The resurgence of new vehicle inventory coupled with enticing manufacturer incentives has spurred consumers back into the new vehicle market, causing a noticeable shift in lender market dynamics. According to Experian’s State of the Automotive Finance Market Report for Q1 2024, captives’ market share for new vehicle financing surged to 61.75%, marking its highest point since 2010. Conversely, banks saw a decline from 23.36% to 20.65% year-over-year, while credit unions plummeted from 17.02% to 9.69% during the same period.
Melinda Zabritski, Head of Automotive Financial Insights at Experian, noted, “The resurgence of new vehicle inventory has had a ripple effect across the automotive finance market. Not only are we observing a transition of in-market shoppers away from the used vehicle segment, but also a revival of leasing.”
New vehicle leasing experienced a significant upswing, reaching 24.12% in Q1 2024, up from 19.33% in Q1 2023, largely attributable to the availability of new vehicle inventory. Moreover, the average monthly payment for new leases decreased by $7 compared to the previous year, settling at $595 in Q1 2024.
In Q1 2024, SUVs dominated the top leased vehicles, with the Honda CR-V at 3.12% and the Tesla Model Y at 2.69%. The top five also included the Nissan Rogue (2.35%), Chevrolet Equinox (2.21%), and Honda Civic (2.02%).
Despite a slight decrease in the average loan amount for both new and used vehicles, elevated interest rates led to marginal increases in average monthly payments. The average loan amount for a new vehicle was $40,634 in Q1 2024, down $481 from the previous year, with an average interest rate of 6.73%. For used vehicles, the average loan amount decreased to $26,073, accompanied by an average interest rate of 11.91%.
Interest in electric vehicles (EVs) continued to surge, constituting 8.56% of all new vehicle financing in Q1 2024. Notably, leasing of EVs increased significantly, comprising 35.22% of EV financing, up from 12.27% the previous year.
Prime and super prime borrowers dominated nearly 69% of the total finance market in Q1 2024. Captives increased their market share to 31.39%, while banks decreased to 25.07%, and credit unions dropped to 20.14% year-over-year.
Additionally, new SUV registrations continued to climb at 64.29% in Q1 2024, while sedan registrations declined to 15.46% over the same period. Delinquencies also rose, with 30-day delinquencies reaching 2.72% and 60-day delinquencies hitting 0.88% in Q1 2024.
For further insights, the entire State of the Automotive Finance Market Report: Q1 2024 presentation is available on demand.
