The auto industry is changing drastically for dealers and consumers alike. Focusing on customer experience will be key to moving forward in the face of challenges, and should be a priority for auto companies in 2025.
Over the last 10 years, debt for auto loans and leases has risen nearly 15%. The current total outstanding balances for auto loans and leases are $1.7 trillion. Auto loan debt has grown so significantly that it now makes up 35.9% of total non-mortgage consumer debt. This is a greater percentage than student loans and credit cards, speaking to the severity of auto loans today.
At the same time, delinquencies and fraud are also increasing. In fact, in 2023, synthetic identity fraud rose by 98%, which caused losses totalling $7.9 billion. Increasing fraud creates further problems, as loans and leases with a risk of synthetic identity have a delinquency rate three to five times higher than the portfolio average.
Luckily, there are solutions to these obstacles. For example, Equifax champions a proactive approach to prevent fraud losses. This approach involves securing the buying process with KYC tools and delivering buying power insights at the onset of the shopping process.
2025 appears to be a year of change for the auto industry. Although the industry faces several challenges, there are ways to overcome these threats. Emphasizing good customer experiences and rooting out fraud before it can take place will be important tools moving forward.
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