Consumers Shifting Back to Used Vehicles as Inventory Shortages Continue
August 25 2022 - 9:30AM
Business Wire
As used originations increase, credit unions
reach nearly 26% total vehicle financing market share, the highest
volume in five years
As the automotive market continues to face inventory shortages,
consumers are shifting back to the used vehicle market. According
to Experian’s State of the Automotive Finance Market Report: Q2
2022, 61.78% of all vehicle financing was for used vehicles, up
from 58.48% in Q2 2021.
The shift back to used vehicles was present across all credit
tiers, though near prime saw the largest increase, going from 72.3%
in Q2 2021 to 77.69% in Q2 2022. Subprime consumers saw the
percentage of used vehicle loans grow from 86.28% in Q2 2021 to
89.29% in Q2 2022, while prime consumers saw growth from 61.02% to
63.59% in the same time frame.
“Between the inventory shortage and rising vehicle costs,
consumers are looking to make the most cost-effective decision,
which is often a used vehicle,” said Melinda Zabritski, Experian’s
senior director of automotive financial solutions. “The benefit of
higher vehicle values is that consumers are able to get more for
their trade-ins, which can help offset the increased cost of their
next vehicle.”
The shift to used comes amid rising average vehicle loan amounts
and monthly payments for both new and used vehicles. The average
new vehicle loan amount increased 13.21% year-over-year to reach
$40,290 in Q2 2022, with a monthly payment of $667 compared to $582
in Q2 2021. Average used vehicle loan amounts saw a sharper
increase of 18.66% year-over-year, clocking in at $28,534, with an
average monthly payment of $515, an increase from $440 in Q2
2021.
Credit unions see jump in market share
As consumers financed more used vehicles, credit unions
experienced significant growth. Credit unions saw a jump in overall
market share, reaching 25.81% in Q1 2022, up from 18.32% in Q1
2021, coming in second only to banks (27.94%) and surpassing
captive lenders (22.64%).
Credit unions achieved growth in both new and used vehicle
financing, though the growth was more pronounced in the used
vehicle space. Though captives still led new vehicle financing at
46.14% in Q2 2021, credit unions increased to 21.35%, up from
11.15% last year. For used vehicle financing, credit unions
comprised 28.62% in Q1 2022, up from 23.49% in Q1 2021. The growth
places credit unions just behind banks, which held 29.19% of used
vehicle financing in Q1 2022.
“With the market dynamics we’re seeing right now, the shift in
lender market share makes sense, as credit unions often offer two
things that consumers are seeking: lower interest rates and longer
terms,” Zabritski continued. “This helps to manage their monthly
payment, which is often what consumers prioritize when looking at
financing options. Understanding these trends will ensure lenders
and dealers can help consumers make the most informed decisions
when purchasing a vehicle.”
Additional findings for Q2 2022:
- Leasing decreased to 19.65% of new vehicles in Q2 2022, down
from 27.82% in Q2 2021.
- The market continues to move more prime with prime (45.74%) and
super prime (19.57%) comprising more than 63% of all originations
in Q2 2022.
- SUVs surpassed 60% of total financing in Q2 2022 at 60.43%, up
from 58.57% in Q2 2021.
- The average difference between a new vehicle loan and lease
payment was $127 in Q2 2022.
- The average loan term for new vehicle loans remained flat going
from 69.45 to 69.46 months from Q2 2021 to Q2 2022; average used
vehicle loan terms grew from 66.14 months to 68.01 months,
year-over-year.
To learn more, watch the entire State of the Automotive Finance
Market: Q2 2022 webinar.
About Experian
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to sending a child to college, to growing a business by connecting
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version on businesswire.com: https://www.businesswire.com/news/home/20220825005068/en/
Jordan Takeyama Experian Public Relations 1 714 830 7561
jordan.takeyama@experian.com
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