Repos Are Not “Exploding”: They Rose from Record Lows and Are Still Historically Low

A few weeks ago, an article on a major financial news site proclaimed in the headline that “Car Repos Are Exploding.” The article was circulated everywhere, and yet it was devoid of actual data on repos, it had no chart of repos, and was really just clickbait. Most people who spread this thing around the internet never read the article; they just read the clickbait headline, and that was good enough. The internet is a strange place.

But the entire auto industry and auto finance industry got a good chuckle out of it. Before there is a repo, the borrower must be delinquent on the loan. If the borrower falls behind on payments and cannot catch up and thereby cannot cure the delinquency, the lender will repossess the vehicle and sell it at auction.

So before the number of repos can spike, the rate of delinquencies of 30+ days must spike, because it comes first.

As we’ve seen with data from the New York Fed today, there is no “explosion” of delinquencies, and therefore no explosion of repos. Repos remain low compared to historic levels. They ticked up from the record lows last year and are in the process of increasing to more normal levels.