Subprime Auto Outperforms in July; Loan Age Leads the Improvement

The latest dv01 Subprime Auto Performance report finds broad outperformance across key metrics. 30+ Impairments rose 30 bps MoM, 1.5x better than seasonal trends, while Overall and First-Time New Impairments both performed more than 2x better.

What the Data Shows

• Impairment improvement stands out by loan age: Impairments among 9-14 month loans declined in July and are nearly 400 bps below their seasonally adjusted 2024 peaks, the largest improvement of any attribute over the past two years.
• LTV remains the strongest performance differentiator: Impairments on 95-105 LTV loans are now 500 bps lower than on 115+ LTV loans, as the gap with above-105 LTV ranges continues to widen.
• Loss severity set a new record: Severities reached 56.5% in July, the highest level in the available loan-level data history.

What We’re Watching

• With charge-offs now matching 2019’s elevated levels, could the second half of 2026 see record highs?
• With PTI’s emergence as a performance differentiator, will it take years to be incorporated into pricing decisions, as they did with LTV?
• Will the improvement in performance in the 9-14 loan age cohort translate into outperformance among ages 15-24, or is the lack of true transition an indicator of temporary strength followed by persistent weaker behavior as borrower circumstances change?