LAS VEGAS – Elevated interest rates and rising monthly payments are exacerbating affordability concerns as delinquencies rise across prime and subprime segments, while the supply situation remains mixed.
Auto Finance Summit 2023 brings together auto finance leaders to discuss issues facing the industry, including as inflationary pressures and affordability, rising cost of funds, subprime financing and the impact of still tight inventory on sales and demand.
Affordability concerns heighten
Average monthly payments are nearing $800, with the average new-vehicle transaction price $47,841 in August.
While affordability has improved industrywide, inflationary pressures are squeezing consumers’ wallets and turning some buyers from higher-priced cars. Vehicles above $50,000 in August were sitting longer on dealership lots.
Delinquencies rise
While credit availability improved in September, credit performance continues to be a watch item. In the third quarter, nearly every major bank and captive reported a year-over-year increase in delinquencies.
Past-due balances also climbed in both prime and subprime securitized loan pools in September.
Inventory, sales mixed
New-vehicle sales picked up at most automakers in Q3 in tandem with new-car inventory reaching 2.2 million units, or 60 days’ supply, as of Oct. 2, according to Cox Automotive.
Supply remains constricted at manufacturers such as Honda, while the United Auto Workers strike is prompting production delays and supply concerns at Ford Motor, GM Financial and Stellantis NV.
Follow along with Auto Finance Summit 2023 coverage during the event here.
