As the automotive market undergoes significant transformations, affordability remains a critical issue for consumers. However, emerging trends in leasing and cash transactions offer a positive outlook. In the latest episode of CBT Now, Melinda Zabritski, Experian’s Head of Automotive Financial Insights, shares key findings from the Q2 2024 Automotive Finance Market Report. Zabritski discusses how consumer buying behavior is evolving in response to rising car prices and increasing financial pressures.
During the interview, Zabritski highlights several vital trends from Experian’s Q2 2024 Automotive Finance Market Report. One of the most notable is the elevated level of cash purchases. Cash transactions for new vehicles remain steady at 20%, while used vehicle cash purchases have surged to a record high of 62%, driven by an increase in the average age of used vehicles being bought.
Leasing is also making a comeback, now accounting for 25% of new vehicle purchases—up from 17% during the height of inventory shortages. This rebound in leasing is attributed to improved inventory availability and renewed incentives, offering consumers a more affordable option with average payments up to $150 lower than traditional loans.
Zabritski also points to a shift in the types of vehicles being leased. SUVs dominate leasing at 15%, while trucks have dropped from 14% to 11%. Additionally, EV leasing is growing, thanks to attractive tax credits and incentives that help bring down payments.
Despite rising delinquency rates, which are currently at about 1% for 60-day past-due balances, Zabritski notes that the situation differs from the 2009 financial crisis. The automotive industry is better equipped to manage these challenges due to high used vehicle values and reduced severity of losses.
Affordability still remains a concern, but we've seen cash purchases for used vehicles hit a record high of 62% in Q2 2024, while leasing is making a respectable comeback at 25%, offering consumers a way to lower their payments by around $150 on average." — Melinda Zabritski.
