Longer loans are “ubiquitous,” new vehicle sales are forecast to rise, and lease maturities are growing significantly. That’s the take on the new vehicle market from Joseph Derkos, director consulting & analytics, Power Information Network (PIN), who spoke at the Standard & Poor’s Auto Industry Hot Topics conference yesterday.
As average transaction prices on vehicles climb ever higher, consumers have increasingly opted for longer-term auto loans and leasing, Derkos said. Auto loans with terms of 72 months or higher have risen to 34% year to date, up from 23% in 2010, according to information provided by PIN, a division of J.D. Power. The percentage of cars leased so far this year has also grown to 28% of cars sold, from 19% in 2010.
Leasing, in fact, has become so popular post-recession, that 3.1 million leases are expected to mature in 2016, the highest volume since 2.4 million cars came off lease in 2010, according to PIN.
The auto industry has experienced continued growth and recovery since the recession, with the seasonally adjusted annual rate (SAAR) growing in record numbers, and is poised to end 2015 at 17.2 million new vehicles sold, up from 16.4 million in 2014. However, that growth is expected to slow in 2016, with only 17.5 million new vehicles predicted to sell in 2016.
In other words, the party can’t last forever, Derkos said.