Experian’s latest State of the Automotive Finance Market Report indicates that an increasing number of consumers are opting for EVs. To provide more insights on the findings, Melinda Zabritski, Experian’s head of automotive financial insights, joins us for the latest episode of CBT Now.
Key Takeaways
1. There has been a noticeable increase in the adoption of electric vehicles (EVs). New financing for EVs now accounts for 9% of the market, up from 3-4% a few years ago, indicating a significant shift in consumer preferences towards electric vehicles.
2. Zabritski asserts that the automotive finance market has stabilized, particularly in the fourth quarter of last year. Moreover, loan amounts for new and used vehicles have remained steady, with new vehicle loans averaging around $40,000-$41,000 and used vehicle loans averaging around $26,000. This suggests a stable market without significant year-to-year increases.
3. Additionally, lenders’ market share has fluctuated due to banks leaving the market and tightening credit, which reduced their market share. However, credit unions have experienced growth in their market share, especially as they have been slower to raise interest rates compared to banks.
4. Consumers are increasingly opting for shorter-term loans due to higher interest rates and the desire to minimize overall interest payments. Additionally, many of the incentives available were for shorter terms, influencing loan duration choices.
5. The number of vehicles purchased with cash has increased, rising to about 20% of new vehicle sales from the usual 15%. At the same time, delinquency rates have increased, returning to pre-COVID levels, this is likely due to the end of government financial support and rising monthly payments.
To learn more about Experian’s State of the Automotive Finance Market Report, click here.
"EV adoption is growing, quickly approaching 9% in new financing, indicating a significant shift in consumer preferences." – Melinda Zabritski
