The Auto Finance Roadmap

Higher costs for everyday expenses such as gas, groceries and vehicle insurance have prompted many consumers to turn to credit cards, with rising expenses making it harder for consumers buried in debt to qualify for auto loans.

Point-of-sale financing as an alternative payment method is a growing opportunity for lenders, technology company Pagaya’s President Sanjiv Das says on this episode of “The Buzz” podcast, shared to The Roadmap. According to auto lender and Pagaya partner Ally Financial, POS financing is expected to reach a value of more than $81 billion by 2030.

Car dealerships are leaning on manual processes following consecutive cyberattacks against software provider CDK Global last week.  In powersports, RV and marine manufacturer Winnebago Industries’ promotional liabilities decreased 26.4% year over year as demand for RVs was sluggish during Q3.

The auto finance industry is showing slight improvements in affordability and loan production while worsening credit performance and inflationary pressures remain concerns. Auto outstandings held steady above $1.5 trillion in the first quarter, down 0.2% sequentially but up 2.4% year over year. Access to auto credit worsened for the second month in a row but improved YoY in May.

Leasing is picking up in tandem with incentives while used-vehicle values decreased in May — positive signs toward improving affordability.  While some measures indicate better deals and lower prices, external costs such as vehicle insurance continue to burden borrowers, especially affecting consumers with lower credit scores.

Auto lenders were active in the capital markets last month as credit union issuance picked up, while market share among banks and credit unions shifted in the first quarter.  In powersports, Canadian manufacturer Bombardier Recreational Products’ North American retail sales fell 5% year over year. Motorhome values, too, fell 9.4% YoY in April while towables values declined 7.2% YoY. Recreational v...

Optimizing efficiency, improving accuracy and customer experience, and automating credit decisions are core uses of artificial intelligence in the auto finance industry as lenders look to grow their portfolios and manage risk.  

Several auto lenders had to adjust their underwriting strategies in 2023 to account for worsening credit performance across loans originated in 2021 and 2022, a theme prevalent during Auto Finance Summit East 2024. 

Gaining operational efficiencies through artificial intelligence, navigating a challenging EV market and embracing the return of leasing were top themes at Auto Finance Summit East 2024 last week in Nashville.  

First-quarter earnings continued to bring mixed results as vehicle sales slowed in April.  

First-quarter earnings kicked off last week with banks reporting a decline in auto originations. Chase Auto and Wells Fargo Auto’s origination volume decreased year over year in Q1, while outstandings were mixed. Meanwhile, auto credit availability improved across all lender types in March.

Used-vehicle values declined again in March while car sales improved as the industry shifts toward a buyers’ market. 

The return of higher supply levels is contributing to an uptick in incentives and increased new-vehicle sales projections. Meanwhile, the powersports market is feeling the ramifications of higher interest rates. 

Auto lenders have been active in the past week in funding initiatives, while competition has ramped up across the market.

Powersports lenders project mixed origination volume in 2024 as credit unions and regional banks pull back in the space and consumer application quality declines. In this episode of the “Weekly Wrap,” Auto Finance News Deputy Editor Amanda Harris and Senior Associate Editor Riley Wolfbauer discuss the top trends during the week ended March 15.  

Wholesale used-vehicle values ticked down in February while electric vehicle residual values are causing concern for asset-backed securities investors. In this episode of the “Weekly Wrap,” Auto Finance News Deputy Editor Amanda Harris and Senior Associate Editor Riley Wolfbauer discuss the top trends during the week ended March 8.  

The auto finance industry continues to face a tightened credit environment, worsening credit performance and recoveries, and shrinking subprime market share as affordability concerns persist.

Aftermarket product sales have become more crucial for dealerships as vehicle profits decline, prompting the industry to increasingly turn to digital finance and insurance offerings.   The ancillary product market is also a hot topic for regulators as the Consumer Financial Protection Bureau and the FTC look closely at how lenders manage the addition of aftermarket products within retail installme...

Auto lenders expect 2024 to be a year of growth driven by technology updates and loosening credit standards. Powersports sales and financing performance are mixed. 

Earnings season continued last week with GM Financial and Credit Acceptance Corp. reporting a rise in originations and worsened consumer credit performance.

Rising costs and limited supply have created challenges for used-car retailers, evidenced by Vroom’s planned shutdown of its used-car sales and e-commerce business and the closure of several Sonic Automotive-owned dealerships last week.

Elevated interest rates contributed to a competitive landscape that prompted some banks to slow auto lending activity in the fourth quarter while others saw growth in origination volume.  

Fourth-quarter earnings season kicked off with several banks reporting mixed results in auto originations as some tightened credit and others picked up auto lending activity.

Stricter federal tax credit requirements for electric vehicles have prompted price cuts, incentives, and dealer operation changes.  Lower interest rates and low unemployment also drive economists’ prediction of a soft landing in 2024. 

Mark Chandler, vice president for business development at Credit Union Leasing of America, lives and breathes the auto industry and leads his team with an infectious positive energy to create a productive work environment.