More Americans are losing their cars as the economy struggles under the twin burden of high interest rates and inflation.
This trend is a clear sign of the strain Bidenomics is putting on everyday consumers.
Cox Automotive’s data tells a worrying story.
Repossessed vehicles at Manheim auctions, the largest wholesale market, are up 23% from last year.
Jeremy Robb, a Cox senior analyst, reports that loan defaults across the industry have increased 11% compared to 2019.
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The Federal Reserve Bank of New York adds to this gloomy picture.
Their latest report shows 4.4% of auto loan debt is now seriously delinquent.
CAR REPOSSESSIONS SURGE 23% AS AMERICANS FALL BEHIND ON PAYMENTS
High interest rates and inflation are squeezing consumers.
Repos have now surpassed pre-pandemic levels, up +14% compared to the first half of 2019.
"When you consider the costs for rent, shelter, and insurance,… pic.twitter.com/P289QLXt0c
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What’s more, auto loan balances grew by $9 billion in early 2024, reaching a total of $1.62 trillion.
Why is this happening?
Look no further than soaring interest rates. Since July 2021, just before the Federal Reserve started hiking rates, the average new car loan rate has jumped from 4.18% to 7.9%.
Used car rates have seen a similar climb, rising from 4.80% to 8.55%.
These rate hikes, a key part of the current administration’s economic strategy, were meant to cool inflation.
But they’ve also made car ownership much more expensive for many Americans.
Dave Cantin, CEO of Dave Cantin Group, points out that high interest rates are just part of the problem.
Car repossessions are up 23% – here's how to avoid falling behind on payments https://t.co/tBWoMV2SCJ
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The pandemic caused a car shortage, driving up prices. “We had a scarcity issue on the new vehicle side that forced used vehicles to increase more in value,” Robb explains.
This combination of high rates and inflated car prices has left many owners struggling to keep up with payments.
While new car inventory is slowly improving, it’s still well below pre-pandemic levels.
As Bidenomics continues to shape the economy, more Americans are finding themselves caught between rising costs and stagnant wages.
The result? An increasing number of people are at risk of losing their vehicles, highlighting the real-world impact of current economic policies.
