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Era of Stimulus-Distorted Consumer Credit Ends: Auto Loans, Delinquencies, Prime & Subprime

Wolf Street | Nov. 17, 2022

The balance of auto loans and leases continued to surge in Q3 even though new-vehicle sales in Q3 were at levels first seen in the late 1970s – and that’s not a typo – with the number of vehicles sold down by 19% in Q3 compared to Q3 2019; and with used-vehicle unit sales down about 15%.

Auto loan balances surged because new-vehicle prices surged as automakers keep going upscale because that’s where the money is, and because they’re supply constrained and are trying to boost their dollar-revenues and profit margins by prioritizing more expensive models and by price increases even as sales of new vehicles are in terrible shape.

Auto loans also surged because used-vehicle prices had spiked in a ridiculous manner though there were never any shortages of used vehicles. Some of those price spikes have finally started to back off a little.

So balances of auto loans and leases increased by 2.2% in Q3 from Q2, and by 6.1% year-over-year, to a record $1.52 trillion, according to data from the New York Fed’s Household Debt and Credit Report, on a mix of surging prices, going upscale because that’s where the money is, and dropping unit sales, leading to fewer but bigger loans with longer terms:

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