Revived Vehicle Stock Alters the Landscape of Auto Finance in Q1 2024

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.

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