New trends are emerging in the auto industry, particularly regarding consumer behavior. This poses additional challenges for the industry, and dealerships will need to adapt their strategies.
For example, consumers are feeling increasing financial stress. Debt for auto loans and leases has risen nearly 15% in the last 10 years. Auto loans and leases now make up 35.9% of total non-mortgage consumer debt. It is the fastest growing category in non-mortgage consumer debt and is now higher than student loans, personal loans, and private label cards.
Delinquencies are also rising, which is another reflection of consumer stress. In fact, in the first 11 months of 2024, 1.5% of all auto loans and leases were auto delinquencies that were 60 or more days past due.
Additionally, cars are growing more expensive; the average new vehicle price in 2024 is $48,397, which is a 34% increase in vehicle price since 2016. Due to these pressures, auto loan and lease originations dropped 1.6% YoY in September 2024, resulting in a $9.2 billion decrease.
To rise to these challenges, auto companies will need to focus on bolstering the consumer experience. 72% of consumers would visit dealerships more often if the buying process was improved, so this is an area in which change can occur. Understanding consumer behavior and economic trends is important to finding success as an auto dealership.
