Coronavirus curbs car-buying appetite [FEATURE] | Auto Finance News Coronavirus curbs car-buying appetite [FEATURE] | Auto Finance News
Auto Finance News

No products in the cart.

Subscribe
  • Home
  • News
    • All News
    • Exec of the Year
    • Innovation & Technology
    • Management
    • Compliance & Regs
    • Risk Management
    • Capital & Funding
    • Sales & Marketing
    • Powersports
  • Events
    • DEMOvation Challenge 2021
    • Auto Finance Risk Summit
    • Auto Finance Summit
    • Auto Finance Innovation Summit
  • EXCELLENCE
    • Best Practices
    • Topics
      • Compliance
      • Customer Experience
      • Technology
    • White Papers
    • Glossary
  • Magazine
    • Latest
    • Archives
  • Podcast
  • Data
AFN PLUS
Friday, July 1, 2022
Log In
No Result
View All Result
Auto Finance News
  • Home
  • News
    • All News
    • Exec of the Year
    • Innovation & Technology
    • Management
    • Compliance & Regs
    • Risk Management
    • Capital & Funding
    • Sales & Marketing
    • Powersports
  • Events
    • DEMOvation Challenge 2021
    • Auto Finance Risk Summit
    • Auto Finance Summit
    • Auto Finance Innovation Summit
  • EXCELLENCE
    • Best Practices
    • Topics
      • Compliance
      • Customer Experience
      • Technology
    • White Papers
    • Glossary
  • Magazine
    • Latest
    • Archives
  • Podcast
  • Data
AFN PLUS
Log In
No Result
View All Result
Auto Finance News
No Result
View All Result

Coronavirus curbs car-buying appetite [FEATURE]

Nicole Casperson and Joey Pizzolato by Nicole Casperson and Joey Pizzolato
April 8, 2020
in Features, Leasing, Risk Management
Reading Time: 4 mins read
0

Editor’s note: This feature first appeared in the April issue of Auto Finance News, available now. 

As major auto lenders provide relief for new and existing customers, it is unclear whether consumers will be willing to conduct large purchases after shelter-in-place directives are lifted around the country. Black Book, for one, is predicting “substantial drop in consumer confidence” as it relates to buying “big ticket items.”

Weeks after the outbreak, the U.S. economy is feeling the effects of the novel coronavirus pandemic. Cases of COVID-19 have popped up in all 50 states, and jobless claims have soared to record highs, clocking in at 3.3 million on March 26, an increase of over 1,000%, according to the Department of Labor. By comparison, jobless claims came in at 281,000 the previous week.

Consumers still employed are finding their income negatively affected, according to a survey of conducted by TransUnion. “The coronavirus pandemic is creating a new reality as its impact has stretched to consumers of all generations and income levels,” said Satyan Merchant, senior vice president and automotive business leader at the credit reporting agency. “Over half of Americans say that the COVID-19 outbreak has already negatively affected their household income. And 45% of these consumers say, at the very least, their work hours have been reduced.”

Further, consumers expect to be behind, on average, $900 on payments they owe, according to the survey.

In early March, other data sets pointed to a more optimistic outlook. While consumers paniced, hoarding toilet paper and disinfecting wipes, “there [was] little evidence that the panic [was] due to the escalating downturn in business activity and mounting job losses,” according to Richard Curtin, chief economist at the University of Michigan’s Survey of Consumer Sentiment.

Yet, consumer sentiment still dipped due to the spreading coronavirus and the steep declines in stock prices, Curtin said. However, the initial response to the pandemic had not at the time generated the type of economic panic among consumers that was present in the run-up to the Great Recession. Simply put, consumers were more concerned about their physical health than their financial health.

Buyer’s remorse

In less than 30 days, however, that all changed. On March 27, the Survey of Consumer Sentiment index dropped 9.5% year over year to 89.1, the fourth-largest single-month decline in 50 years, according to the most recent survey results from the University of Michigan. The three other largest declines in the index were related to Hurricane Katrina and the recessions of 1980 and 2008.

“The 1980 and 2008 collapses in consumer confidence sparked long and deep recessions,” Curtin said.

Data suggests that further declines in confidence are likely to occur in the coming months as the spread of the virus accelerates. Further, it will be difficult to stabilize consumer confidence as unemployment rates increase and household incomes fall.

“Mitigating the negative impacts on health and finances may curb rising pessimism, but it will not produce optimism,” Curtin said. “There is no silver bullet that could end the pandemic as suddenly as the military victory that ended the Gulf War,” he explained, noting that “economic policies must quickly adapt to a new era that will reorder the spending and saving priorities of consumers,” in order to avoid an extended recession.

Prior to the COVID-19 outbreak, there were rising concerns around consumer affordability in the industry, particularly in the subprime tier. A prolonged recession could exacerbate that problem.

Auto loans are the third-largest category of consumer debt, behind only mortgages and student loans, according to a February letter submitted to the Consumer Financial Protection Bureau by lawmakers. By yearend 2019, there were more than 115 million auto loan accounts open totalling $1.33 trillion. Now, that mounting debt could prove problematic in a recession when it comes to consumers paying their auto loans.

For subprime lender Gateway Financial Services, consumers prioritize paying off other debts before car loans. “Affordability is key,” said President Kristin Karwat during an industry conference earlier this year. “But when you are in the subprime space, you see consumers are more willing to pay their cell phone bill before their car loan.”

Pile on the negative impacts from the coronavirus pandemic, and an “increased pressure on the affordability crunch” is unavoidable, said TransUnion’s Merchant. “We forecast auto originations will slow significantly due to factors such as a rise in unemployment and reduced work hours for many consumers, along with reduced dealership hours.” At last count, TransUnion’s Industry Insights Report noted third-quarter auto loan originations totaled 7.3 million units, flat year over year.

Lease options are typically a more attractive option for consumers in a recessionary economy. Yet, the impacts of COVID-19 outbreak and containment efforts have made a “significant” impact on consumers desire to spend, said Scot Hall, executive vice president of operations at Swapalease.com.

“Part of this stems from the fear of the economic unknown, and part of this is as a result of their desire to refrain from shopping at stores,” Hall said.

Though the lease retailer’s website is still seeing some traffic from consumers, this activity reflects consumers looking to escape a lease they feel they can no longer afford, Hall noted. “While no one has a crystal ball, the severity of the current situation most likely depends on whether this lasts six to eight weeks, or if it persists three to four months in length,” he said.

Tags: Black BookBureau of Consumer Financial ProtectionConsumer sentimentCoronavirusDepartment of Laborfeaturegateway financial servicesSales & MarketingTransUnionUniversity of Michigan
Previous Post

Toyota lays off 5,000 temps, postpones North American reopening

Next Post

Santander and Vroom ink multiyear deal  

Related Posts

The Tesla Gigafactory in Shanghai, China, on Friday, Dec. 25, 2020.
Risk Management

Tesla braces for delivery slump on china plant shutdown

July 1, 2022
The painted bodywork of an Aston Martin DB11 luxury automobile is moved by a robot through the Aston Martin Lagonda Ltd.'s manufacturing and assembly plant in Gaydon, U.K., on Tuesday, June 6, 2017. Aston Martin may consider an initial public offering as early as next year as the British maker of James Bond’s cars seeks to capitalize on the success of Ferrari NV’s listing to lure investors, people familiar with the matter said.
Risk Management

Aston Martin assuages funding concerns with assurance on orders

June 30, 2022
New-vehicle SAAR projections for 2022 revised to 14.4M units  
Risk Management

New-vehicle SAAR projections for 2022 revised to 14.4M units  

June 29, 2022
Next Post
Santander Leans on Chrysler Volume to Offset Runoff

Santander and Vroom ink multiyear deal  

INNOVATION & TECHNOLOGY

The Tesla Gigafactory in Austin, Texas, US, on Thursday, June 23, 2022. Elon Musk said Tesla Inc.'s new plants in Germany and Texas are losing "billions of dollars" as the electric-vehicle maker tries to ramp up production.

Electric vehicle jobs grew 26% YoY in 2021

July 1, 2022
Speed Leasing Hits $10 Million in Originations

2022 Powersports Finance Summit agenda is live, call for speakers open

June 28, 2022

RISK MANAGEMENT

The Tesla Gigafactory in Shanghai, China, on Friday, Dec. 25, 2020.

Tesla braces for delivery slump on china plant shutdown

July 1, 2022
The painted bodywork of an Aston Martin DB11 luxury automobile is moved by a robot through the Aston Martin Lagonda Ltd.'s manufacturing and assembly plant in Gaydon, U.K., on Tuesday, June 6, 2017. Aston Martin may consider an initial public offering as early as next year as the British maker of James Bond’s cars seeks to capitalize on the success of Ferrari NV’s listing to lure investors, people familiar with the matter said.

Aston Martin assuages funding concerns with assurance on orders

June 30, 2022

SPONSORED

Your SaaS, Covered: Risk Decisioning through Economic Uncertainty

Your SaaS, Covered: Risk Decisioning through Economic Uncertainty

June 8, 2022
Drive a better consumer experience in auto financing with instant decisioning

Drive a better consumer experience in auto financing with instant decisioning

May 9, 2022
PenFed auto marketing campaign promotes its open charter

Examining effective specialty recovery processes in auto finance

April 12, 2021

About

ABOUT US

PRIVACY TERMS

ADA COMPLIANCE

CODE OF JOURNALISM ETHICS

Manage Cookie Consent

Contact Us

ADVERTISE

HELP CENTER

EMAIL SIGN UP 

Follow Us

twitter twitter linkedin podcast

©2022 Royal Media & Auto Finance News

No Result
View All Result
  • Home
  • News
    • All News
    • Exec of the Year
    • Innovation & Technology
    • Management
    • Compliance & Regs
    • Risk Management
    • Capital & Funding
    • Powersports
  • Events
    • DEMOvation Challenge 2021
    • Auto Finance Risk Summit
    • Auto Finance Summit
    • Auto Finance Innovation Summit
  • Excellence
    • Best Practices
    • Topics
      • Compliance
      • Customer Experience
      • Technology
    • White Papers
    • Glossary
  • Magazine
    • Latest
    • Archives
  • Podcast
  • Data
  • +PLUS
  • SUBSCRIBE
  • Log In / Account

© 2022 Royal Media

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Powered By MemberPress WooCommerce Plus Integration
THIS WEBSITE USES COOKIES

We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “I CONSENT”, you consent to the use of ALL the cookies.

Cookie settingsI CONSENT

Review our Cookie Policies
.
Manage Cookie Consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
34f6831605sessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
a64cedc0bfsessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
CookieConsentPolicy1 yearUsed to apply end-user cookie consent preferences set by our client-side utility.
cookielawinfo-checkbox-advertisement1 yearSet by the GDPR Cookie Consent plugin, this cookie is used to record the user consent for the cookies in the "Advertisement" category .
cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
crmcsrsessionGeneral purpose platform session cookie, used by sites written in JSP. Usually used to maintain an anonymous user session by the server.
JSESSIONIDsessionThe JSESSIONID cookie is used by New Relic to store a session identifier so that New Relic can monitor session counts for an application.
LS_CSRF_TOKENsessionCloudflare sets this cookie to track users’ activities across multiple websites. It expires once the browser is closed.
LSKey-c$CookieConsentPolicy1 yearUsed to apply end-user cookie consent preferences set by our client-side utility.
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
CookieDurationDescription
__cf_bm30 minutesThis cookie, set by Cloudflare, is used to support Cloudflare Bot Management.
_zcsr_tmpsessionZoho sets this cookie for the login function on the website.
663a60c55dsessionThis cookie is related to Zoho (Customer Service) Chatbox
e188bc05fesessionThis cookie is set in relation to Zoho Campaigns
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
CookieDurationDescription
_ga2 yearsThe _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
_gid1 dayInstalled by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
CONSENT2 yearsYouTube sets this cookie via embedded youtube-videos and registers anonymous statistical data.
vuid2 yearsVimeo installs this cookie to collect tracking information by setting a unique ID to embed videos to the website.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
CookieDurationDescription
__Host-GAPS2 yearsThis cookie allows the website to identify a user and provide enhanced functionality and personalisation.
_dc_gtm_UA-1038974-31 minuteUsed to help identify the visitors by either age, gender, or interests by DoubleClick - Google Tag Manager.
_fbp3 monthsThis cookie is set by Facebook to display advertisements when either on Facebook or on a digital platform powered by Facebook advertising, after visiting the website.
fr3 monthsFacebook sets this cookie to show relevant advertisements to users by tracking user behaviour across the web, on sites that have Facebook pixel or Facebook social plugin.
test_cookie15 minutesThe test_cookie is set by doubleclick.net and is used to determine if the user's browser supports cookies.
VISITOR_INFO1_LIVE5 months 27 daysA cookie set by YouTube to measure bandwidth that determines whether the user gets the new or old player interface.
YSCsessionYSC cookie is set by Youtube and is used to track the views of embedded videos on Youtube pages.
yt-remote-connected-devicesneverYouTube sets this cookie to store the video preferences of the user using embedded YouTube video.
yt-remote-device-idneverYouTube sets this cookie to store the video preferences of the user using embedded YouTube video.
yt.innertube::nextIdneverThis cookie, set by YouTube, registers a unique ID to store data on what videos from YouTube the user has seen.
yt.innertube::requestsneverThis cookie, set by YouTube, registers a unique ID to store data on what videos from YouTube the user has seen.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
CookieDurationDescription
caf_ipaddrsessionNo description available.
citysessionNo description available.
countrysessionNo description available.
gnt_eidsessionNo description available.
gnt_eu6 hoursNo description
iamcsrsessionZoho (Customer Support) sets this cookie and is used for tracking visitors (for performance purposes)
systemsessionNo description available.
traffic_targetsessionNo description available.
Save & Accept
Powered by CookieYes Logo
Go to mobile version