Secretary Bessent drops U.S. auto loan deduction bombshell

Core Insights - The U.S. Treasury Secretary announced a significant tax break aimed at improving vehicle affordability for buyers, indicating a shift in focus from previous statements regarding the affordability crisis [1][5] Group 1: Affordability Challenges - The U.S. auto industry is facing significant affordability pressures, with monthly finance payments reaching a record high of $776 in December [3] - Despite predictions of major price increases due to tariffs, actual price increases have been muted, yet affordability remains a critical issue [3][4] Group 2: Market Performance - Retail consumers spent $620 billion on new vehicles in the previous year, marking a nearly 6% increase from the prior year, driven by concerns over potential price hikes [2] - Major automakers reported year-over-year sales increases: GM sold 2.83 million vehicles (+5.1%), Toyota 2.52 million (+8.4%), Ford 2.18 million (+5.6%), Hyundai 1.84 million (+7.9%), and Honda 1.42 million (+0.6%) [7] Group 3: Government Initiatives - The Treasury's new tax plan allows eligible taxpayers to deduct $10,000 per year in auto loan interest for vehicles purchased during Trump's second term, aimed at making car ownership more affordable [5][7] - The tax cut is designed to support American workers by applying solely to U.S.-assembled vehicles, thereby strengthening domestic manufacturing [7]