Automotive News Daily Drive Oct 26, 2025

Oct. 26, 2025 | Bonus Episode: Experts unpack vehicle affordability trends

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Term

dealer markup

Dealer markup is when a car dealer raises the price of a car above what the manufacturer suggests it should cost. This usually happens when there are fewer cars available than people want to buy.

Concept

used car market

The used car market is where people buy and sell cars that have been owned before. Prices can change based on how many cars are available and how many people want to buy them.

Concept

state incentives for EVs

Some states give money back or other benefits when you buy an electric car. These are called state incentives and can help you save money.

Concept

EV tax credit

An EV tax credit is money you can get back on your taxes when you buy an electric car. It helps reduce the price you pay for the car.

Concept

automaker incentives

Sometimes car companies offer special deals or discounts to help sell their cars. These are called automaker incentives and can make buying a car cheaper.

Concept

EV incentives

EV incentives are money or tax breaks that help people buy electric cars. They make the cars cheaper, so more people can afford them.

Car

Ford F150S

The Ford F-150 is a popular truck that many people use for work and everyday tasks. It's known for being strong and reliable.

Term

tariffs

Tariffs are extra fees that the government charges on products coming from other countries. When car companies have to pay these fees, they might raise the prices of their cars.

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Hey, this is Daily Drive executive producer

Jake Neer in Detroit.

On this week's bonus episode of the show,

you'll hear more of our Congress Conversations

livestream from this past Wednesday

about vehicle affordability and where pricing trends are headed

as tariffs begin to make their full impact.

Our own Hannah Lutz and Paige Hodder

spoke with several experts.

Laura Parada is president of the New Jersey Coalition

of Automotive Retailers.

Jennifer Newman is editor-in-chief

at Cars Commerce.

Shirley Jones is CFO at Car Pros Automotive Group.

And Melinda Zebritsky is experience head

of Automotive Financial Insights.

We have another audience,

a few more audience questions actually,

so thanks for sending those in.

One from Mike Finko,

how long do you project this difficult financial period

to last?

He's comparing it to 2008, 2020.

He referenced the Fed using quantitative easing.

And he's also noting that salaries are rising slowly

while average transaction prices

for vehicles are climbing fast.

So, looking into a crystal ball here, I guess,

how long do you expect this to go?

Melinda, would you like to start on this?

Well, like I mentioned earlier,

when we saw the spike in prices in 2022,

a lot of that, of course, were some dealer markups

with very low inventory spilled over into used.

Even though inventory recovered,

we didn't see prices come down.

And especially if we start having lower volume

of new car sales,

which we have had for the last couple of years,

that does spill over into a very tight used car market.

So, unfortunately, I don't have a crystal ball,

but I don't see things easing up

anytime in the next several years,

unless there are government programs that come into play,

as Laura was mentioning.

So, I just don't see things really coming down.

And that reminds me,

we wanted to go back to what the states are doing.

So, let's go there.

So, I know, Melinda, you look at nationwide

and are in Colorado.

Shirley, you're in California,

and Jenny, you also look nationwide.

So, let's start with California.

Shirley, what are you seeing on the horizon there?

I'm interested, as well as you are, Hannah,

to see what's going to come with the state incentives,

whether it's EV or for some type of,

based upon income level,

to get new consumers back into the marketplace.

So, I don't have necessarily any particular insight,

but the one thing I do really know

is that rebates have been a pivotal contributor

to selling of new vehicles.

So, I'm really excited to see if the state comes back

with some of those mandates to provide for the consumer.

Jenny, do any states stick out to you

as having strong affordability programs?

We actually have representation here today

because we've got Laura in New Jersey,

we've got Melinda in Colorado, I'm in Illinois.

Those three states, they do have incentives around EVs.

And so, I think there's a lot of talk, of course,

about the federal EV tax credit going away.

And I think consumers need to know

that there are still credits available through some states.

So, it's definitely worth digging into that.

And the other side of it, too, is automakers.

Automakers on the EV front, at least,

are helping to try to boost EV sales

in this changing environment

by offering, essentially, their own version

of the tax credit to the price of the vehicle.

So, there are a bunch of ways, I think,

that shoppers can sort of dig in

to see how they can help lower the cost

of the car they're considering.

Yeah, in New Jersey, I'll just add

that the EV incentives are helpful.

They do help get customers into the vehicle.

Unfortunately, our state has kind of lowered

those incentives over time,

which is something we have pushed back on

and said we really need to increase the incentive,

not lower the incentive,

as these vehicles become more expensive across the board.

But I know for our dealers, too,

they've really relied on the EV infrastructure incentives

as well to get chargers at their dealerships.

That's extremely important, too.

But it will be interesting to see what happens,

though, really, with the product mix

as these mandates for having deadlines

to introduce EVs at a certain threshold for sales,

how that might change things

when there's not as much pressure

to meet artificial targets, really.

And Paige, you wrote about

the $1,000 payment buyers recently.

Tell us a bit about that.

Yeah, so this is a trend I've been tracking

for a while because the idea of paying $1,000 or more

for my car kind of just blows my mind.

So 17.5% of new vehicle buyers

who finance their purchase with a loan

signed up to pay $1,000 or more a month

from January to July this year, according to Experian.

How are these high-payment buyers

shaping the auto retail industry?

Melinda, can we start with you?

Yeah, like I said, I've also been tracking this

for quite a while.

We went from the last five, six years,

it was less than 5% to now over 17%.

What's interesting with this payment group

is the big growth, like I said, really occurred in 2022.

And prior to that, the people with these $1,000 payments

I think knew what they were getting into.

As Laura was talking about, as consumer education,

I think the increase in that payment

really was more of a surprise to the 2022 and 23 buyers.

More recent ones, I think, are expecting it.

Like I said, more educated now.

They know what's out there.

But what's interesting with this

is most of these vehicles are trucks.

It's F-150s, it's the big trucks.

Those buyers aren't going away.

A lot of these are used as personal work trucks.

So it does, I think, shift the market a little bit

because of, again, it could potentially,

some of these buyers who maybe need a big truck

might not be able to afford one.

But that's what that market is, is it's truck buyers.

Are you seeing that on the ground, Shirley and Laura?

Those very high payment buyers?

Yes, yes.

And also think too with electric vehicles are more expensive.

There was a lot of pressure to push those out the door too.

But also everyone still wants the trucks and the large SUVs.

Just like Melinda was saying,

that is the hot space that everyone wants to be in.

And it drives the higher payments

and we're not seeing an end.

For some of the EV leasing was so positive

because of the incentives from the manufacturers

that you could get a really affordable payment

on some of those EVs.

It's just a very dynamic situation overall,

but we are definitely just continuing

to see higher lease payments as we've seen in the data.

Yeah, to give some insight

from the dealership's perspective,

some of those payments is coming from our luxury store

of those higher prices.

But as stated before,

with the support of the mandates of the EV credits,

we've been able to help mitigate some of those prices

where those monthly payments are not above the $1,000.

So the credits were definitely been able

to reduce those monthly payments.

And we've seen it primarily in our lease models,

but not so much our non-lease models that we're not,

I'm sorry, our luxury models.

Our luxury models is where we're really seeing

those prices above $1,000.

But for our leases, we're not seeing that impact.

For our non-luxury models,

we're not seeing that as much over $1,000.

When we come back,

we'll hear more of this conversation with experts

about the vehicle affordability crisis.

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You know, looking ahead,

we're starting to wind down the year.

Obviously, as we've established,

the affordability situation is not going anywhere

anytime soon.

So what should dealers be preparing for

in the first quarter of 2026 based on current trends?

Jenny, do you want to start?

You give me the hard one.

I think we're starting to see the impact of tariffs.

And so, you know, we're seeing some automakers

be relatively upfront about those increases,

but prices are going to increase.

And so the difficulties around affordability

are going to increase unless we see some major move

by the federal government.

I was, as we were talking about all of this,

I was thinking about cash for clunkers.

I can, was it 08?

I know, sorry, Melinda, but back in 08, right?

And just thinking through,

is that a way to sort of, you know,

give a boost to affordability and what is going on right now

and bring more cars into the used side of things?

No idea.

I'm not a politician, thankfully.

So we'll stay out of that.

The last thing we want is a tight used vehicle,

BIO or vehicles on the road of, you know,

late model car park.

The last thing we want to do is pull some of those out.

You know, we need to keep the used car market.

We need to keep that volume.

I would comment from what I see in the data,

I think the areas for the dealers,

first of all, get ready for used EVs coming back.

You know, what are you going to do with those

if the consumer's wanting to trade that in?

But I think also to the point of the tariffs,

I think there will be the need for the dealer

to be able to educate the consumer

because you might walk into,

I'll just use Ford as an example.

You might walk into a Ford store.

Some of the models are impacted by tariffs.

Some of them aren't.

So having that consumer education

of being able to talk to the consumer about perhaps why.

But the other thing, yes,

get ready for those EVs coming back.

Yeah, every brand is going to be hit differently

by the tariffs, as we all know.

It's like a scale.

And we are seeing though, you know,

announcements where maybe Trump's plan is working,

where there's more investment in the United States

and, you know, changing factory focus.

And so I'm always optimistic

as the dealers are always optimistic

that we will mitigate any storm

and that we're going to survive this

like we survived every other crisis

that has occurred like COVID.

Most definitely.

In 2026, I'm looking from a lens

from the OEM, the finance companies,

collaborating and coming with some strategies

to help offset some of the tariff costs

that we might see in 2026.

To Jenny's point, she spoke briefly about cars for clunkers

and it just reminded me of maybe there's a segue

that we can do some deferred first payments

or 90 days of deferred payments.

So those are some strategies that I can see

that potentially in 2026,

that can help drive consumers back into the dealerships

and to help mitigate some of the tariff costs

that we might be seeing coming ahead of us.

Shirley Jones is CFO of Car Pros Automotive Group.

Laura Parada is President

of the New Jersey Coalition of Automotive Retailers.

Melinda Zabritsky is Experian's Head

of Automotive Financial Insights.

And Jennifer Newman is Editor-in-Chief at Cars Commerce.

You can find their full conversation

with our own Hannah Lutz and Paige Hodder

on the Automotive News LinkedIn, Facebook, or YouTube pages.

Thanks for listening to this bonus episode of Daily Drive.

We'll be back on Monday

with a brand new full episode of the show.

0:00

13:34

Oct. 26, 2025 | Bonus Episode: Experts unpack vehicle affordability trends

dealer markup

used car market

state incentives for EVs

EV tax credit

automaker incentives

EV incentives

Ford F150S

tariffs

About this episode

Original notes