Fed Continues Interest Rate Increases
Inflation-fighting series cuts further into consumers’ ability to afford purchases such as cars.
Affordability of new vehicles improved over January but remained worse than a year earlier and well above what the typical American household can afford.
IMAGE: Pixabay/NikolayFroloch
The Federal Reserve instituted another quarter-point interest rate hike today in a series of increases that started a year ago to try to tamp down inflation.
The ninth hike in the series to the Fed’s benchmark rate is making it harder for some consumers to borrow money for purchases, such as vehicles.
Affordability of new vehicles improved over January but remained worse than a year earlier and well above what the typical American household can afford, according to Cox Automotive/Moody’s Analytics Vehicle Affordability Index.
The typical household can afford a $400 a month car payment, but February’s average monthly payment as at $765.
Year-over-year vehicle loan debt per borrower increased 4.4% in the fourth quarter to $16,769, according to TransUnion. It was the 11th straight quarterly increase. The year-over-year 60-day delinquency rate rose 1.04% but stayed under the fourth-quarter average between 2007 and 2013.
“While we observed an uptick in auto loan delinquencies, there are reasons to believe they will continue to remain relatively low in the near future," said Pete Turek, vice president of automotive in TransUnion's financial services business unit.
"First, while auto loan originations are increasing at a rapid pace, the percentage of nonprime accounts remains low. In fact, the percentage of nonprime borrowers for all auto loan accounts was lower in the [fourth quarter] than it was the previous year."
Originally posted on Auto Dealer Today
More Industry
Used EVs Defy Overall Market
While the used-car market saw three months of price declines or stagnation, the used EV segment did the opposite – rising for three straight months.
Read More →
Gone to the Dogs
A Stellantis brand decided to have some fun with one of its SUVs’ design to address growing emphasis on family pets.
Read More →
OEM Poll Sees Industry Evolution
Kerrigan Advisors’ survey of automakers finds that tariffs, technology, network tightening and other factors are poised to reshape auto retail.
Read More →
Luxe N.C. Dealerships Change Hands
A collection of Italian and English brand franchises were handed off to the owner’s friend in the business and include the Carolinas’ only Ferrari retail stores.
Read More →
Exposure Drives Interest in Chinese Cars
At a recent demonstration, consumers had the chance to ride in a Chinese-branded vehicle, a firsthand experience that improved their perceptions and purchase intent.
Read More →
Automotive Consumers Sink Further in Debt
Most financing metrics hit records in the second quarter as more buyers locked themselves into long terms and high monthly payments.
Read More →
Agent Advocate
Rob Mancuso, who comes from a long line of auto dealers, values general agents’ place in the industry and makes a case for them taking an even bigger seat at the table.
Read More →
Driving Under Distraction
Though consumers gave higher marks to new vehicles in JD Power’s most recent initial-quality poll, high-tech interference worsened, pointing to craving for simplicity.
Read More →
Affordable New Cars a Thing of the Past
More than one out of five new vehicles sell for more than $60,000, according to Edmunds. That's up 7% compared to prepandemic 2019.
Read More →
State Follows Federal Warning on Auto Ads
The Massachusetts attorney general cautioned the state’s automotive dealers to be upfront with the consuming public about their vehicle prices or risk punishment.
Read More →