Consumer behaviors are constantly changing, especially in the auto industry. Businesses that can enhance customer experiences while implementing proactive fraud prevention measures to help mitigate rising delinquencies and fight against synthetic identity fraud will be better positioned to attract and retain customers. But what exactly does this mean?
For dealers, high-touch customer experiences can make it easier to identify their most interested, qualified customers.
However, most buyers favor a combination of in-dealership and online options. In 2023, 50% of consumers completed all car buying steps at the dealership while 43% of consumers used online and in-person options. Only 7% of vehicle buyers bought completely online.
For auto lenders, certain lender types are more susceptible to fraud and delinquencies than others, which is why knowing the customers is critical, especially when it comes to understanding what they can really afford. Over 40% of Baby Boomers use captive financing more than other generations while 29% of Gen Z consumers opened an auto loan with a credit union, which is the highest percentage of any generation.
Consumer auto trends in 2025 are showing that debt for auto loans and leases has increased by almost 15% in the last 10 years. Auto loans and leases make up 35.9% of the total non-mortgage consumer debt with the share of debt having increased by 14.7% from 31.3% in 2014. Student loans comprise 29%, which indicates a 21.3% decrease in the share of debt from 37.1% in 2014, while credit cards account for 23.9% or a 9.6% increase in the share of debt from 21.8% in 2014. These trends show that auto is the fastest-growing category in non-mortgage consumer debt with the total outstanding balances for auto loans and leases amounting to $1.7 trillion.
Delinquencies are rising as well, highlighting the financial strain on consumers. As of November 2024,
Currently, the year over year percentage of deep subprime and subprime borrowers with auto loans and leases is increasing the most compared to other score bands. 13.2% of accounts are deep subprime borrowers and 8.1% are subprime borrowers, which have both grown by 4.8% year over year. And as financial pressure is felt by more people, fewer cars are being sold.
In fact, auto loan and lease originations dropped by almost 2% year over year by September 2024, which is a $9.2 billion decrease. However, interest rates and higher prices are partly to blame for slower sales. From 2016 to 2024, the average new vehicle price increased by 34% while the average vehicle interest rate (60-month new car loans) rose by 56%.
Fraud is a major factor in the auto industry as well with synthetic identities (Syn ID) having increased by 59% annually since 2020. In 2023, Syn ID fraud surged by 98%, resulting in $7.9 billion in losses. Auto loan credit applications with a high risk of Syn ID rose from ~5% in 2019 to +8% in 2023. Auto loans and leases with a Syn ID risk have a delinquency rate up to five times higher than the portfolio average.
That is why auto dealers and lenders that are proactive at preventing fraud losses and improving customer satisfaction will gain a competitive edge in the industry.
