Car prices have been on the rise in recent years, making it difficult for many people to afford the monthly payments. A new study by Cox Automotive has revealed that auto repossessions have increased by 23 percent compared to last year. This surge in repossessions is the highest it has been since before the COVID-19 pandemic.
The data provided by Cox Automotive does not specify whether the repossessions are from new or used car purchases, but it is clear that prices are high across the board. In June 2024, the average selling price for a new vehicle was $48,644, which is slightly lower than the peak of $50,000 in 2022. However, after a decline last year, prices are once again on the rise.
When it comes to financing, US News & World Report indicates that the average interest rates for new vehicles are around 7.24 percent, and for used vehicles, it is 7.49 percent. For those with subprime credit, the interest rates are even higher. This increase in repossessions began last year as government assistance programs related to the pandemic came to an end.
The sharp increase in auto repossessions is concerning as it may be a sign of a more severe economic downturn to come. Similar trends were seen in the mid-2000s, leading to the Great Recession. Even the US auto industry, which was once considered too big to fail, suffered during that time. Companies like General Motors and Fiat-Chrysler Automobiles declared bankruptcy, while Ford barely managed to stay afloat with significant loans.
Looking ahead, Cox Automotive predicts that repossessions will continue to rise slightly into 2025 before stabilizing. It is crucial for policymakers and industry leaders to monitor this trend and work towards improving the overall economic situation. Let’s hope for better days ahead for everyone involved in the auto market.