5 Years of Market Pulse Insights: How the Auto Market Has Evolved Since 2020

Highlights: 

• Shift to Flexible Financing: In response to high interest rates and vehicle prices, consumers are pivoting from traditional long-term loans to leasing, with lease balances growing by over 13% while auto loans remain nearly stagnant.

• Data-Driven Risk Mitigation: Rising delinquency rates across auto and installment loans highlight the critical need for lenders to use strong data to monitor early warning signs of consumer payment stress and adjust product strategies accordingly.

Market Pulse, the premier thought leadership platform from Equifax, completed its fifth year offering unique, data-driven insights to decision makers across a wide range of industries. This blog kicks off a series that looks at how some of these industries have changed over the past five years. Each entry will compare three moments in time over this time period: five years ago, two and a half years ago, and today. 

For this first blog, we’re focusing on the auto industry, which has gone through several major swings since 2020. These swings were shaped by the pandemic, the subsequent economic recovery, and the more recent financial pressures of the past few years. By looking at each era side by side, we can see the clear path from crisis to recovery to the new challenges facing lenders and consumers today.

2020: Covid-19 Pandemic Sinks Demand

In 2020, the pandemic hit the auto market hard. Car sales dropped fast as lockdowns began and people stayed home. At the lowest point in March, new auto sales fell by about 80 percent. Many dealers were left with too much supply and too little buyer demand.

But the downturn did not last as long as many feared. To move cars off lots, lenders offered aggressive financing incentives. One major trend was the rise of 0% APR deals, which accounted for more than one in five new car loans at the peak. These offers helped the industry rebound in a V-shaped pattern, bringing buyers back more quickly than expected.

During this time, experts also worried about what would happen to used car values. With repossessions expected to rise and many off-lease vehicles returning to the market, there was concern that too many used cars would flood the system and push prices down. While this pressure did show up in places, the market eventually found its balance as supply and demand shifted throughout the year.

Mid-2023: An Affordability Crisis Hits the Market

By mid-2023, the biggest challenge in the auto market was affordability. Prices were still high, and interest rates had climbed, creating stress for many buyers, especially those who were already dealing with rising costs in other parts of their lives.

As lending returned to more normal patterns after the pandemic, delinquencies began to rise again. Auto and installment loan delinquencies were moving back toward pre-pandemic levels, which showed that many consumers were struggling to keep up with payments. The focus for lenders shifted from boosting sales to keeping an eye on consumer stress and adjusting their strategies to match the changing economy.

Even though the broader economy was improving, many buyers found that vehicles, new or used, simply cost more than they had just a few years before. This period highlighted how sensitive the auto market is to changes in interest rates, consumer income, and overall economic confidence.

Today: Driving a Shift in Buyer Behavior

Today, the market looks different again. The high interest rates and high vehicle prices of the past couple of years have pushed consumers to rethink how they buy cars. Instead of taking out long-term loans on expensive vehicles, many buyers are turning to leasing as a way to control their monthly costs.

Lease balances have grown by more than 13% over the past year, while auto loan balances have grown just a little over 1%. This shift shows that consumers are choosing shorter terms and lower payments whenever possible. At the same time, auto loan delinquencies have continued to edge up, demonstrating that even with more people choosing leases, many households are feeling financial pressure.

The rise in leasing is not only a sign of changing consumer preferences. It also reflects the need for more flexible options when money is tight. Leasing can give buyers new vehicles with lower monthly payments, which makes it easier to manage debt and other expenses.

What This Means Going Forward

Looking across these three periods, we can see a clear pattern. The industry went from pandemic-induced crisis in 2020, to affordability strain in 2023, to a major shift in buyer behavior in 2025, with each stage set up the next. 

The heavy incentives of 2020 helped the market recover quickly but also built a base of buyers who were sensitive to rising costs. The affordability challenges of 2023 pushed more consumers toward alternative options. And today, leasing has become a key way for people to stay in the market without taking on long-term debt.

For lenders and auto companies, the most important step now is to monitor early warning signs using strong data. Understanding changes in payment stress, interest rate impacts, and consumer preferences can help guide product offerings. Taking steps forward may mean expanding lease options, adjusting loan terms, or designing new products that support consumers who want more flexibility.

The past five years have shown how quickly the auto market can shift. By staying focused on data-driven insights and adapting to consumer needs, the industry can stay ready for whatever comes next.

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