Car Repos Remain Low

By Nate Griffin – November 19th, 2021

Despite predictions that 2021 would be a year of higher auto repossessions, new numbers show that has not been the case.

Auto Loan Delinquencies – those more than 90 days late – continue to trend down in Q3 of 2021, according to a recent report from the NY Fed.

The delinquency rate remains among the lowest levels in the last decade, though economic conditions remain mixed.

The latest CPI report show that workers in the lower range of the income distribution have seen their real wages increase over the last year, primarily due to a tight labor market.

However, the unemployment rate remains somewhat elevated at 4.6 percent. 7.4 million people reported being unemployed and looking for work in October of this year.

Total auto debt continues to increase to nearly $1.5 Trillion, making up about 9.4% of all household debt.

So why are delinquencies falling?

There are many theories. Some economists point to stimulus checks and other government programs as helping out the balance sheet of every day Americans.

The lack of availability of new cars, due to shortages in inputs like computer chips, have driven up prices of used cars. Meaning that if a borrower is close to default, they could quickly sell their used car and possibly erase their debt.

Eventually, supply chains should ease up and auto manufacturers will be able to increase their production. If used car prices normalize, that could mean more defaults.