Automotive Finance Market Shows Recovery Signs with New Vehicle Inventory Bouncing Back – Report

With new vehicle inventory rebounding and some manufacturers continuing to offer incentives, consumers are shifting back into the new vehicle market—resulting in a notable impact on lender market share.

According to Experian’s State of the Automotive Finance Market Report: Q1 2024, captives’ market share “for new vehicle financing jumped to 61.75%, its highest level since 2010. Meanwhile, banks declined from 23.36% to 20.65% year-over-year and credit unions went from 17.02% to 9.69% over the same period.”

Melinda Zabritski, Experian’s head of automotive financial insights, said:

“The return of new vehicle inventory has had a ripple effect across the automotive finance market. Not only are we seeing in-market shoppers transition away from the used vehicle market but we’re starting to see the resurgence of leasing.”

Largely driven by the “availability of new vehicle inventory in Q1 2024, new vehicle leasing experienced a significant increase, reaching 24.12%, up from 19.33% in Q1 2023.”

In addition, the average monthly payment “for a new lease dropped $7 compared to the previous year, reaching $595 in Q1 2024.”

Notably, SUVs comprised the “majority of the top leased vehicles in Q1 2024, with the Honda CR-V at 3.12% and Tesla Model Y at 2.69%.”

Rounding out the top five were “the Nissan Rogue (2.35%), Chevrolet Equinox (2.21%), and Honda Civic (2.02%).”

Average monthly payments remain relatively stable

The average loan amount for “a new vehicle was $40,634 in Q1 2024, down $481 from the previous year.”

Meanwhile, the average loan amount for “a used vehicle decreased $498 over the same period, to reach $26,073.”

Despite the average loan amount for new and used vehicles declining, “elevated interest rates caused slight increases to average monthly payments.”

The average interest rate for “a new vehicle was 6.73% in Q1 2024, up from 6.61% the previous year, while the average interest rate for a used vehicle was 11.91%, up from 11.40% over the same period.”

As a result, the average monthly payment “for a new vehicle increased $3, reaching $735, and the average monthly payment for a used vehicle was up $2 at $523.”

Interestingly, data showed “that 16.31% of all new vehicle loan payments were over $1,000 in Q1 2024. Meanwhile, 33.6% of all used loans were under $400 this quarter.”

EVs accounted for 8.56% of “all new vehicle financing in Q1 2024.”

In addition, consumers are leasing EVs “at a higher rate than previous years, with leasing making up 35.22% of EV financing in Q1 2024, an increase from 12.27% the previous year.”

Of the top five leased EV models “in Q1 2024, Tesla Model Y made up 39.26%, followed by the Tesla Model 3 (11.88%), Tesla Model X (3.72%), Rivian R1S (3.03%) and Volkswagen ID.4 (3.00%).”

Zabritski continued:

“With more manufacturers rolling out a diverse range of EV models and a wider availability of tax incentives, we’re seeing consumers lean into the EV market, particularly with leasing. As technology evolves and infrastructure continues to develop, it’ll be interesting to see the buying preferences for these consumers once they come off lease.”

Additional findings for Q1 2024:

  • Prime and super prime borrowers accounted for nearly 69% of the total finance market in Q1 2024.
  • Captives comprised 31.39% of total vehicle finance market share this quarter, up from 25.93% last year. Banks went from 25.98% to 25.07% year-over-year and credit unions declined from 25.17% to 20.14% in the same time frame.
  • New SUV registrations continue to grow at 64.29% in Q1 2024, up from 61.70% last year, while sedans declined from 16.53% to 15.46% over the same period.
  • 30-day delinquencies increased from 2.34% in Q1 2023 to 2.72% in Q1 2024, and 60-day delinquencies reached 0.88% this quarter, up from 0.76% last year.

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