ATPs rise 2.2%, credit availability worsens

Affordability challenges worsened as new-vehicle average transaction prices rose to their highest level since December 2023 in April, driven by a decline in incentives, and credit access decreased. The average transaction price (ATP) for new vehicles increased 2.2% month over month to $48,510, down 0.5% from a year ago, according to Kelley Blue Book . . Though prices fell YoY, April marked the first month of the year in which ATPs rose. [caption id="attachment_58341052" align="alignnone" width="696"] Cox Automotive [/caption] Incentives averaged 6.3% of the ATP in April, according to KBB, down from 6.6% in March and marking the first time incentives had fallen since October 2023, when incentives sat at about 4.7% of ATP. When incentives fall, ATPs tend to rise since they are inversely correlated with each other, but beyond that, affordability remains a concern weighing on the consumer and ATP, Jonathan Gregory , senior manager of Cox Automotive ’s economic and industry insights team, told Auto Finance News . “The consumer is waiting for the price to fall, but they need to wait for the interest rate to fall too,” Gregory said. . While they are waiting, [rates are] suppressing ATPs and it ends up being like a spiral.” Credit availability declines In another tick against affordability, credit availability also reversed course in April, as credit tightened across new and certified pre-owned vehicles across all lending types, according to Cox. The Dealertrack Credit Availability Index fell to 93.8 in April, down 0.7% year over year. . Though the dip from March was minor, the index had previously risen for two consecutive months. [caption id="attachment_58341051" align="alignnone" width="681"] Cox Automotive [/caption] Some key credit availability factors that moved against consumers in April include: The proportion of subprime loans dropped to 14.9% from 13.2% in April, yet it showed a 1.2% increase YoY; Average yield spreads on auto loans narrowed by 46 basis points (bps) but the report did not offer specifics; Approval rates dropped 20 bps in April and were lower by 2.4 percentage points in Q1 2023; and The portion of loans with terms exceeding 72 months rose 89 bps and decreased by 1 percentage point YoY. C onsumer challenges Still, many consumers remain concerned about monthly payments , which are unlikely to fall until the Federal Reserve cuts rates, which is likely to come later then expected. The national auto industry interest rates were north of 8%, according to data provider Curinos . “You put a 7%, 8% interest rate in the subprime market or significantly higher than that into a payment, that's going to really stress the individual,” Tim Owens , head of consumer vehicle lending at Bank of America, s aid this month at Auto Finance Summit East 2024 in Nashville, Tenn. Another factor weighing on the consumer is the record high vehicle prices from the pandemic. As a result, many consumers were pushed into a negative equity position , which is "going to be a bit of a cold shower for consumers,” TD Auto ’s President and Chief Executive Andrew Stuart said at the summit. “In our application volume, consumers are coming in today and that truck they bought three years ago, they probably paid a little bit too much for it,” he said. “Combine that with increased interest rates, perhaps a little bit of drawback availability of credit, it all stacks up to make a bit of a challenging situation for consumers.” Interest “rates are the most important thing for most buyers, especially the subprime market, because the No. 1 thing they're concerned about is how much do I have to pay each month?” Cox’s Gregory said. The Big Wheels Rankings are now available as a component of the relaunched Big Wheels Data Service, which includes an array of datasets on underwriting, volume, pricing and capital. . The rankings tabulate the Top 100 auto lenders and lessors by originations and outstandings. . See BigWheelsData for details.

ATPs rise 2.2%, credit availability worsens

Dealertrack Credit Availability Index fell 0.7% YoY

Chase Auto taps bank channels to support private label partners

Li Auto sales disappoint amid tepid demand for electric cars

Related Posts

Flagship Credit sold to investment firm InterVest

10 auto finance executives to watch in 2026

RV dealers say rate cuts needed as cash flow tightens

Li Auto sales disappoint amid tepid demand for electric cars

Stay Informed with Our Newsletters

The Roadmap Podcast

SPONSORED

Driving Innovation in Automotive Refunds: How Onbe and Allied Solutions Are Modernizing the Payment Experience

Navigating the Margin Squeeze: EVs, Tariffs & Pricing — A Q&A with Earnix

Enhancing credit approaches to boost conversion and dealer loyalty

Welcome Back!

Retrieve your password