August Subprime Auto Update: Performance Falls Short of Seasonal Trends

dv01's latest Auto Performance Report is now available. In August, subprime cure rates fell 150 bps MoM, while made payment rates also declined more than seasonal trends would suggest. Charge-offs increased but remained below pre-COVID levels.

What the Data Shows

• Delinquency improvements on bank-held auto loans are slowing: 30+ delinquencies fell 20 bps YoY in Q2, but charge-offs were slightly higher, with both remaining above pre-COVID levels.
• August impairments rose against seasonal trends: Subprime 30+ impairments increased 30 bps MoM when they typically decline, marking the third-weakest August in the dataset.
• Newer-loan improvement partly reflects a shift toward near-prime borrowers: Changes in issuer mix explain much of the stronger performance.
• LTV remains the strongest performance differentiator: The monthly gap in impairment net changes between 85–105 and 115+ LTV loans reached 100 bps, exceeding the difference in loan pricing.

What We’re Watching

• Is August’s underperformance the start of a repeat of the second-half deterioration seen in 2025?
• Beyond changes in issuer mix, has subprime auto underwriting quality improved over the past 2 years?
• Will loss severities reach 60%, and how much could a larger near-prime share moderate losses as those loans reach charge-off?