The average loan amount for a new vehicle jumps $4,000; however, the average monthly payment remains steady
Since the onset of the pandemic, analysts and pundits have speculated about its impact on the automotive industry. Despite the overall reduction in automotive loan originations, findings from Experian Q2 2020 State of the Automotive Finance Market report show positive trends in the industry—particularly towards the end of the quarter.
New and used vehicle registrations declined in Q2 2020 compared to the previous year. The percentage of new vehicles with financing dropped from 87.62 percent in Q2 2019 to 85.54 percent in Q2 2020, while the percentage of used vehicles with financing decreased from 40.33 percent to 36.75 percent over the same period. However, much of the overall decrease can be attributed to the early months of the pandemic; in April, new vehicle sales were down 50.8 percent year-over-year, while used vehicle sales were down 54.0 percent. In June, new and used vehicle sales rebounded, with new vehicle sales down only 10.6 percent, while used vehicle sales actually increased by 0.2 percent compared to 2019.
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“COVID-19 has impacted the industry, but the data shows manufacturers, dealers and lenders have adjusted to the current landscape,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions. “For example, manufacturer incentives have helped new car sales rebound over the past few months. The more the industry can stay on top of the trends, the better positioned they will be to continue to boost sales and navigate the recovery.”
With the option for consumers to take advantage of manufacturer incentives, we’ve seen consumers with strong credit shift back into the new vehicle market, reversing a trend we’ve observed over the past several quarters. Prime and super prime consumers made up 74.96 percent of new vehicle loans in Q2 2020, up from 71.89 percent in Q2 2019. The report also shows that captives made up the largest share of new vehicle financing (31.1 percent), up from 28.6 percent in Q2 2019.
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