Car prices have skyrocketed in recent years. Not everyone can afford those monthly payments, a new study shows. Recent data from Cox Automotive shows auto repossessions are up 23 percent compared to last year. That's a significant jump, taking repos to levels not seen since before the COVID-19 pandemic.
The data doesn't differentiate between new or used car purchases, but prices are high all around. Cox Automotive reports the average selling price for a new vehicle in June 2024 was $48,644. That's actually down slightly from a peak of around $50,000 in 2022, but after a period of decline last year, prices are steadily going up again. As far as financing goes, US News & World Report shows average interest rates of 7.24 percent on new vehicles, or 7.49 percent for used. Dip into the subprime realm, and the numbers go way up.
The increase in repossessions actually started last year, as policies and programs designed to help people through the pandemic came to a close. But a 23-percent surge is both shocking and worrisome, as it could be a forerunner to a more dire economic downturn. Something similar happened back in the mid-2000s, starting with delinquencies in auto loans and credit cards. The housing bubble popped, wrapping up the decade with the Great Recession.
Not even the US auto industry—once deemed too big to fail—made it through that era unscathed. General Motors and Fiat-Chrysler Automobiles declared bankruptcy. Ford barely scraped by thanks to big loans. It took years for everything to recover.
Cox Automotive forecasts repossessions to increase slightly into 2025 before holding steady thereafter. Here's hoping things get better all around.
