XPost: alt.autos, sac.politics, talk.politics.guns   
   XPost: alt.home.repair   
   From: adolph8@gmail.com   
      
   DETROIT - Look no further than the automotive industry for the latest   
   indication that U.S. consumers could be facing a "K-shaped" economy,   
   where the wealthy keep seeing gains while those who have lower incomes   
   struggle.   
      
   The average price paid for a new vehicle last month topped $50,000 for   
   the first time ever, Cox Automotive's Kelley Blue Book reported Monday.   
   Meanwhile, auto loan delinquency rates remain near all-time highs for   
   those with low credit ratings.   
      
   Consumers who can afford a new vehicle are on a buying spree, while   
   those on tighter budgets are staying out of the market, according to Cox   
   Automotive executive analyst Erin Keating.   
      
   "While there are many affordable options out there, many price-conscious   
   buyers are choosing to stay on the sidelines or cruising in the   
   used-vehicle market," she said in a statement. "Today's auto market is   
   being driven by wealthier households who have access to capital, good   
   loan rates and are propping up the higher end of the market."   
      
   Economists have warned the U.S. economy is increasingly "K-shaped"   
   following the coronavirus pandemic, with consumers experiencing   
   different realities depending on their income level.   
      
   Wealthier Americans have been assisted by rising house values, lucrative   
   stock market returns and favorable credit, while lower- and   
   middle-income buyers have faced tighter budgets and been hit hard by   
   rising inflation.   
      
   "We have already, for a while now, talked about the 'K-shaped' outlook   
   for the consumer. Some consumers are doing well. Some are doing less   
   well," Apollo Global Management chief economist Torsten Slok said Monday   
   on CNBC's "Squawk on the Street." "Now we also having a K-shape for the   
   broader economy, where you have a booming industrial renaissance, but   
   the consumer is facing more headwinds."   
      
   Slok was addressing the overall U.S. market for consumers amid a   
   potential trade war with China, but also said affordability concerns and   
   the increasing rate of auto loan delinquencies by subprime buyers are a   
   problem.   
      
   New car buyers have faced rising sticker prices, smaller discounts and   
   higher loan rates since the coronavirus pandemic - especially for those   
   with the worst credit scores.   
      
   The average new auto loan rate was about 9% as of the most recent data   
   from August, according to Cox Automotive's Dealertrack. That included   
   rates of around 18% to 20% for subprime or "deep-subprime" consumers,   
   who have lower credit scores and are more likely to default on a loan.   
      
   Last month's pricing record of $50,080 comes as auto loan delinquencies,   
   defaults and repossessions have increased in recent months and years,   
   particularly for consumers with subprime credit - or those with a FICO   
   score below 620.   
      
   Fitch Ratings reports 6.43% of subprime auto loans in August were at   
   least 60 days past due, in line with a record high of 6.45% that was hit   
   in January. Delinquency rates for borrowers with higher scores have   
   remained relatively stable.   
      
   The Consumer Federation of America, a nonprofit advocacy group, last   
   month described U.S. auto financing at a "breaking point, as Americans   
   owe over $1.66 trillion in auto debt."   
      
   The report was released as the Consumer Financial Protection Bureau   
   received record high numbers of complaints about auto loans. It followed   
   an analysis by the New York Fed last year that found car buyers with   
   above-average credit scores (620-679) were twice as likely to fall   
   behind as they were before the pandemic.   
      
   Cars.com's   
    Edmunds earlier this month reported the share of buyers committing to   
    monthly payments of $1,000 or more accounted for 19.1% of all financed   
    new-car transactions in the third quarter, near the record set the   
    previous quarter at 19.3%.   
      
   Rising delinquency rates among other concerns, recently led to subprime   
   auto lender Tricolor unexpectedly collapsing.   
      
   Cox's Keating noted that while tariffs have increased costs and reduced   
   affordability, the record prices last month were driven by the strong   
   sales of all-electric vehicles. Consumers rushed to buy EVs ahead of   
   federal tax incentives of up to $7,500 ending at the end of September.   
      
   EVs are typically more expensive than their traditional counterparts,   
   with Cox Automotive reporting the average transaction price for a new EV   
   last month was more than $58,000.   
      
   "We've been expecting to break through the $50,000 barrier," Keating   
   said. "That's today's market, and it is ripe for disruption."   
      
   https://www.cnbc.com/2025/10/13/new-car-prices-auto-loan-delinquencies.ht   
   ml   
      
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