Auto debt reached $1.68 trillion at the end of 2025, a 37 percent increase since late 2018, according to analysis by The Century Foundation and Protect Borrowers, a consumer advocacy group. This figure includes traditional installment loans and leases.
Total auto debt stood at $1.23 trillion in late 2018. The $450 billion increase over seven years represents substantial expansion of consumer leverage that threatens companies reliant on consumer credit health.
General Motors Co. and Ford Motor Co. with their captive finance arms, face direct exposure from rising debt levels. GM Financial and Ford Credit provide financing for vehicle purchases and leases. A weakening consumer balance sheet pressures future vehicle demand and profitability for these segments, potentially compressing their forward earnings multiples.
Dedicated auto lenders like Ally Financial Inc. face the clearest risk. Higher debt burdens across the consumer base could lead to rising charge-offs and tighter lending standards. Ally's loan portfolio, heavily weighted toward auto loans, would directly absorb the impact of increased defaults. We view this as a headwind for Ally's fourth-quarter 2025 and first-quarter 2026 earnings, potentially driving the stock lower from current levels.
Elevated auto debt diverts household income away from other purchases, dampening overall retail sales. This could weigh on performance of the Russell 2000 index, which includes many smaller consumer-facing companies.
The Federal Reserve's next consumer credit report, expected in early 2026, will offer further insight into these trends. Auto manufacturers will release fourth-quarter 2025 earnings reports in late January and early February 2026, providing updated guidance on financing performance and sales outlooks.
