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Car buyers upbeat on economy, auto market — survey
New data from Santander suggests nearly half of middle-income consumers will be looking to buy a car in 2025. (2 min. read)
Anna del Villar
January 30, 2025
Middle-income Americans are heading into 2025 with a sharp rise in confidence about the economy.
Driving the news: Expectations of a recession have dropped 17 percentage points over the past year, according to Santander, a global financial services company. The company surveyed over 2,000 Americans with incomes ranging from $50,000 to $148,000.
Nearly two-thirds of respondents (64%) believe the job market will be stronger in 2025, while six out of 10 expect inflation to improve.
This is translating into higher outlooks for household finances, with 76% of middle-income respondents saying they expect their financial situation to improve.
“When the consumer is in good shape because of a stable and strong labor market and seeing positive, income gains with inflation, moderating still some more, it effectively means that, the consumer's financial health is improving, and that's good for vehicle demand, that's good for credit performance, and those things become a virtuous, cycle,” Cox Automotive Chief Economist Jonathan Smoke, speaking at AutoTeam America Summit.
Zooming in: With these economic expectations, it’s no surprise middle-income consumers are showing more interest in car shopping this year.
Access to a vehicle is seen as essential, with 81% saying it provides flexibility in where they live and work.
Forty-five percent are considering buying a vehicle in 2025, and 1 in 3 intends to purchase.
Of those interested, 65% have started researching, and 46% have already visited a dealership.
“We think that confidence will pop back up, and that's what we started to see towards the end of last year. It seems like that will actually unleash this extreme pent-up demand…we think there's at least 10,000,000 units of pent-up demand,” said Bank of America Managing Director John Murphy, speaking at AutoTeam America Summit.
Zooming out: At the same time, struggles continue for many American car buyers. Car repossessions spiked 23% year-over-year in the first half of 2024, soaring higher than pre-pandemic levels. Subprime consumers face a shrinking pool of lenders and an increasingly tough credit landscape, restricting them from vehicle access and work opportunities. While situations are improving for some auto customers, challenges are likely to continue for others.
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