I’m an auto enthusiast in the literal sense. I’m enthusiastic about automobiles, the auto industry, and driving. Family vacations meant two-day drives from Indiana to Texas. I spend a fair amount of time watching the country go by through a car window. More recently, I drove solo from the Red Ball Garage in New York City to the Portofino Hotel in Los Angeles—a one-man Cannonball Run, mostly near the speed limit. I pay attention to the industry the way some people follow baseball. The new models, the sales numbers, the technology, the business moves. It’s a thing.
So when I saw a headline that CarMax had fired its CEO as 3.2 million American families had lost their cars to repossession, I didn’t just scroll past it. This is a story about the economy, the auto industry, and what happens when an essential part of American life becomes unaffordable for the people who need it most.
CarMax Implodes
In November 2025, CarMax terminated President and CEO Bill Nash. He’d led the company since 2016. The board classified it as “termination without cause,” which is corporate for “this isn’t working.” Nash walked away with roughly $14.8 million in severance. The stock dropped 24% on the news, hitting its lowest price since 2010.
The numbers tell the story. Sales dropped 6% in Q2. Net earnings cratered 28%. CarMax had set a goal of selling 2 million units a year by 2026. They’ve now pushed that target to 2030. Meanwhile, they laid off 350 employees in late 2025, another 400 in 2024, and ordered the remaining corporate staff back to the office four days a week.
In February 2026, CarMax named Keith Barr as its new CEO. Barr’s most recent job was running InterContinental Hotels Group. He has zero experience in the auto industry. That’s either a bold bet on operational turnaround skills or an admission that nobody from the industry wanted the job. His base salary is $1.25 million with a target bonus of 175%.
What happened to CarMax? In a word: Carvana. The company that nearly went bankrupt in 2022 reinvented itself with an asset-light, fully online model and posted record EBITDA of $1.4 billion in 2024. Carvana’s retail sales jumped 55% year-over-year in Q3 2025. Analysts expect Carvana to surpass CarMax in total retail volume by late 2026. CarMax’s stock is down nearly 29% year-to-date. Carvana’s is up 75%.
But CarMax’s problems aren’t just competitive. They’re a symptom of a used car market that’s broken at a fundamental level.
The Repo Crisis
The numbers are staggering. Between 2022 and 2024, approximately 3.2 million vehicles were repossessed in the United States, a 43% increase. Subprime auto loan delinquencies hit 6.9% at 60-plus days past due in January 2026—the highest since the Federal Reserve started tracking that data in 2000. The overall auto loan delinquency rate reached 3.88% in Q3 2025, the worst since the year after the Great Recession.
A record 4.8 million Americans are behind on their car payments. Sixty-two percent of repossessions involve borrowers with credit scores below 580. Forty-five percent of repossessed vehicle owners are blue-collar workers. Households earning under $40,000 face four times the repossession risk of everyone else.
This isn’t happening because people suddenly became irresponsible. It’s happening because cars got expensive and the loans written during the pandemic were built on prices that didn’t last.
How We Got Here
The average monthly payment on a new car hit $772 in Q4 2025. Used cars averaged $570. One in five new car payments now exceeds $1,000 a month. The average new car loan is $43,759 with a term of 69 months. That’s nearly six years of payments on a depreciating asset.
And here’s where it gets ugly. When car prices spiked during the pandemic supply chain crisis, lenders happily wrote loans on inflated values. Now those cars are worth less, but the loans haven’t shrunk. According to Edmunds, 29.3% of trade-ins in Q4 2025 carried negative equity. The average underwater borrower owed $7,214 more than their car was worth. A record 27% of those underwater owed more than $10,000.
I’m right there with everyone else. I drive a 2025 Ram Tradesman—the lowest trim level Stellantis makes. No leather, no big screen, no premium anything. It’s designed as a work truck, even if I drive it to the office. My lease payment is right around the national average. And I’ve said more than once that this might be the last pickup truck I ever drive, because even the base models are getting out of reach. If I’m feeling that as a single person with a steady career, imagine what it’s like for the millions of people whose cars have been priced out from under them, who owe more than their vehicles are worth, with monthly payments eating a significant chunk of their income. When something breaks in that equation—a layoff, a medical bill, an unexpected repair—the car goes back to the bank.
The pattern looks uncomfortably familiar. During the housing crisis, lenders wrote mortgages on inflated home values—and when the market corrected, millions of homeowners were left underwater. The same dynamic is playing out with auto loans. Seven-year terms at high interest rates on vehicles that depreciate the moment they leave the lot. Loans that exceed 72 months default at 15% higher rates. Used car loans carry delinquency rates double those of new car loans. The terms changed, the prices changed, and now the math doesn’t work.
Tariffs Are Making It Worse
As if the math weren’t bad enough, tariffs are adding thousands of dollars to new car prices. President Trump’s 25% tariff on vehicles built outside the United States went into effect in April 2025, with parts tariffs following in May. The cumulative tariff bill on the auto industry has topped $10.6 billion.
The average price increase on 2026 model-year vehicles is nearly $2,000 across the board. Canadian-built models jumped almost $4,000. Japanese models climbed $3,300. German cars went up $2,800. And those are averages—on vehicles priced under $40,000, shoppers can expect increases of up to $6,000.
The tariffs don’t directly touch used cars, but the effect is indirect and predictable. When new cars become unaffordable, demand shifts to used cars, and used car prices follow. Imported parts also drive up repair costs and insurance premiums. The people who can least afford a new car end up paying more for everything.
Cars Aren’t Optional
In most of America, a car isn’t a luxury. It’s how you get to work. It’s how you get to the doctor. It’s how you get groceries if the nearest store is 15 miles away. Lose your car and you can lose your job. Lose your job and you definitely can’t make the payments on the next one.
The 3.2 million repo number isn’t just a financial statistic. It represents families whose daily logistics got significantly harder. People who now need rides from friends, or Uber money they don’t have, or a bus system that may not exist where they live. Connecticut, where I live, is the fourth most densely populated state in the country, and even here, transit is concentrated in the cities with limited service between suburban towns. If you’re in Milford and your job is in Shelton, you need a car. Period.
Where This Goes
I don’t see this getting better quickly. New car prices are going up, not down. The tariff pressure isn’t easing. Subprime delinquencies are projected to stay elevated through 2026. The negative equity problem is structural—it doesn’t resolve until either car values stabilize or enough time passes for borrowers to pay down their balances.
The one bright spot is used car inventory. Lease returns are expected to rebound in 2026, including over 300,000 off-lease EVs hitting the market. That should put some downward pressure on used car prices. But “slightly less unaffordable” isn’t a solution.
The auto industry has survived recessions, fuel crises, and massive recalls. What it hasn’t faced before is an affordability crisis this broad, combined with a regulatory vacuum, combined with trade policy that makes everything more expensive. Something has to give.
Henry Ford’s whole idea was that the people building the cars should be able to afford to buy them. That principle has been inverted. The average new car payment is $772 a month, and the median American household income is around $80,000. That’s more than 11% of gross income on a car payment alone, before insurance, gas, and maintenance. And most households need two vehicles.
America was built on the assumption that people could drive. That assumption is breaking.