Bank of America logs increased auto, EV originations

Bank of America ’s vehicle lending portfolio grew in the first quarter as the bank streamlines financing, builds on relationships with dealers and manufacturers, and taps into a growing interest in electric vehicles. First-quarter auto originations clocked in at $7.1 billion, an increase of 4.4% quarter over quarter and 36.5% year over year, Fabien Thierry, head of vehicle lending products, told Auto Finance News . Outstanding auto loans and leases stood at $49.7 billion in Q1, an increase of 2.5% sequentially and 9.5% YoY, according to the Q1 earnings report. Direct-to-consumer transactions in Q1 accounted for a record 27% of auto originations, including for EV and hybrid financing, largely due to a streamlined application process that makes applying for financing faster and easier, Thierry said. Turning to credit performance, Bank of America’s net charge-offs on its auto portfolio sat at 3 basis points in Q1, Thierry said, noting the bank in the first quarter introduced an 84-month loan term. “We’re feeling very strong about where we are,” he noted. Bank of America also added 750 new dealers to its authorized dealer network in Q1, bringing the total to 10,580 and expanding options for car shoppers. On the commercial side, the bank’s floorplan balance for auto dealers clocked in at $11.4 billion, a decrease of 15.2% YoY but up 3.7% from the previous quarter as supply remains tight, according to the earnings report. “[Dealers] can't keep enough inventory on the lot,” Chief Executive Brian Moynihan said on today’s earnings call. The electric future Bank of America has seen an uptick in its non-internal combustion engine (ICE) vehicle market share. The lender’s electric vehicle (EV) and hybrid vehicle loan originations doubled from a year ago to exceed $787 million in Q1, Thierry told AFN . The growth aligns with the bank’s goal to mobilize $1 trillion to accelerate the transition to low-carbon solutions by 2030. [caption id="attachment_56408015" align="alignnone" width="2560"] © Can Stock Photo / jozzeppe [/caption] “Clients are now open to the idea of their next car to be an EV or hybrid,” Thierry said. In response, Bank of America launched in 2021 EV-specific financing information online and is training the sales team on electric vehicles, he noted. Consumer consideration of EVs rose 69% in March compared with January, while hybrid interest increased 32% during the same time frame, largely due to rising gas prices, according to a March 23 Cox Automotive report. Bank of America is working to offer financing options and digital capabilities that meet the needs of new EV manufacturers entering the industry, such as Lucid Motors and Rivian, Thierry said. Bank of America is the preferred financing partner of Lucid. New efforts include simplifying the mobile application and pre-approval process for EVs. Financing terms and rates on EVs mirror those the bank typically offers on ICE vehicles, Thierry told AFN . The move to digital The bank continues to see increased online adoption in its auto business, with 75% of vehicle financing applications through digital channels in Q1, Thierry said. Bankwide, 53% of consumer sales were through online and mobile channels during the quarter, according to the earnings report. Bank of America’s active mobile banking users also increased to 33.6 million, compared with 31.5 million during the same period a year ago. “We are now selling more digitally than we are in person,” Moynihan said on the call. "Our digital sales are now twice the pre-pandemic level just three years ago.” Auto Finance Innovation Summit, the premier event for technology in auto finance, returns April 25-26 in San Diego. The event will showcase today’s technology and tomorrow’s innovation-driven opportunities to position your company for success in this fast-paced digital era. To learn more about the 2022 event and register, visit www.AutoFinanceInnovation.com .

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