Earlier this year, we questioned whether a recession was priced into auto stocks yet. After all, who wants to buy a car in a recession, especially with rates rising so fast?

We got the answer yesterday. Used car dealer CarMax (NYSE:KMX) reported earnings that missed analyst forecasts on nearly every metric.

KMX

fell 25%, and the news also crushed the entire auto market yesterday.

• Auto retailers AutoNation (NYSE:AN) and Carvana (NASDAQ:CVNA) fell 10% and 20%, respectively.
• Auto manufacturers General Motors (NYSE:GM) and Ford (NYSE:F) both fell 6%.

Even electric vehicle makers, which have even larger order backlogs, weren’t spared — with Tesla (NASDAQ:TSLA) falling 7% yesterday.

The industry went from having trouble meeting demand (see: supply chain issues) — to no one wanting to go anywhere near a dealership.

• If a recession wasn’t priced into the market, it is now. And that might not even be the end…
• Per OANDA analyst Ed Moya, “affordability challenges” suggest it is “only going to get worse” (BBG).

The bright side (yes, there is one): Rising car prices have contributed to inflation — and falling demand is another indicator of peak inflation.