How Automotive Lenders Can Remain Successful During Economic Downturns

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For the past two years, automotive predictions on vehicle sales have remained consistent. In 2018, NADA predicted approximately 16.7 million new vehicles would be sold, and another 16.8 million would be sold in 2019. In the wake of recent events that led up to the COVID-19 pandemic, ALG, a subsidiary of TrueCar, estimated new vehicle sales may fall by as much as 60%. Furthermore, Cox Automotive has said that in U.S. states under stay-at-home orders, sales fell as much as 80% to 90%.

According to the latest Quarterly Report of Household Debt and Credit from the Federal Reserve Bank of New York, auto loans have continued to grow over the past 10 years, with a significant amount of this growth fueled by new originations. However, this is sure to change considering economic uncertainty and a decrease in consumer spending during these trying times. Additionally, there’s also growing uncertainty surrounding future unemployment rates as a result of the pandemic.