The Auto Finance Roadmap

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 lease and a loan across all EV models is $88 per month, according to Experian. EV lease deals often qualify for the $7,500 tax credit under the Inflation Reduction Act.  

Used EV values have continued to fall and were down 11% year over year in August, according to the Exponential Used Vehicle Index, which measures price changes for wholesale electric vehicles, considering models, vehicle features and mileage.  

Still, only 34% of consumers are preparing to buy an EV in the next two years, down from 48% a year ago, according to the 2024 Consumer Mobility Index from EY, which provides insights on capital markets. 

In this special episode of “The Roadmap,” Auto Finance News Associate Editor James Van Bramer discusses how to tap into EV leasing and declining used EV values with John Possumato, founder and chief executive of DriveitAway, and Elena Ciccotelli, founder and host of the “EVs for Everyone Podcast.”  

Auto Finance Summit, the premier industry event for auto lending and leasing, returns Oct. 7-9 at Wynn Las Vegas. To learn more about the 2024 event and register, visit www.AutoFinanceSummit.com. 

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 16 basis points YoY to 2.88% in the second quarter.  

Credit access tightened in August, with the Dealertrack Credit Availability Index down 0.5% month over month and 1.7% YoY to 92.5.  

In this episode of “Weekly Wrap,” Auto Finance News Editor Amanda Harris and Associate Editors Ashley Savage and James Van Bramer discuss the updates in affordability and sales for the week ending Sept. 13.  

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 organizations. Still, several auto lenders are maintaining their inclusion-based DEI initiatives. 

Meanwhile, market share data last week shows that incentives are driving up captive market share, especially on the new-vehicle side.  

August sales also reflect improved hybrid vehicle sales, which contributed to a 12% month-over-month uptick and an increase of 8% year over year in total sales.  

In powersports, Canadian powersports manufacturer Bombardier Recreational Products’ North American retail sales declined 18% YoY in the company’s second fiscal quarter driven by softer demand and increased competition with incentives.  

In this episode of the “Weekly Wrap,” Auto Finance News Editor Amanda Harris and Associate Editors Ashley Savage and James Van Bramer discuss the latest feature and an update on vehicle sales for the week ending Sept. 6.  

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-standing consumer protection laws. Lenders must test and monitor the use of new technology and tools and ensure that they convey accurate information to consumers.  

At the same time, the CFPB’s funding is under scrutiny again, as new arguments question whether the bureau should receive money when the Federal Reserve isn’t profitable. Under the Dodd-Frank Act, “the combined earnings of the Federal Reserve System” are supposed to fund the CFPB.   

In powersports, inventory continues to be a challenge across every market segment, spawning elevated promotions to drive sales and operational changes to meet changing consumer demand.  

In this episode of the “Weekly Wrap,” Auto Finance News Editor Amanda Harris and Associate Editors Ashley Savage and Jameso Van Bramer discuss top trends in compliance, technology and powersports for the week ended Aug. 23. 

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 receivables were flat YoY at $7 billion. 

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 and hybrid leases during Q2.

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.