Jessica Caldwell from Edmunds discusses the current state of the automotive market, highlighting concerns over rising car prices that are excluding average buyers. With the Trump administration poised to ease fuel efficiency standards, Caldwell anticipates potential impacts on market dynamics as consumers may shift towards smaller vehicles or the used car market. She also reflects on the evolving landscape of electric vehicles and the uncertainties facing the industry as it navigates high prices and changing consumer behaviors heading into 2026.
Jessica Caldwell, head of insights at Edmunds, talks about the state of the industry heading into 2026 and how affordability issues have continued to shrink the new car market. Trump is poised to propose relaxed fuel economy standards. Plus, thousands of dealerships fall victim to a new data breach.
"Executives from Detroit's major automakers, including Stellantis, CEO, Antonio Filosa..."
Stellantis is a big car company that owns many brands like Jeep and Ram.
Stellantis is a multinational automotive group formed from the merger of Fiat Chrysler Automobiles and PSA Group, owning brands like Peugeot, Citroën, Jeep, and Ram.
"They're selling quicker than internal combustion engine use vehicles because they're cheap."
ICE vehicles are cars that use gasoline or diesel engines, which burn fuel to move the car.
ICE vehicles run on gasoline or diesel engines that burn fuel to produce power, as opposed to electric motors.
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I think the worry for the auto industry is the fact that new cars have become very exclusionary. Let's run through all the news you need to know to keep up in the auto industry.
The Trump administration is set to roll back Biden era fuel efficiency standards. As of recording time, we're expecting an announcement from the White House sometime today.
Executives from Detroit's major automakers, including Stellantis, CEO, Antonio Filosa, are slated to attend. The administration argues that artificially high fuel economy requirements have pushed average new car prices above $50,000, pricing out many Americans.
The current standards require automakers to hit about 50 miles per gallon across their 2031 model-year vehicles, but easing requirements is unlikely to lower prices quickly. Automakers plan line-ups years in advance, and Trump's tariffs have already raised cost by billions.
More U.S. November sales results are in, Subaru's top three sellers, the Crosstrek, Forester, and Outback, all posted lower volume that led to an overall decline of more than 3% for the brand.
The company's U.S. sales have dropped for consecutive months. Mazda's deliveries slipped for the fifth straight month. November volume was down 1.5%, mostly on weaker CX70, CX30, and Mazda 3 sales.
And Volvo sales fell 27% in November. The automaker is now off almost 3.5% for the year. You can find all of the latest sales results at autonews.com.
And a cyber attack on credit check providers, 700 credit has exposed personal data from more than 5.5 million customers at nearly 18,000 dealerships across North America.
Hackers accessed customers' names, addresses, and social security numbers through a backdoor connection to a vendor partner, stealing data collected between May and October. Joining me now to talk more about this is automotive news retail tech reporter Mark Holmer.
Mark, welcome back to daily drive.
Thank you. It's great to be here.
So Mark, what do we know so far about this cyber attack?
Well, the attack was on October 25th. The company immediately knew something was up to the protections that it had, and it took a quick action and numerous areas.
They notified their insurance company. They hired two cyber security firms to evaluate their system.
They hired something known as a reach attorney. That's a thing. And this attorney was hired to make sure that the company handled all the legally required notifications and response that the industry requires.
Compare this to something like the CDK cyber attacks in 2024. Is this a sign that retailers haven't learned the right lessons from that?
That's a complicated question that deserves a complicated answer. It is partly a sign that they didn't learn the lesson because attacks keep changing and worsening and coming.
So that's something to consider, but it's also the nature of cyber security.
The cyber security is evolving rapidly. It's every changing what worked a year or two ago. It doesn't work now.
And so it's not as much about learning lessons that part of it, but it's also about keeping everything current in terms of having the best possible protection.
And that's sorely lacking, according to experts.
We urge your interview with Helios Technology President Eric Nockbarge yesterday here on the show about how dealerships should be updating their practices to protect themselves and their customers.
What are you hearing from all of your sources about what retailers need to improve?
It's a question of moving away from protections that worked five years ago.
It's adding multi factor authentication, even now that everybody uses it. It's using AI driven solutions to combat AI driven cyber attacks.
It's staying current. It's using outside consultants. It's treating this as an aggressive infection basically that you can stabilize, but won't entirely go away.
Perfect. Mark, thank you so much for joining me. You're welcome. My pleasure.
Those are today's headlines. You can find more details on all those stories at auto news.com coming up Jessica Caldwell of Edmunds talks about what she's watching out for in 2026.
And whether there's a good way to address high prices that are shrinking the market. That's next on daily drive.
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Welcome back to daily drive. I'm Kellen Walker. New car MSRP's are pricing out average buyers. The question is whether Americans will decide to downsize their vehicles, move to the use car market or simply pay more than they can afford.
Our own Jerry Hirsch caught up with Edmunds head of insights Jessica Caldwell at the LA Auto Show to talk about that.
And what she expects to see in the market heading into 2026.
Hi, this is Jerry Hirsch with automotive news and we're at the LA Auto Show with Edmunds head of insight Jessica Caldwell.
We're going to talk just to touch about the auto show. I think Jessica, you and I start coming to the shows talking about what the automakers were introducing and thing about 2009, 2010.
And if I recall auto sales for the entire year, that year was $10.4 million. 10.4 million vehicles. Yeah, right.
Yes, almost 10.4 million dollars, too. So where are we at this year? How do you see this year finishing?
Yeah, I mean, for all of these scary points of this year, I mean, at some point it was auto sales were going to collapse.
I don't know if you remember back in March when the tariffs were announced, those headlines saying by the summer, car prices are going to go up $5, $15,000.
I think I saw something that said it was $20,000.
And now we know reflecting back that they didn't happen. Car prices are relatively the same. People are still turning up to buy cars.
A lot of folks have delayed their purchases over the past few years for COVID reasons, chip shortage reasons, all those type of things.
And the sales rate is pretty strong. I mean, look, we're going to close above 16 million, which is a pretty healthy sales number.
And certainly perhaps different than what we thought maybe mid-year.
What do you see for 2026?
I mean, it feels like it's going to be more of the same, right? Unless there's anything major that happens.
I mean, we're starting to see, or we could start to see a little bit more creep up in price as tariffs start to take a hold.
Because I mean, for the most part, automakers have really absorbed a lot of the cost for tariffs. And they're not every vehicle either.
So that helps too. You think you say tariffs. You think it's across every vehicle line. And that's just not the case.
So I think that if we obviously start to see prices increase, that will affect things. But the thing is, is that consumers are used to price increases.
We've seen transaction prices raise about 30% over the past five years. So it's not as if continuing to see price increases, anything new or anything different that they haven't already seen.
Won't that start to cut into the market? Because every thousand dollars more, the average transaction price rises, cuts people out based upon creditworthiness, or just the amount of budget they have, the amount of cash they have.
Yeah, and I think that is, it's a good point because that's something that we have seen. Because if we look back at how cars have changed, everything now is bigger, more technology, more features.
Even though car prices have gone up, it's like the quality of vehicles have gotten better. There's more bang for your buck. It's not like a gallon of milk that's gone up and you're basically getting a gallon of milk still.
So I think that is, that's good. But I think the worry for the auto industry is the fact that new cars have become very exclusionary. If you look at the income levels of the new car buyer, they're much higher than they were before.
They're earning over $200,000 to buy a car. And it makes sense when you look at average transaction prices being near $50,000, you have to have a good income to buy a new car.
So I think we may start to see a shift towards perhaps more affordable vehicles, not subcompact cars because Americans don't like those, but perhaps maybe smaller, more well executed crossovers, or something that becomes a little bit more inclusionary to the market.
I'm looking at the product mix that we see for 2026. And one of the things I've noticed about American consumers when they purchase cars is that they typically go for the biggest use case.
So they go for a three US three row SUV when they maybe have one child because they want to drive other people's kids around, or they go for a bronco with a lot of off road capability and they take it to the shopping mall.
So are these high prices, these high transaction prices in the burden that puts on your monthly budget? Well, people start to write size their vehicles to their drive cycle.
What they actually need most of the time rather than what they think they might need on occasion.
Yeah, that's a tough one because I think that's how Americans shop, right? Like even like EVs, it's like, well, I can get an EV because I'm going to drive across the United States, and that seems like a hassle.
It's like you're never actually going to drive across the United States. You just think in your mind that you're going to or carrying 15 kids in your car. That just doesn't happen.
But that's how people buy cars. And I think it's also hard for people to downsize when they've already gotten used to a certain size of vehicle.
Just like luxury, once people go luxury, they're not necessarily willing to go back out of luxury market.
But I think we may hit an inflection point where people just simply can't afford these type of vehicles.
Because if we look towards the future, the big trends are autonomous technology and electrification and that adds additional cost.
So can you still keep the size with all of the new features and all of the costs? I think that's going to be a bit tricky.
So we could start to see people starting to downsize slightly. It's a very un-American thing.
It's a trend that we have not seen so far in this country.
But I don't think we'll necessarily see people go from suburban to Honda Fits like we did during the 2008 gas price spike.
But maybe something more sensible like a midsize SUV versus a large one.
Yes, the Honda FIT, which was discontinued longer.
I just remember in 2008, you just saw so many trade-ins of large SUVs to cars like the Honda FIT, the Toyota Prius.
And they were so unhappy afterwards because they went from this massive car to a tiny car.
Because gas prices were supposed to stay at $5 and it galled indefinitely at that point.
And the buyers or more is just off the charts. And negative equity rose, too, as a result of that.
It's interesting. The auto industry has been characterized by doctrine that turns out not to be true.
In other words, we were going to go to peak oil and then there was fracking and we found all this oil.
That the oil prices were going to rise inexorably forever. And yet they've kind of modified.
You look at an inflation-adjusted price for a gallon of gas across the country.
You know, it works out to about $0.35 or $0.40 a gallon in the 1970s.
It's just not in terms of a family budget. It's not any bigger bite than it was decades ago.
It'll be interesting to see where this heads.
So let's talk about another thing that's been a lot of hype about, which she referenced, which is AVs and Robotaxies.
We're seeing Waymo now just recently says it's going to operate on freeways in the San Francisco Bay area.
And it's going to start to connect airports, more routes to airports, which is where there's a real demand for taxis and ride-hailing services.
Zouks is starting to roll out service in various cities.
Of course, we're all waiting for Tesla, which we've been waiting for Tesla for a long time.
But perhaps it will happen where they will expand their service, take the humans out of the cars.
Do you think that 2026 might be an inflection point for Robotaxies and autonomous vehicles?
And do you think that in urban areas, places like Los Angeles, San Francisco, Austin, perhaps Las Vegas, that people will start to learn to use those and rely on those and maybe cut back on the number of household vehicles?
I think a lot has to do with income, because I think for folks that are in higher income brackets, a thought of sharing a vehicle or ride-share just doesn't sound appealing.
You want your own vehicle with your stuff, you don't want to be in a shared type of a situation, maybe once in a blue moon, but not indefinitely.
So I think it's going to come down a lot to that.
And just general comfort, I think, as well.
It is funny how you see the reactions, especially here in Los Angeles when they first rolled out Waymo, it was like a little bit of a freak out.
Like there's no one in that car. And now the people, I feel like people have accepted it a lot faster than I thought that they would.
And now it just seems like, oh yeah, there it is, like no big deal.
And I feel like that is a willingness for these technologies to happen to make an impact.
I don't know if 2026 will be an inflection year for this. It feels like it's still maybe early and it feels like it's kind of folded into so much other Haiti's word drama, but sort of drama in the auto industry that it feels like
which was one such a hot topic for us.
It almost feels like it's taken a bit of a back seat just because there's so many new logistical issues in relation to pricing and the new administration and what's happening with EVs and federal tax credits.
It just feels like there's a whole host of other things going on in AVs in line, but maybe not as much in the front as they were a few years ago.
So you referenced the federal tax credit for EVs. We all know that sunset at the end of September.
We saw a huge pull forward in sales in September and then I'd say a crash or a free fall in October.
Let's forget about this year and let's look at 2026. What do you think will happen with EV sales?
I mean, I think they're still going to struggle. I mean, new product is definitely going to help.
It feels like we're on the cost of more affordable EVs, which I think is of course a positive thing because that's going to expand the consumer base.
But I think what we'll see is people that are just more serious about EVs that actually want to buy them for product reasons, not because they're a great deal, not because you can get one for 279 a month.
And it's the best deal in the new vehicle market and you're just going to maybe live with it and see how it goes for you for the next few years.
So I think the intention will be a bit more serious for these folks. And I think obviously long term it's going to be a positive shift for the EV market.
I mean, sure you're going to have to take your medicine now with lower sales. But also when you're leasing such cheap EVs, it comes back to roost a few years later when your residual values are terrible.
And right now we're seeing high demand for used EVs. They're selling quicker than internal combustion engine use vehicles because they're cheap.
And so you're creating a market that doesn't seem particularly positive and it was going to have to change at some point and now it is and it's going to be tough for sales, but it was going to happen at some point.
And I think the fact that there are cheaper EVs that are for sale that are more compelling, it'll help kind of maybe pad some of the pain, pain points.
Thinking of the auto industry and car sales, what worries you the most for 2026?
I mean, just general uncertainty, I would say, it feels like consumers have still been buying cars. We know interest rates have been high, auto prices have been high.
You know, some point is there just a rebellion like we don't want to pay these high prices anymore. And there's just not enough options available on the lower price on the lower side of the price spectrum.
You know, is there going to be actual like push back? And also I would say the other big worry is like for the next black swan event.
Because for a while there, we would see a black swan every decade maybe and now we're getting one served up to us every six months. So I'm kind of like I'm probably probably both worried about as a thing I do not know because that has been the pattern for the past five years.
And so it's kind of hard to see what's just around the corner because we've had some surprises.
Jessica Caldwell of car research firm Edmunds. Thank you for joining automotive news. Thank you for having me.
That's daily drive for today. I'm Kellen Walker. Thanks to automotive news executive producer Jake Near as well as our own Mark Homer and David Phillips for their reporting for today's podcast.
You can get the latest news on the new car market, cafe standards and everything happening in the auto industry at auto news.com.
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