U.S. auto sales hit a record high 17.47 million in 2015, and the industry appears to be firing on all cylinders heading into this year’s Detroit Auto Show.General Motors Company (NYSE: GM) is also calling for another record-high 18 million sales in 2016.
However, what the auto industry sees as a boom, others are calling a bubble. A large number of those auto sales have been made on credit, and the amount and quality of that credit has some onlookers thinking back to the subprime housing bubble a decade ago.
The Numbers Behind The Numbers
There’s no question that sales are on fire, but how are U.S. consumers paying for all these automobiles? The graph below shows the underlying issue that might be a cause for concern. The percentage of vehicles requiring financing has been steadily on the rise in recent years, up to nearly 86% for new vehicles and 56% for used vehicles.
After looking at that chart, it should come as no surprise that total U.S. auto debt hit a new all-time high (and a nice round number) of $1 trillion in 2015. While many Americans seem to have learned their lesson from the Financial Crisis when it comes to mortgage debt and credit card debt, auto debt and student loan debt are still headed in the wrong direction.
Cause For Concern?
If you find these numbers troubling, you’re in…
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