Auto loans stretch to record lengths; metals fall on Hormuz reopening

Edmunds data show 36.5% of new-car loans now 73 months or longer

Car buyers are taking on longer loan terms and paying record amounts each month to finance new vehicles, according to an analysis of new-car financing data published by Edmunds. During the second quarter, 36.5% of new car buyers took a loan of 73 months or longer, compared with 27.3% a decade earlier, Edmunds said. Loans of 84 months or longer accounted for 23.9% of new-car financing, another record.

Average monthly payments reached a record $777 in the second quarter, Edmunds said. Ivan Drury, Edmunds’ director of insights, said “stretching out the term to be able to swallow a higher-priced vehicle guarantees you’ll be building equity at a snail’s pace, leaving you highly vulnerable to falling underwater when it’s time to trade in.” Jessica Caldwell, Edmunds’ head of insights, said the combination of record loan terms, shrinking down payments, and record monthly payments creates “a clear recipe for long-term financial strain.” She said meaningful relief would require “a major shake-up in automaker incentives, a meaningful drop in interest rates, or a shift toward a more affordable mix of vehicles” — none of which she said appear imminent.

The broader U-6 unemployment rate, which includes discouraged workers and involuntary part-time workers, stood at 8.1% in June, according to Federal Reserve data.

Base metals slide as Hormuz reopening boosts supply expectations

In commodity markets, base metals traded lower in early European hours. Three-month aluminum futures fell 1.3% to $3,050.50 a metric ton, extending a decline that has pushed aluminum down 18% over the past month. Copper edged 0.9% lower to $13,215.50 a ton.

Analysts cited the reopening of the Strait of Hormuz, which has boosted expectations that supplies from Persian Gulf producers — a region accounting for more than 10% of global aluminum output — will normalize. A firmer U.S. dollar also softened investor appetite for dollar-denominated commodities. The broad trade-weighted dollar index stood at 120.8866 on July 2, according to Federal Reserve data. Traders are also awaiting signals from Washington on refined copper imports, with any policy changes likely to influence trade flows and market sentiment.

USMCA renewal not expected, with auto industry at center

The Trump administration is not expected to renew the U.S.-Mexico-Canada Agreement, but the existing terms of the trade deal persist into the next decade, according to Jim Wiesemeyer of Ag Bull. Wiesemeyer said the administration is likely using the review as a way “to keep pressure” on Mexico and Canada, with the automotive industry at the center of the dispute.

Wiesemeyer noted that while the pact’s agricultural market access provisions are not the immediate target of the auto-content debate, “once the U.S. uses the review to reopen the broader agreement, farm issues can quickly become bargaining chips.”

European airlines cautiously trim capacity as demand recovers

European airlines are becoming more cautious about adding capacity, with several carriers including Deutsche Lufthansa and Ryanair trimming their summer flight schedules, Bank of America analysts said in a research note. The analysts said the adjustments appear “measured rather than a sign of weakening demand” and noted that short-haul booking trends have improved in recent weeks.

As demand recovers, the analysts said there is potential for low-cost carriers to outperform current guidance. Booking patterns are returning to normal after being disrupted by geopolitical uncertainty, suggesting consumer confidence is gradually improving ahead of the peak summer travel season, they said. Lufthansa and Ryanair shares traded 1.8% lower and 0.8% lower, respectively.

In a separate note, Bernstein analysts Alex Irving and Antoine Madre said Ryanair’s strategy of increasing flight frequencies on existing routes, rather than simply adding new destinations, is strengthening its competitive position and giving the airline greater pricing power. Bernstein maintains a positive valuation on the stock, arguing the market has yet to fully reflect the benefits of these structural advantages.

MWB Research analyst Jens-Peter Rieck said Lufthansa is unlikely to exceed its 2026 guidance but that higher fuel costs and strike-related disruption are already largely reflected in the share price. He said the market continues to undervalue Lufthansa’s business, particularly its fleet and maintenance division.

Renault shares rise on reaffirmed guidance

Renault shares rose 3.2% to 25.89 euros after an analyst call ahead of earnings confirmed full-year guidance that sits above consensus, Jefferies analyst Philippe Houchois wrote. However, Renault reiterated guidance that the second-half margin would exceed the first half, which Jefferies said keeps risk to the downside given competitive market conditions.

For the first half, Jefferies expects revenue of 28.9 billion euros, adjusted EBIT of 1.32 billion euros, and a 4.6% margin. Management highlighted competitive cost improvement from the Horse Powertrain joint venture, and Jefferies expects the group’s results presentation to discuss the Nissan stake and diversification into drones and humanoid robotics. Jefferies rates Renault stock at hold with a 31 euro price target.

Deutsche Bank analyst Christoph Laskawi wrote that Renault’s first-half report is expected to be hit by cost and mix headwinds, partially mitigated by cost-reduction measures. The bank expects higher volumes and fully ramped mitigation measures to drive margin improvement in the second half. It sees a risk that the full-year margin drifts towards 5%, which the bank said could still rank it above other European automakers for 2026 overall. Deutsche Bank lowered its target price to 35 euros from 40 euros and retained its hold rating.

Malaysia auto sales outlook positive amid competition risks

In Asia, CIMB Securities analyst Mohd Shanaz Noor Azam wrote that Malaysia could witness stronger auto sales in the second half, supported by fuel subsidies, seasonal demand, strong electric-vehicle sales, and stable financing conditions. A broader pipeline of new models from national brands could also boost sales, the analyst said.

However, Azam noted that sector earnings risks persist given intensifying competition and a stronger dollar that could weigh on margins. CIMB maintains a neutral rating on Malaysia’s automobile and components sector, pegging Bermaz Auto and Hi Mobility as its preferred picks.