The auto industry is shifting as economic pressures, changes in consumer preferences, and rising fraud risks reshape the market. Increasing auto delinquencies and synthetic identity fraud are especially problematic for lenders, dealers, and consumers, making it essential for efforts to be made to improve the customer experience while managing financial risks.
Enhancing the customer experience makes it possible for auto dealers to recognize their best buyers while making consumers more inclined to physically visit dealerships. Meanwhile, auto lenders can strengthen their relationships by identifying the most vulnerable lender types and reducing fraud-related disruptions while also understanding the lending preferences of different generations.
As of 2025, auto loans and leases have the highest total outstanding balance with approximately $1.7 trillion, making it the highest-growing form of consumer debt outside of mortgages, even exceeding personal loans. Auto delinquencies have also risen sharply, with Gen Z consumers facing the most financial strain. They have the highest percentage of auto loans in 60+ days delinquency. With financial pressures mounting, vehicle sales have fallen, although interest rates and car prices have risen by 56% and 34%, respectively, in the last eight years.
Fraud continues to be a growing concern, specifically synthetic identity (Syn ID) fraud, which has risen by 59% annually since four years ago. Syn ID fraud led to $7.9 billion in losses in 2023 alone. A growing number of auto loans and leases have a risk of Syn ID, which can result in a delinquency rate that is at least three times greater than the portfolio delinquency baseline.
To remain ahead of the competition, auto lenders and dealers have to prioritize customer-focused solutions that address delinquency and Syn ID fraud issues while creating a smooth customer experience.
