Record Auto Loan Debt, Union Labor and Affordability, Rivians Burning Tires

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We’re power sliding into Monday as we talk about some record auto loan dept numbers. We also contrast that against the ongoing labor contract discussions. And did you know Rivian’s are burning through rubber at an alarming rate?

• A record $1.5 trillion in auto loan debt looms over the U.S., with over 100 million Americans having some sort of auto loan. Continuing factors like residual pandemic effects on supply chains, the Fed’s increasing rates and other economic shifts have escalated car ownership costs, leading to increased concerns about lending practices and growing consumer dissatisfaction.
  • In 2023, the average monthly loan payment for new vehicles increased to $725…up from $650 in 2022. Used monthly payments are also up 2-3% YoY to $516 
  • According to a CNN article, new auto loan delinquencies are rising and reached 7.3% in Q2 up from 6.9% in Q1. 
  • Additionally, Moody’s warns that new credit card and auto loan delinquencies will both continue “rising materially,” peaking in 2024 at between 9% and 10%, compared with 7% pre-Covid.
• Stellantis' ambitious goal to produce a $25,000 EV is colliding with the United Auto Workers union's demands for better wages and benefits. As industry experts weigh in on the feasibility of such a price point, tensions rise over balancing affordability, profitability, and worker compensation in the evolving EV market.
  • Stellantis' CEO Carlos Tavares emphasizes the importance of a $25,000 EV for job protection and absorbing additional costs, while UAW President Shawn Fain counters, stating, "Stellantis' business model is broken, and until they fix it, they'll never hit that $25,000 target."
  • Industry experts, like Doug Betts of J.D. Power, suggest that achieving a $25,000 EV might require significant cost reductions and minimalistic designs, similar to Tesla's interiors
  • Stephanie Brinley from S&P Global Mobility and Sam Fiorani from AutoForecast Solutions believe that producing a profitable EV at this price point is a long-term goal, possibly a decade away, and that immediate profitability for legacy automakers is unrealistic.
    
    
• The Rivian RT1 and R1S pickups that have progressive styling and a lot of power are receiving rising complaints on many Rivian driver’s forums about the rate at which they are burning through tires with some owners having to replace tires rated by the manufacturer for 50k miles, as early as 6000 miles
  • The excessive front tire wear is linked to Rivian’s “Conserve” drive mode, which switches the vehicle to front-wheel drive and lowers the ride height to maximize range.
  • The lowered ride height in Conserve mode results in toe-in and increased negative camber, leading to accelerated and uneven tire wear.
  • Recommendations include adjusting alignment and regular tire rotations to mitigate wear.

Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.

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