The Auto Finance Roadmap

Captive lenders will remain aggressive in the auto space this year after tapping back into auto loans at the close of 2024, when delinquencies cooled.  “Delinquency rates for captives have come down and they are improving,” Michael Brisson , director of economic research at Moody’s Analytics, tells Auto Finance News in today’s “Weekly Wrap” podcast.   Captives will likely maintain increased appeti...

Wildfires impacting large areas of California are contributing to higher auto insurance costs in the state and more deferral offerings from lenders for affected borrowers.   The annual cost of full-coverage car insurance in California rose 47.8% year over year in December to $2,575, compare with the average cost across the U.S. of $2,313. The current fires started Jan. 7.   Meanwhile, lenders’ fun...

The past year has largely been defined by persistent affordability concerns even as vehicle prices stabilize and interest rates come down, as costs for everyday expenses make it challenging for consumers to keep current on debt.   The most-read stories of 2024 highlight readers’ interest in how financial institutions navigated affordability challenges and managed risk while looking to maintain or...

Bank pullback in asset-backed lending has spurred growth for lenders that provide floorplan financing for independent dealers, while banks are expected to further tighten credit access in 2025 as demand weakens.  Floorplan providers First Business Bank and NextGear Capital have seen a boost in their portfolios as dealers use more of their floorplan lines of credit for inventory and banks scale bac...

The Manheim Used-Vehicle Value Index ticked up 0.2% YoY and 1.3% month over month in November to 205.4.   High car prices have contributed to affordability pressures for consumers, but incentives are helping drive sales. The latest edition of the Beige Book, citing data collected on or before Nov. 22 by the Federal Reserve, highlights areas of the country where sales activity has rebounded with in...

Affordability, credit performance, leasing and digital innovation have been top of mind for auto lenders in 2024.   Car shoppers saw some relief over the holiday weekend as Black Friday deals offered low interest rates and cash-back incentives.   Lenders are also focused on sustainable growth. U.S. Bank is investing in digital capabilities across auto, recreational vehicle and marine product finan...

Near prime and nonprime consumers are seeing some relief from affordability challenges in the automotive industry following rate cuts by the Federal Reserve but remain cautious about elevated monthly payments.  New-vehicle registrations among near prime and nonprime consumers increased 1% year over year and 7% month over month to 161,435 in the second quarter, highlighting an increase in supply an...

Auto originations have picked up industrywide even as average payments remain elevated, while manufacturers are increasing incentives to move inventory.   Originations totaled 6.4 million contracts in the second quarter, up 0.7% year over year, according to the latest data from TransUnion. The return of leasing and an uptick in incentives are helping address affordability concerns and drive sales....

Sales at most major automakers increased in October, driven in part by an increase in EV sales.  Overall sales increased for American Honda , Ford Motor Co ., Hyundai Motor America , Mazda North America and Subaru of America in October. Volvo, however, saw U.S. sales fall 17% year over year to 9,360 vehicles.  American Honda’s EV sales rose 31.1% YoY in October . Honda joined Hyundai Motor America...

More auto lenders announced year-over-year origination growth last week in their third-quarter earnings reports.  Carvana posted a 35.5% YoY increase in originations in Q3 as retail sales jumped 34.2% YoY and 7.1% quarter over quarter to 108,651 units. The increase in originations comes as the financier and retailer saw “record performance in virtually every key financial measure,” Carvana Chief E...

Bank earnings last week highlighted mixed results as some institutions saw an uptick in auto originations while others’ portfolios shrank.   Bank of America’s auto originations rose 16.2% year over year to $7.9 billion in the third quarter, while U.S. Bank’s indirect auto loan and lease originations jumped 65% YoY to $1.8 billion. Huntington Bank’s auto originations rose 71.4% YoY to $2.4 billion....

Chase Auto and Wells Fargo kicked off the Q3 earnings season last week, with both lenders reporting flat or lower origination volume on a year-over-year basis.  Wells Fargo’s auto originations hit $4.1 billion in Q3 , up 11% sequentially and unchanged compared with Q3 2023, according to the bank’s earnings supplement published Oct. 11.  The bank's auto loans 30-plus days delinquent remained flat s...

High rates and rising consumer debt levels still drive a worsening auto loan landscape.   Delinquencies and losses rose across prime and nonprime securitized auto loans in Kroll Bond Rating Agency’s August auto loan asset-backed securitization index published Sept. 23. Prime recovery rates increased while nonprime recoveries declined.   CarMax Auto Finance (CAF) also increased its provision for cr...

Leasing an EV or buying a used one offers a more affordable option in today's challenging market, but many consumers remain hesitant.  Nearly 8.5% of new purchases were EVs, and more than 46% of those are leased , according to Experian ’s second-quarter state of the auto market report, published on Sept. 5.  Part of the drive in EV leasing is affordability. The average payment difference between a...

Demand for used vehicles is strong as supply remains limited and affordability is top of mind for consumers.   The used-car turnover rate rose 8.4% year over year in August to 43 days for franchise dealers, signifying that inventory is being sold quickly.   As consumers look for more affordable cars, inflationary pressures weigh on credit performance. Auto loans 30-plus days delinquent increased 1...

Several companies in the automotive and powersports industries made changes to their diversity, equity and inclusion initiatives following social pressure to scale back targeted DEI strategies.   Ford Motor Co. joined Harley-Davidson, Tractor Supply, John Deere and Polaris in publicly announcing changes to their DEI programs, including in how the companies define and measure DEI at the organizatio...

Regulators are scrutinizing practices surrounding the use of artificial intelligence and machine learning as well as aftermarket product sales, prompting auto lenders to review processes for themselves and their dealer partners.   The Consumer Financial Protection Bureau this month published a letter to the U.S. Treasury making it clear that emerging AI-based technology isn’t exempt from long-stan...

Subprime lenders are weighing the risks and benefits of protecting assets through force-placed insurance as credit-challenged borrowers face continued affordability issues, while some lenders tap into “buy here, pay here” opportunities, in this episode of the Weekly Wrap. 

In this episode of the “Weekly Wrap,” Auto Finance News Associate Editors Ashley Savage and James Van Bramer discuss trends in financier earnings, AI-based lending updates, finance and insurance revenue and the powersports market for the week ended Aug. 9.  

In this episode of the “Weekly Wrap,” Auto Finance News Associate Editors Ashley Savage and James Van Bramer discuss trends in financier earnings, technology, EVs and the powersports market for the week ending Aug. 2.    

Captives’ second-quarter earnings last week reflected portfolio growth despite affordability and incentive challenges. Leases are a key driver for dealers as consumers continue to be hesitant amid inflationary pressures, high interest rates and elevated vehicle prices.  In powersports, Harley-Davidson Financial Services’ originations ticked down 4% year over year in Q2 and retail finance receivabl...

Second-quarter bank earnings continue to point to mixed loan production volume and a rise in leasing spurred by EVs.  U.S. Bank originated $1.9 billion in Q2, up 21.5% year over year while outstandings fell 30.6% YoY to $8 billion. PNC Financial’s auto outstandings dipped 1.6% YoY to $14.8 billion, and Citizens’ auto book continued to run off. Ally Financial originated $639 million in battery EV a...

Second-quarter bank earnings kicked off this week and showed a continued slowdown in auto originations compared with a year ago. Chase Auto’s originations declined 10% year over year to $10.8 billion and Wells Fargo Auto’s originations decreased 22.9% YoY to $3.7 billion.  Powersports sales slowed in June. 

June marked mixed vehicle sales and an uptick in incentives ahead of the July Fourth holiday, while the industry continues to keep an eye on impacts from cyberattacks that halted dealer operations.