As the automotive sector adapts to rising vehicle prices, shifting consumer behavior, and persistent inflation, the ripple effects are clearly visible in commercial credit activity. Experian’s latest Commercial Pulse Report (July 22, 2025) dives deep into the evolving credit dynamics within the auto industry—and one trend is clear: credit access is contracting across nearly every segment.
Used Cars Rise, But Credit Lines Fall
With the average new vehicle price exceeding \$47,000, many consumers are opting for used cars, priced more affordably at just over \$28,000. This shift has helped drive consistent growth in the used-car market, accompanied by an uptick in business activity and a growing demand for commercial credit.
In fact, used-vehicle and aftermarket service providers have seen commercial credit inquiries jump approximately 20% above January 2021 levels. Their credit utilization rate now sits at 32%, reflecting the costs of managing larger inventories and higher parts prices. But unlike traditional signs of financial distress, this trend appears tied more to operational needs than liquidity crunches.
Despite the increased appetite for credit, credit limits are shrinking.
A Cross-Sector Credit Contraction
Across the entire automotive supply chain, from OEMs to aftermarket shops, businesses are receiving smaller commercial credit lines on new originations than in previous years. The declines are significant:
- OEMs and New-Vehicle Dealers: Average commercial card limits have dropped by \$7.6K, now sitting at \$9.7K compared to \$17.4K in 2022–2023.
- Used-Vehicle Dealers and Aftermarket Services: Limits have fallen by \$5.8K, from \$13.6K to \$7.8K.
- Vehicle and Parts Wholesalers: These businesses faced the steepest cut—\$8.9K on average, down from \$18.5K to just \$9.6K.
All subsectors experienced over a 40% reduction in average credit lines, signaling tighter lending conditions despite robust business activity in several parts of the industry.
Why Are Credit Lines Shrinking?
This broad contraction is not purely about borrower risk. In fact, many used-car and aftermarket businesses have maintained steady commercial risk scores, and delinquency rates remain relatively flat.
A few critical factors include:
- Elevated Interest Rates: High financing costs are squeezing margins, especially for OEMs and franchised new-car dealers, where delinquencies are rising. Lenders may be proactively managing exposure.
- Segment-Specific Risk Trends: OEMs and dealers are facing mounting late-stage delinquencies—91+ DPD rates have nearly doubled since 2022—and their average risk scores are down ~4 points.
- Economic Uncertainty: Despite stable employment and wage growth, inflation, Fed policy, and geopolitical risk (like tariffs) are prompting more conservative credit practices.
- Portfolio Diversification: Lenders may be redistributing credit availability to less volatile sectors or industries with higher recovery potential.
The Middle Squeeze: Wholesale Distribution
Among the three major segments—OEM/New-Car Dealers, Used-Vehicle & Aftermarket, and Wholesale Distribution—wholesalers are caught in the middle. Their delinquency and risk score trends resemble those of OEMs, but their growing credit utilization and inquiry rates mirror the aftermarket segment. This dual exposure to shrinking new car volumes and rising parts demand puts them in a uniquely vulnerable position.
What It Means for Credit Managers and Lenders
These trends underscore the importance of granular credit monitoring. Treating the auto industry as a single credit risk profile is no longer viable. Subsector segmentation—by vehicle type, service focus, or market exposure—is key to understanding which businesses are truly at risk and which remain stable but under credit strain.
For lenders, this is a time to rebalance risk models and align credit policies with real-time sector insights. For businesses, it’s a moment to double down on credit management and strategic planning.
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Experian Commercial Pulse Report – Business owners with unpaid student loans carry a higher risk for lenders.
As temperatures rise across the U.S., so does the nation’s appetite for travel—and the Leisure & Hospitality sector is feeling the heat. In this week's Commercial Pulse Report, we examine how soaring consumer demand intersects with evolving credit conditions for businesses in travel, lodging, and transportation. Travel Rebounds, But the Story Is Mixed By every measure, Americans are traveling in droves. AAA projected over 72 million domestic travelers over the July 4th holiday—setting a record. Meanwhile, Memorial Day travel surged across all transportation types, especially road trips, which saw a 3.0% year-over-year increase. However, despite six new TSA checkpoint records in June, major airlines have cut forward-looking forecasts, signaling a notable shift: travelers are increasingly opting for alternatives like road and rail over the skies. This change in travel behavior has direct implications for how different business subsectors access and manage credit. Infrastructure Drives Commercial Credit Trends The Leisure & Hospitality industry is broad and fragmented—from mega-airlines and hotel chains to small sightseeing operators and independent RV campgrounds. This diversity is reflected in commercial credit data. Businesses with heavy infrastructure needs—like airlines and hotels—tend to carry higher loan and credit line balances. Airlines, in particular, average the highest number of commercial trades, a reflection of their large-scale operations and capital intensity. Hotels also hold sizeable credit, but with a twist. While revenues have rebounded beyond pre-pandemic levels, occupancy rates remain flat due to an increase in room supply from new construction. The hotel pipeline stood at 6,211 projects with over 722,000 rooms as of Q3 2024, signaling sustained investment even amid margin pressures. Rental Cars: High Volume, Higher Risk The rental car sector stands out—but not in a good way. Despite being a key enabler of domestic travel, these businesses exhibit the highest commercial credit risk across the industry. According to Experian’s Commercial Risk Classification, 32% of rental car companies are considered Medium-High to High Risk, compared to less than 10% in categories like air transport and sightseeing. The elevated risk may be due to a combination of factors: fleet acquisition costs, multi-location exposure, and operational disruptions during the pandemic. While credit trades in this segment remain high, inquiries have declined over recent years, possibly reflecting tightening lending standards or constrained demand for new credit. Encouraging Risk Trends—With Exceptions Across the broader Leisure & Hospitality industry, there’s been a decline in commercial credit risk since 2020. The share of businesses classified as Medium-High or High Risk dropped from 11.7% to 8.5% as of April 2025. Most firms now fall into the Medium Risk category—a sign of normalization in the sector. Delinquency rates remain low (under 1%), and the average Intelliscore Plus v2 score has remained stable across most subsectors. Still, credit conditions vary sharply by business type, underlining the importance of nuanced risk assessment in portfolio management. Smarter Credit Allocation Starts with Subsector-Level Insight The summer travel surge is a powerful reminder of the sector’s resilience—but not all players are experiencing the boom equally. For credit professionals and commercial lenders, the latest data from Experian suggests a growing divide: infrastructure-heavy firms are leaning into credit, while high-risk subsectors like rental cars may warrant closer scrutiny. Whether your clients are in air transport or roadside accommodations, understanding these credit trends will be key to navigating the second half of 2025. ✔ Visit our Commercial Insights Hub for in-depth reports and expert analysis. ✔ Subscribe to our YouTube channel for regular updates on small business trends. ✔ Connect with your Experian account team to explore how data-driven insights can help your business grow. Download the Commercial Pulse Report Visit Commercial Insights Hub Related Posts
Experian Commercial Pulse Report reveals decline in total number of ecommerce businesses, strong revenue, and fewer credit inquiries.
