Subprime Auto Loan Delinquency Is Only Getting Worse

Happy Thursday! It’s November 11, 2025, and this is The Morning Shift — your daily roundup of the top automotive headlines from around the world, in one place. This is where you’ll find the most important stories that are shaping the way Americans drive and get around.

In this morning’s edition, we’re looking at how many car owners are behind on their loans, as well as the latest steps towards enacting a U.S./EU trade deal. We’ll also look at Toyota’s promise of an 11-figure investment in U.S. operations, and Polestar’s less than stellar numbers. 

Subprime auto loans are in bad shape, and they’re trending worse and worse. In October, the rate of 60-day delinquencies hit the highest level ever recorded. This is what we in the industry call an “omen” or “portent,” which are always perfectly fine and good things that no one needs to worry about. From Reuters:

The share of subprime borrowers at least 60 days behind on their auto loans rose to 6.65% in October, the highest level on record, according to Fitch Ratings data going back to the early 1990s

…

PrimaLend, which serves the “buy-here-pay-here” auto financing market — where dealers sell and directly finance vehicles for customers with poor or limited credit — filed for bankruptcy protection last month.

Tricolor, which sold cars and provided auto loans mostly to low-income Hispanic communities in the Southwestern United States, also filed for bankruptcy in September.

A further deterioration in credit quality could weigh on lenders, especially at a time when investors are highly sensitive to signs of stress in loan portfolios.

This sparked some discussion in the Jalop Slack about what happens when Affordable Care Act credits expire. Do people give up their car to pay for their healthcare, or stop paying for healthcare so they can afford their car? In our society, it’s probably the latter — we don’t exactly have public transit alternatives in much of the country. Is it good when your nation is comprised of sick people who can’t get medical care, inundating emergency rooms when their symptoms finally become unignorable, only to go into crippling lifelong medical debt?

It’s tariff time again! You may not have seen them in TMS much recently, but don’t worry — our deeply dumb trade war is still on. The EU and U.S. may have a deal by now, but there are still some specifics around implementation to be worked out. Now, the EU is working on those specifics. From Automotive News:

The European Union is set to propose a plan to the U.S. that would implement the next phase of the trade agreement the two sides reached this summer, according to people familiar with the matter.

The push comes as the EU’s trade chief, Maros Sefcovic, is due to meet his U.S. counterparts later this month, said the people, who spoke on the condition of anonymity.

The move is in response to proposals Washington sent Brussels earlier this year demanding a legally binding plan to revise EU regulations it said hurt U.S. businesses, according to the people.

The deal agreed between European Commission President Ursula von der Leyen and U.S. President Donald Trump in August set a 15 percent tariff on most EU goods entering the U.S., but also included pledges to keep working on issues such as how to deal with steel exports and non-tariff barriers.

Right now, American companies are paying 15 percent tariffs on European cars, but 50 percent on the steel and aluminum needed to make cars in the States. If you’re wondering why we haven’t seen more automakers open up shop here, it’s supply chain issues like that — sometimes the tariff on a completed car is less costly than the tariffs on the parts to make one. 

Last month, President Trump said that Toyota would spend $10 billion on shoring up its U.S. presence. The company wouldn’t say whether or not that was true, and many speculated that the 11-figure number included prior investments. Now, it’s official: Toyota is spending big on the States. Maybe. From Bloomberg:

Toyota Motor Corp. confirmed it will plow as much as $10 billion into the US over the next five years to boost its local operations, less than a month after President Donald Trump flagged that the Japanese carmaker planned such an investment.

The announcement clears up a confusing moment from Trump’s visit to Tokyo last month, when he said Toyota would build plants all over the US “to the tune of over $10 billion.” At the time, the automaker wouldn’t confirm such a plan, calling it mere speculation.

The automaker provided no further details on how it will spend the funds. David Christ, Toyota’s US sales chief, said that will be revealed at a later date.

Is this Toyota covering for Trump, to ingratiate the company to him? Promising to pay “up to” $10 billion, without details, is kind of meaningless — investing one dollar is “up to” $10 billion. We’ll get more details at some point, but for now this could easily just be playing nice with the man in charge. 

Polestar is doing rough. Rough enough, in fact, that the company risks being delisted from American trading markets — something no company wants. So, Polestar may enact an odd plan to stick around. From Reuters:

Polestar reported a wider third-quarter loss on Wednesday and said it would conduct a reverse stock split – reducing the number of its existing shares while increasing their value – in an attempt to retain its Nasdaq listing.

Shares in the company, majority-owned by China’s Geely Holding (GEELY.UL) and chair Li Shufu, dropped as much as 17% in early New York trading.

It also reported a third-quarter net loss of $365 million, compared with a $323 million loss a year earlier.

A reverse stock split is a situation in which a company reduces the number of outstanding shares, but proportionally increases their value — essentially mashing multiple shares together. It doesn’t actually benefit investors in the ways you might expect — portfolios can hold fractional shares — but it raises the nominal share price enough to look good int he Nasdaq’s eyes. The economy is all fake anyway. 

Aren’t they always complaining about that? Huh. Weird.

I’ve been listening to a lot of Laura Les’ solo stuff recently. She’s just so good. This has some real nightcore energy, and I’m into it.