The Automotive Finance Market Continued to Move Forward at a Healthy Pace in Q1 2021, With Total Open Loan Balances Reaching $1.288 Trillion
The automotive finance market saw strong performance during the first quarter, according to Experian's Q1 2021 State of the Automotive Finance Market report. Total open automotive loan balances increased from $1.168 trillion in Q1 2020 to $1.288 trillion in Q1 2021. Much of the growth was driven by captive lenders, who saw significant growth year-over-year, from 23.82% of the automotive finance market share to 28.02% from Q1 2020 to Q1 2021.
Prime and super prime consumers continued to make up the largest portion of financing in Q1 2021, comprising 64.88% of total financing, compared to 60.56% a year ago. In addition, the findings show that prime consumers are opting to finance new vehicles in larger quantities. In Q1 2020, 66.61% of prime and 50.15% of super prime consumers opted for used vehicles, which decreased to 62.76% and 45.41% in Q1 2021, respectively.
"The industry continues to be resilient, despite the continuation of some of the challenges caused by COVID-19, such as used inventory and global chip shortages," said Melinda Zabritski, Experian's senior director of automotive financial solutions. "While captives have seen notable growth, there should be continued opportunity for other players to increase market share. Focusing on data to better understand these trends will help lenders and dealers navigate the dynamic marketplace."
Highlighting geographic auto finance trends
In addition, there are regional differences in the types of vehicles being financed. For instance, the Ford (News - Alert) F150 is the top financed new vehicle in the Midwest and South regions, compared to the Toyota RAV4 in the West region and the Honda CR-V in the Mideast. These differences also impact average MSRP in the regions, which is slightly higher in the West region, at $38,121, and lowest in the Northeast region at $36,989.
Average loan attributes remain consistent
"Affordability will likely continue to remain a prominent topic in the industry as we move through 2021," Zabritski continued. "As the industry continues to navigate tight inventory and other potential disruptions, ensuring that lenders and dealers are able to meet consumers' needs will require staying close to the data to make the most strategic decisions."
Additional findings for Q1 2021:
To learn more, watch the entire Q1 2021 State of the Automotive Finance Market report webinar.
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