A method for determining a trailer characteristic includes disposing a camera at a rear portion of a vehicle so as to have a field of view rearward, providing a control having an image processor, and hitching a tongue of a trailer to a hitch ball of the vehicle. Location of a portion of the trailer relative to the camera is determined via processing of captured image data. Responsive to the determination of the location of the portion of the trailer relative to the camera, a subregion of the imaging array of the camera is determined that includes the determined portion of the trailer, and processing at the control is enhanced at the determined subregion during processing of subsequent frames of captured image data to determine location of the portion of the trailer relative to the vehicle centerline in the subsequent frames of captured image data.