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Episode #1244: Today we're talking about Tesla's FSD flip to subscription-only, the continued softening of auto credit conditions, and a loyalty report that says your customers are expecting way more.

Show Notes with links:

• The Dealertrack Credit Availability Index closed out December at 99.6—its highest reading of 2025 and the strongest level since October 2022. It marks a continued return to pre-pandemic credit conditions, capping off a yearlong trend of easing lending standards.
  • Approval rates rose to 73.7%, up 90 basis points from November and 80 bps from December 2024.
  • Average contract rates dropped from 10.5% to 10.3%, while yield spreads also narrowed—making pricing more attractive for buyers.
  • Subprime lending edged down from 14.3% to 14.1% month-over-month, though still up from 11.8% a year ago.
  • Loans over 72 months grew in share, as consumers stretch payments to keep monthly costs manageable.
  • Captive lenders led the loosening, but banks, credit unions, and finance companies all showed increased flexibility.

• Starting February 14, Tesla will stop offering its Full Self-Driving (FSD) system as a one-time purchase, moving exclusively to a monthly subscription model, according to CEO Elon Musk.
  • FSD, which still requires active driver supervision, currently costs $8,000 or $99/month.
  • Tesla hasn’t said how many users pay for FSD, but Musk once admitted he was "kind of glad" not many bought the lifetime option.
  • The shift may be tied to Musk’s compensation package, which includes hitting 10 million active FSD subscriptions.
  • California regulators are still considering suspending Tesla’s sales license for 30 days over alleged misleading marketing of FSD capabilities.
  • Tesla has not disclosed how many of its customers have bought or are paying monthly subscriptions for FSD.

• In its 28th annual Customer Loyalty Engagement Index, Brand Keys found that consumer expectations jumped a record-breaking 32% year-over-year — a shift that’s shaking up brand rankings across industries and putting serious pressure on retailers to evolve.
  • Hyundai once again ranked highest among automotive brands for meeting modern consumer expectations — its 17th year holding that title.
  • Nearly 40% of product and service categories saw new leaders emerge, signaling a wave of disruption driven by more demanding buyers.
  • Loyalty continues to deliver ROI: a 5% improvement can boost lifetime customer profits by up to 88%, while a 2% lift can cut marketing costs by nearly 30%.
  • Amazon, Whole Foods, Shell, Ben & Jerry’s, and Dollar General were also among the top performers in their categories.
  • “The bottom line: loyalty moves markets.” – Robert Passikoff, President of Brand Keys

Join Paul J Daly and Kyle Mountsier every morning for the Automotive State of the Union podcast as they connect the dots across car dealerships, retail trends, emerging tech like AI, and cultural shifts—bringing clarity, speed, and people-first insight to automotive leaders navigating a rapidly changing industry.

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