![\"Vidframe](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/08\/vidframe_min_top1.png\")
<\/p>\nThe total amount of automotive debt in the United States is now at a level that exceeds the Gross Domestic Product of Turkey. That\u2019s a lot of automotive debt, although it\u2019s not necessarily a bad thing. Don\u2019t let it scare you. It\u2019s not the end of the world, yet.<\/p>\n
Will that number rise next year? Yeah, probably. I have no crystal ball, nor does The Morning Dump ever achieve perfect foresight. Honestly, sometimes my hindsight is suspect. Here\u2019s a prognostication: Incentives for gasoline-powered cars will likely increase, but not enough to offset the price increases next year.<\/p>\n
<\/p>\n
![\"Vidframe](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/08\/vidframe_min_bottom1.png\")
<\/p>\n
Aston Martin isn\u2019t waiting to find out and is therefore going to cut its workforce by about 20% as it tries to survive the downturn. Nissan, on the other hand, is going to double the number of Pathfinders. I wonder if that\u2019ll work.<\/p>\n
Debt Isn\u2019t Bad Until It Is<\/p>\n
I did not watch the State of the Union last night. It was clear it was going to be long, and I thought the time would be better spent sleeping rather than seeing if some White House staffer\u2019s Kalshi prop bet pays off<\/a>.<\/p>\n The full transcript is available over at the\u00a0AP<\/a>, and my general view is: I ain\u2019t reading all that. I\u2019m happy for you, though, or sorry that happened. Don\u2019t tell Robert Caro, but I didn\u2019t turn every page. I just did a Ctrl+F for the word \u201cauto\u201d and came up with this:<\/p>\n The cost of chicken, butter, fruit, hotels, automobiles, rent is lower today than when I took office by a lot. And even beef, which was very high, is starting to come down significantly. Just hold on a little while. We\u2019ll get that down. And soon you will see numbers that few people would think were possible to achieve just a short time ago.<\/p>\n I will only speak to the automotive part of it; that\u2019s maybe true if you compare January of this year to January of last year and look, specifically, at affordability. Here\u2019s Cox Automotive on the costs<\/a>:<\/p>\n New-vehicle affordability in January was better than a year ago, when prices were 1.9% lower but interest rates were higher. Incomes were also lower a year ago. January incentives were 6.4% lower than a year ago, yet affordability still improved \u2013 a sign that macro tailwinds from lower rates and higher incomes continue to outweigh reduced manufacturer support. The new-vehicle affordability index fell by 1.8% year over year, indicating affordability improved last month. A year earlier, it required 36.2 weeks of median income to purchase the average new vehicle.<\/p>\n The cost of cars built outside of the U.S. (and thus the overall average<\/a>) has gone up a lot, though, and terms have gotten longer, which means that the total amount people have spent financing cars has risen to new heights. According to Equifax<\/a>, the total amount of automotive loan debt reached about $1.589 trillion in December of 2025, which is up by about 0.6% year-over-year. Add in leases, and that number grows to $1.685 trillion.<\/p>\n What you have to worry about with auto loans is not specifically the size, although it\u2019s a fun number to put in the headline. It\u2019s\u00a0who is getting those loans and for what. Are subprime buyers taking a bunch of loans on wildly depreciating cars? Are delinquencies getting out of control? Equifax\u2019s analysts don\u2019t seem to think so:<\/p>\n Severe auto delinquency (share of balance 60+ DPD increased to 1.61%, up three basis points year-over-year, while auto write-offs decreased to 25.9 basis points. Delinquency trends have remained largely stable since late 2023, including within the subprime segment, where auto loans continue to rank as the top payment priority for borrowers.<\/p>\n There\u2019s nothing about this that seems extreme. We\u2019re now on year three of me writing about the bad loan vintages from the pandemic<\/a>, and those haven\u2019t all been paid off yet.<\/p>\n Here\u2019s what stands out to me, though:<\/p>\n The average origination balance for all auto loans and leases issued in October 2025 was $31,962. This is a 7.6% increase from October 2024. The average subprime loan amount was $26,813. This is a 10.0% increase compared to October 2024.<\/p>\n This is the reality of today. Car prices have slightly improved, and the slow lowering of interest rates is, finally, starting to positively impact car buyers. To meet monthly payments, though, consumers are stretching further and further out into the future.<\/p>\n Again, it\u2019s one of those situations where it\u2019s not bad until it is. If unemployment stays low and the economy grows, then those loans are probably fine. President Trump said many times last night that the economy is strong and \u201croaring like never before.\u201d<\/p>\n If the economy does stumble, though, and car values drop, then the underlying value of these cars will go down, and buyers will find themselves even more upside down as the loan term extends off into 60, 70, or even 80 months.<\/p>\n Cars Are Probably Not Going To Get Cheaper, Even If They Become More Affordable Affordability is not that complex a metric, which is why it amuses me that it\u2019s often misunderstood. When it comes to things you buy directly, affordability is a measure of the price of that object relative to your income. When it comes to things you finance, there\u2019s the added dimension of the cost of borrowing.<\/p>\n The chart above is the Cox Automotive\/Moody\u2019s Analytics Vehicle Affordability Index referenced in the first story, which looks at how many weeks of income the average household needs in order to buy the average new car. This number spiked during the pandemic and has sort of flatlined this year as financing got easier, but cars really didn\u2019t get cheaper.<\/p>\n With flat sales this year, it\u2019s likely that some incentives will be out there in the market. Will this make cars cheaper? Probably not, as pointed out in this Detroit Free Press\u00a0article<\/a> on incentives and car sales:<\/p>\n \u201cOur full year 2026 forecast is that incentives will increase $400 to $3,500, but given that last year had such a substantial electric vehicle incentive spend in the baseline, the true change is over $500 for (gasoline) powered cars,\u201d Tyson Jominy, vice president of data and analytics at J.D. Power, told the Detroit Free Press.<\/p>\n How each automaker spends that extra $500 or more in incentive money will vary depending on their inventory and cost pressures, he said, and the competition for sales might not mean car buyers walk away paying less.<\/p>\n \u201cConsumers will see higher transaction prices net of incentives on average, because automakers continue to increase (Manufacturer Suggested Retail Prices),\u201d Jominy said. \u201cFinal transaction prices (for the full year) are expected to average $46,600, an increase of $800 versus 2025.\u201d<\/p>\n With refunds coming, many buyers might have a slightly higher household income this year.\u00a0 If interest rates come down, then borrowing money gets cheaper. At the same time, if loans get longer, the total cost of a car then goes up.<\/p>\n Ultimately, it depends a lot on the car you want and the buyer you are. If you\u2019ve got cash and you want something from a brand that\u2019s trying to grow this year, then you might get a deal. If you\u2019re financing a Tacoma, it might be a bit tougher.<\/p>\n Aston Martin Cuts 20% Of Staff It\u2019s been a while since I\u2019ve driven an Aston Martin. I should fix that. Unfortunately for Aston Martin, the company sells many of its cars in the United States but does not build them here. Perhaps an Alabama Aston plant next year?<\/p>\n Blaming tariffs, the company is cutting.<\/p>\n Per the\u00a0BBC<\/a>:<\/p>\n Aston Martin, which has its headquarters in Gaydon, Warwickshire, employs about 3,000 people, meaning job losses will total around 600.<\/p>\n The firm said the job cuts should deliver annual savings of around \u00a340m and did not specify when the job cuts would be implemented, but said most of the savings would be made this year.<\/p>\n A spokesperson for Aston Martin said US tariffs had been \u201cextremely disruptive\u201d and demand had also been \u201cextremely subdued\u201d in China, the world\u2019s biggest auto market.<\/p>\n It has also trimmed its five-year capital spending plan to \u00a31.7bn from \u00a32bn by delaying investment in electric vehicle technology.<\/p>\n Clearly, the answer is to bring back the Cygnet.<\/p>\n Inside You, Are Two Nissan Pathfinders The Nissan Pathfinder was once a stout body-on-frame SUV. Then it became a unibody blob. Now it\u2019s a unibody car that looks like it could be a body-on-frame SUV.<\/p>\n Why can\u2019t we have both?<\/p>\n![\"Equifax](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/02\/Equifax_Loan_origination.jpeg\")
<\/a><\/p>\n
\n<\/a>Source: Cox Automotive<\/p>\n
\n<\/a>Source: Aston Martin<\/p>\n
\n<\/a>Source: Nissan<\/p>\n