you agree with that? Totally agree, because unlike housing, this is a global market where you have nationalistic desires to drive more production. We've just had this weird confluence of factors that between the supply chain crisis and now tariffs and regulatory shifts that have caused it to be kind of off of its game. But historically, this has been a market that has been constantly oversupplied. We were never fundamental demand of 17 to 18 million, but that's where the SAR was year in and year out.

And so we can go back to that. I certainly wouldn't bet against it for the longer term. Right. Mike, you agree with that? I would say the opposite direction. The opposite direction. Yeah. So, Mark, I have been wrong.

As much as I hate to admit it. I was wrong. I thought there was going to be a price increase after Terrace went in. We had an 8% price increase in our forecast for new vehicle prices that still hasn't materialized. I was wrong back in 2021 when I said that there wasn't going to be a huge. price increase from the supply chain disruption and prices went up a ton. I think I'm still a little scarred by that semiconductor crunch with the cost increases from semiconductors from data centers and what that might do to the auto industry and around supply

so a larger increase in prices, a lower amount of new vehicle sales some over the next 12 months. That's what I would be worried about. Got it. Got it. Well, Mike, I know you can say whatever you want, but I still think you're the best forecaster out there. So other than Jeremy and Jonathan, I'd say you're the best forecaster out there. Close second, close second. Okay, guys, this was a great conversation.

I guess my takeaway is, wow, the vehicle industry is a pretty amazing market, very resilient, good case study for the resilience of the broader economy, that, you know, there are a lot of threats and risks, a lot of moving parts. And we are getting to a place where, you know, even that resilience could be undone. But, you know, for the time being, it feels like it's hanging in there. And the prospects are at least okay, if not reasonably good. Good summary. Good. Good summary? Okay. Very good. Anything else you want to add before we call it a podcast? Marissa, anything you want to add? Anything you want to say?

Chris? Okay. No, I think we're good. Okay, good. Well, thanks. Thanks so much, guys. I really do appreciate Mike and Jeremy and Jonathan. Thanks for coming on.

Really enjoy that, these conversations, and I hope to have you back on relatively soon. I appreciate you coming on. And with that, dear listener, we are going to call this a podcast. Take care now.