Auto lenders are keeping an eye on loan production, credit performance and vehicle prices as tariffs loom.
Subprime lender Credit Acceptance Corp.’s originations ticked up 0.3% year over year in the fourth quarter to 78,911 loan assignments as the financier grew its number of active dealers.
Negative equity and rising delinquencies continue to be a concern for auto lenders as consumers navigate changing vehicle values and inflationary pressures.
Meanwhile, looming tariffs against Canada and Mexico are expected to drive car prices higher, likely exacerbating dealers’ challenges related to supply, profit margins and sales.
In this episode of “Weekly Wrap,” Auto Finance News Editor Amanda Harris and associate editors Ashley Savage and James Van Bramer discuss nationwide trends affecting the automotive industry and key updates for the week ended Jan. 31.
Subscribe to “The Roadmap Podcast” on iTunes or Spotify or download the episode.
Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.
Amanda Harris 0:14 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 is Monday, February 3rd. And I’m 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 January 31st, 2025. Last week we got a glance into how supply is impacting dealer profits, latest earnings updates and how President Donald Trump’s proposed tariffs could shape the automotive market.
I’ll turn it over to James and ask for those updates. James, take it away. James Van Bramer 0:48 Thank you so much. So first of all, I’ll start with the dealer margins are still under some pressure or in other terms, they’re just resetting from those pandemic highs after peaking at 11.1% in 2021, margins have closed 2024 at about four. Percent that is a drop from 5.1% in 23. Sorry, yes, in 2023, but still above the pre pandemic level of 2.9%. The bottom line? Dealers have to work a little bit harder to secure those margins. Before I go further, I do want to quickly mention that the US appeals court did strike down the Ftc’s cars rule, which is aimed at cracking down on fair and disentive practices that led sorry for the sale of dealers add on products. This is a 2 to one decision and the court mostly ruled that the procedural grounds ruling that the FTC failed to provide an advance notice while drafting the regulation. Back to Dealersports really quickly. One of the big factors, experts say for dealersports. Moving on into 2025 is inventory management experts say that industry, the industry sweet spot is about 75 day supply and at that level vehicles can expect a 7% margin on new cars and 9% on used cars. Obviously, that’s not necessarily the case on both the new and used.
New and used market at the moment, which is kind of going through the roofation where there’s a lot more supply. Empirical side and a lot less supply on the user supply.
But Speaking of inventory availability, is tightening a little bit?
And the pandemic, our production issues. Sorry, on the used side because of the pandemic production issues and fewer awfully sphericals. So what can dealers do? Experts suggest alternative acquisition strategies such as buying of your goals directly for consumers, this can happen even in the service lanes when a customer goes to get their vehicle serviced and a dealer offers to purchase that vehicle off the consumer. This is critical because affordability remains a huge concern as new cars are still averaging about $50,000 in used cars around $20,000 anyways. That’s enough for me. Ash, what’s happening with terrorists? Ashley Savage 3:03 Thanks James. To put it lightly, the conversation on tariffs is ever evolving and highlights the truly uncertain path. The auto market could take this year. Just today, we saw stocks were down across many of the largest automakers in the United States at market close after tariff negotiations Execut. By President Donald Trump fueled concerns about the stability of the auto market in 2025, shares of Honda Motor Co. Posted the largest decline as stocks fell 5.08% to $26.90. At market close. Followed by shares of Celantis, which declined 3.88% to $12.62 at market close today. Shares of General Motors dipped nearly 3.2% to $47.89 at market close, while shares of Ford Motor Co. fell 1.84% to $9.90. Auto stock started their descent at market open today after Trump signed an executive order over the weekend stating plans to impose 25% tariffs on goods from Canada and Mexico.
Beginning at 12:01 AM on Tuesday, February 4th, since the start of the morning and the decline in auto stocks, however, Trump has agreed to delay tariffs on goods from Mexico and Canada for one month after negotiating with the two countries. Today, there’s several moving parts here. But Michael Brisson with Moody’s Analytics analytics shared some of the potential risk with our team today. Those risk, he said, include disrupted supply chains, lower vehicle supply.Higher prices for automobiles, less profits for OEMs and. Parts suppliers, lower levels of new vehicle sales and fewer originations. In his share comments, he added with major economic risk in mind, quote, a slowdown in growth and or the deterioration of the labor market will lead to additional missed payments by borrowers, higher level of delinquencies and charge offs. Risen added that if this were to happen, it would come at a precarious time as total auto delinquencies remained at post financial crisis highs coming into 2025. Later this week, I’ll be chatting with a few contacts at AIM Expo in Vegas, so I hope to have a bit of an update on how these tariff changes play into the power sports market. But for now, those are the updates I have. I’ll now hand it back. Over to Amanda for some other key updates from the past week. Amanda Harris 5:14 Great. Thank you. Ashley and James, first in economic news. I do have to recognize that the Federal Reserve did vote to keep interest rates steady. So leaving the federal funds rate in a range of 4.25% to 4.5%. So we’ll have to see what happens down the road if they keep holding those rates steady or if we will finally see some more declines in the coming months and auto finance news. Several companies did report earnings last week. Tesla’s leasing penetration rose to 5.4% of deliveries in the fourth quarter, which is up from 2.2% a year earlier. The EV maker’s lease portfolio, however, declined 6.8% year over year to $5.6 billion and full year deliveries dipped 1.1% year over year to 1.79 million vehicles. Credit Acceptance Corp.’S consumer loan assignments or originations, total 78,911 units in Q4, up .3% year over year with a 4.7% year over year increase in active dealers to just over 10,000. The competitive environment combined with the lenders changes to a score card. Contributed to a decline in volume per dealer, leading to slower originations growth in Q4 compared with the prior quarter and a year ago. Marine Retailers, Marine Max’s finance and insurance revenue decreased 5.2% year over year to 14.5 million as total revenue. Fell by 11% year over year to 468,000,000 in Brunswick. Boat sales declined 18% year. To come this week, we will dive into more earnings results, including Harley-Davidson Financial Services and Ford Credit. And as a reminder, registration is open for auto finance Summit E, which takes place May 12 through 14th in Nashville. Those from highlights from the past week and that will do it for today’s episode. Thank you for joining us on the road map. Be sure to follow us on X and LinkedIn and we’ll see online at autofinancenews.net and here next time.
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.