The balance of auto loans and leases continued to surge in Q3 even though new-vehicle sales in Q3 were at levels first seen in the late 1970s – and that’s not a typo – with the number of vehicles sold down by 19% in Q3 compared to Q3 2019; and with used-vehicle unit sales down about 15%.

Auto loan balances surged because new-vehicle prices surged as automakers keep going upscale because that’s where the money is, and because they’re supply constrained and are trying to boost their dollar-revenues and profit margins by prioritizing more expensive models and by price increases even as sales of new vehicles are in terrible shape.

Price increases and going upscale are driving the industry – even as more and more Americans are priced out of the new vehicle market – and that process has been happening for many years:

Era of Stimulus-Distorted Consumer Credit Ends: Auto Loans, Delinquencies, Prime & Subprime | Wolf Street