As the auto industry enters the new year, endless opportunities for growth await. However, there are also challenges threatening the auto industry, creating a complex and ever-changing industry. Staying on top of trends in consumer behavior is important when it comes to adapting and succeeding in the industry.
Current trends show that consumers are feeling increasing financial pressures. Debt for auto loans and leases is rising rapidly; in fact, it is the fastest growing category in non-mortgage consumer debt, making up 35.9% of the total. Additionally, the average prices of new vehicles are increasing, as are interest rates. For example, 2024 saw 56% higher interest rates than in 2016.
Financial pressures can also produce elevated fraud rates. Unfortunately, fraud is a major factor in the auto industry, with a 59% annual increase in synthetic identities since 2020. Fraud is also tied to delinquency, which causes further strife for the industry.
Although these challenges seem daunting, there are solutions. For example, Equifax provides services that help auto dealerships stop fraud in its tracks and secure the buying experience with KYC (Know Your Customer) tools. Being proactive about fraud, as well as improving the consumer experience, will go a long way in overcoming current challenges.
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