The first half of 2025 is expected to bring stabilizing delinquencies, increased demand for automotive refinance and mixed vehicle price and sales dynamics.
Auto loan delinquencies are projected to cool in the second quarter as the market stabilizes, improving lenders’ appetite for auto credit. Auto originations are also expected to increase between 12% to 20% as tax refunds boost consumer demand.
Refinance volume is expected to pick up in 2025 as interest rates decline and lenders revamp their refi products to tap into consumer demand.
Rates and vehicle prices also will define sales and pricing trends across the automotive industry as pending tariffs are poised to raise car prices by thousands of dollars. On the EV front, possible changes to federal tax credits could impact sales even as EV prices and battery costs continue to decline.
In this episode of “Weekly Wrap,” Auto Finance News Editor Amanda Harris and associate editors Ashley Savage and James Van Bramer discuss top trends impacting vehicle sales, pricing and consumer demand for the week ended Feb. 28.
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Auto Finance Summit East 2025 is set for May 12-14 at the JW Marriott Nashville featuring fireside chats with Santander Consumer USA and Chase Auto. Visit autofinance.live for more information. Early-bird registration is available here.
Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.
Amanda Harris 0:17 Hello everyone and welcome to the road map from auto Finance News. Since 1996, the nation’s leading newsletter and automotive lending and leasing.
It’s Monday, March 3rd. Now Amanda Harris, joined by James Van Bramer and Ashley Savage. This is our weekly wrap on what happened in auto finance for the week ending February 28th, 2025. Last week brought several updates and credit performance, sales, pricing and electric vehicles. I’ll go ahead and turn over to James and Ashley for those updates. James, take it away. James Van Bramer 0:45 Hi Amanda. So let’s dive into EV pricing. The big story here is that despite the volatility at the start of the year where EV prices ticked up due to stronger demand and the possibility of tax incentive disappearing, prices are still about 9% lower than they were before the pandemic. Meanwhile, for used internal combustion engine. Vehicles or ice vehicles, they tell a different story. You know, since the pandemic, their prices have climbed about 36%. But before I caused any panic, make let me do, let me clarify that those prices have started to come down last year and have remained steady so far in 2025 as is the expectation across the industry now looking at sales trends on both the new and. Used sides EV sales have grown double digits this year so far. An inventory turnover has also picked up on both new and used. The big question is, will that momentum continue? For the full year, right now, tax rebates are still in place. But they could disappear at any moment. So that uncertainty is why most analysts are predicting the EV market share to stay above flat in 2025, hovering around 910%. One thing we do know, battery prices are falling. Dial 20% in 2024 alone, with further with further declines expected for years to come as far as 20-30. A matter of fact, that opens up two possibilities. Are there automakers can pass those cost savings on to consumers making the EVs cheaper, which in theory can keep those prices steady or obviously lower them, right? And I I mentioned that because you can. Sorry, they can also build stronger EV batteries and have the price stay the same. But of course, tariffs, as I was alluding to, is one thing that could take which actually take could some will take effect tomorrow. It’s one thing they could throw a wrench in some of those dynamics. So just something to keep in mind, but I will, I will mention that the impact will is obviously still unclear at the moment. I actually breakdown the math of this in the article, but I’ll spare any. I’ll spare everyone the time and headache of me saying kilowatt hours five times in a row. So please check out the piece if you want a deeper dive about you know how it could either be cost saving or you can get a better battery without raising the prices. All right, that’s enough for me. Ashley, what’s happening in the broader market? Ashley Savage 3:07 Thanks James. So last week, Jeremy Robb, senior Director of Economic and Industry Insights with Cox Automotive, was featured on a webinar addressing used vehicle values sales activity and one of the main takeaways which we covered last week is what we could see is that we could see auto delinquencies cool. From recession level, peaks in the second quarter of this year as the market continues to stabilize following the pandemic Robb shared during the webinar that delinquencies which we know have substantially increased since 2020 as consumers grappled with economic uncertainty and added affordability woes, are quote about as. High as they’ve been since the Great Recession, in fact, TransUnion’s latest look at past two auto account show that the rate of 60 day delinquencies hit 1.67% in Q4, up six basis points year over year from 1.61%. That’s a steady climb as well, from 1.43% in Q 4/20/22 and 1.05% in Q 4/20/21. The good news, though, is that experts from Cox Auto, TransUnion and Moody’s share the sentiment that a slowdown in rising delinquencies and more stable levels through 2025 could be in the cards and could fuel increased lender appetite. And on the note of lender appetite, last week we also covered a likely surge in auto originations. Now that tax season is in full swing, as you mentioned, James. And another recent webinar will Holman Auto sales leader with Equifax Workforce Solutions, said quote. When tax returns start, it only takes a few days for people to take that money and head to the car lots. The seasonal uptick in auto demand also comes with a boost in Compet. And a need for lenders to ensure quick but simple financing. In his words, indirect auto is a competitive landscape and things get even more competitive around tax season. In short, auto loan originations typically jump 12% to 20% during tax season, while income inquiries made by lenders also climb about 20%. Indicating that slight increase in market competition. And while speed and ease is key year round, Equifax also noted that during tax season, there’s about a 6% reduction in the time between the lenders first income inquiry and when the loan lands on the books. Lastly, in talking speed and ease, I also have to mention the latest news from Dallas based Fintech Yendo in a recent conversation I had with chief executive Jordan Miller, he shared that Yendo is currently processing about 150 million in refi applications each month. For context. Indoors, refi offering is linked to its credit card product, which determines consumers borrowing limits based on the values of their car. Now, historically refi products perform best when interest rates are falling and see less demand when interest rates are jumping, Miller told us though that Indo, however, has. Seen growth and refinance demand even as rates have risen given the ability for it to offer refinancing alongside its credit card product. Going forward, Yendo is focused on the continued improvement of its credit card and refi refi product by using AI in large language models designed in house to make the application process faster, Miller said. Quote we view AI as a force multiplier of smart people. Feel free to check out last week’s coverage for a deeper dive at where delinquencies are headed, how competition is shifting around tax season, and how Yendo is exploring AI to tackle fraud and verification requirements. But I’ll hand it back over to Amanda for some other Q updates from the past week. Amanda Harris 6:28 Perfect. Thank you, Ashley and James and that is perfect segue, because I’m also going to be talking about some technology updates that we saw last week from other lenders. So technology forefront of our industry, clearly last week Capital One began to roll out an agentic AI based tool to help consumers ask questions and complete shopping tasks such as comparing inventory and financing options and scheduling test drives all online. The bank’s chat concierge tool, built on Capital one’s tech stack and use of generative AI in this example of how AI use is evolving in the industry. As a little teaser, we are working on a feature on this exact topic, so stay tuned for how Agentic AI is gaining steam in the financial services industry, including an auto lob that up soon. TD Bank is also revamping its tech stack to include additional tools aimed at identifying and remediating suspicious activity that may be linked to money laundering. The bank will implement new capabilities in the. Third quarter to detect and report pot activity of interest as part of a years long plan on the heels of a $3 billion fine from the US Department of Justice. Meanwhile, the latest automaker to apply to form an industrial bank to the Utah Department of Financial Institutions. If you recall, GM Financial and Ford Credit also have pending bank applications and there are several auto lenders who have long established industrial banks as well to come. This week we will have updates on several auto lenders operations and growth plans. More earnings news and a deep dive into auto finance to kind of tease a little bit already. As a reminder, registration is open for auto finance Summit E taking place May 12 through 14th at Nashville and those are some highlights from the past week and that will do. It for today’s episode. Thank you for joining us on the road map and be sure to follow us on X and LinkedIn and we will see you online at autofinancenews.net and here next time.