Auto Dealerships NAICS 441110

Oct 15, 2025 - Subprime Auto Loan Delinquencies Hit Record High

• Subprime auto loan delinquencies in 2025 have hit a record of more than 6%, according to Fitch Ratings, as lower-income borrowers struggle to make payments. The percentage of new-car buyers with credit scores below 650 rose to nearly 14% in September, per JD Power, the highest level since 2016. Stagnant wages and rising unemployment have led many consumers to purchase used cars with extended loans, resulting in average monthly payments of $750, with nearly 20% of loans surpassing $1,000 a month. (Not coincidentally, Cox Automotive notes that car repossessions increased to 1.73 million last year, the most since 2009.) Wall Street continues to invest in subprime auto loan-backed bonds despite the risks, citing stricter underwriting standards. Automakers like Ford and General Motors are also adjusting strategies to address the financial strain on consumers, including offering lower rates to risky borrowers and focusing on making more affordable vehicles.
• US auto dealers in 2025 are navigating a complex market with new car prices remaining near record highs, creating affordability challenges for many buyers, per Cox Automotive. In addition, a shortage of used vehicles, particularly those three- to five-years-old, is driving up secondary market prices. This presents both challenges and opportunities for dealers: efficient inventory sourcing is critical, and transparent pricing helps maintain customer trust. High prices and limited supply also make customer education a key differentiator, as buyers increasingly rely on financing options and expert guidance to make informed decisions. In its Q3 2025 forecast, Cox Auto expects 4-8% price increases for both new and used cars throughout the rest of the year. The report expects average tariff costs of $5,500 for all imported vehicles, about $4,900 for Mexican and Canadian imports, and an extra $1,000 for autos assembled in the US due to parts tariffs.

• National banks boosted their share of the auto loan market, writing about 31% of all new vehicle loans in the first half of 2025, according to Experian. It was a 5% year-over-year increase for new cars and a 1% increase for used cars (banks wrote 28% of used vehicle loans in that period). Banks are on pace to write 29% of all US auto loans by the end of the year. Earnings reports of three large banks all show double-digit value growth in auto loans: JPMorgan Chase had a 12% increase in auto loans for H1 2025 ($22 billion); Capital One rose 26% ($20 billion); and Wells Fargo jumped 47% ($11.5 billion). Industry experts attribute the shift to falling interest rates allowing banks to cheaply borrow money to originate auto loans, which they can then offer at lower rates to consumers in an effort to be more competitive.
• The average new car price held steady in June 2025 at $48,841, according to Kelly Blue Book, which is 1.5% higher than a year ago as dealerships and automakers boost incentives to keep sales volume high and balance out tariffs. Incentives (discounts automakers give to dealers) made up 7.3% of the average purchase in June, but experts don’t see discounts as a long term solution and expect the industry to eventually pass rising costs to consumers. Luxury brands have seen prices rise the fastest (per Cox Automotive) at around twice the industry average. Those brands (Cadillac, Mercedes, Porsche, among others) are keeping the new car industry afloat from high-income earners who are unswayed by the increases amid pent-up demand. EVs bucked the trend and saw prices fall 4.2% year over year in June with the government tax credits to buy those cars expiring this year.