Auto lenders expect 2024 to be a year of growth driven by technology updates and loosening credit standards. Powersports sales and financing performance are mixed.
AI-based subprime lender Lendbuzz originated more than $1.1 billion in auto loans in 2023, a 50% year-over-year jump, and believes originations will again increase 50% YoY in 2024 driven by geographic expansion and widened standards.
CUDL is expecting to launch a universal credit application this year to allow dealers to access an application that would be accepted by all credit unions within the fintech’s credit union lending network.
On the powersports front, National Powersports Auctions Chief Executive Jim Woodruff projects motorcycle sales to be flat in 2024. In addition, off-road motorcycle finance penetration reached 59% in 2023, according to data from the Motorcycle Industry Council.
Harley-Davidson Financial Services’ originations dipped 1% YoY in the fourth quarter while retail finance receivables rose 1.2% YoY to $6.8 billion.
In this episode of the “Weekly Wrap,” Auto Finance News Deputy Editor Amanda Harris and Senior Associate Editor Riley Wolfbauer discuss top news for the week ended Feb. 9, and what’s on the docket for the coming week.
Early-bird registration is now available for the second annual Auto Finance Summit East 2024, May 1-3 in Nashville, Tenn., which gathers lenders, dealers and fintech innovators in an event designed to bring the power of technology to a cross-section of industry players. Early-bird pricing ends March 15. Visit AutoFinance.Live to learn more.
Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.
Hello everyone and welcome to the road map from auto Finance News since 1996 and nations leading news in an automotive lending and leasing.
It is Monday, February 12th and I’m Amanda here is joined by Riley Wolfbauer.
This is our weekly wrap on what happened auto finance for the weekend.
In February 9th 2024, an economic news consumer prices excluding food and energy items rose at a 3.3% annualized rate. In the final three months of 2023, about in line with levels at the end of last year, stabilizing price pressures provide more evidence that inflation is moderating and the Federal Reserve could soon begin cutting rates and auto finance news. Subprime lender FinBe USA, formerly Credito Real USA has launched lending programs for franchised dealers on the heels of its integration with Bepensa Capital. The lender is bringing its program, which provides financing for Hispanic consumers, with or without an individual taxpayer identification number, to franchise dealers. In addition to a traditional subprime product thingy works with between 100 and 200 franchise dealers across 33 states. Ford Credit also reported Q4 and full year earnings last week. The captives outstandings grew 6.2% year over year to 82.3 billion in Q4 and the lenders full year earnings before taxes fell to 1.3 billion, compared with about 2.4 billion a year ago, largely due to elevated borrowing costs, higher credit losses and normalizing auction values. Auction values fell 8.4% to an average $27,775, while lease return rates increased to 41% from 29% in Q3 and 18%.
In Q 42022, the National Automobile Dealers Association show in Las Vegas also highlighted several key themes, including growth and technology upgrades. I spoke with AI based subprime lender Lendbuzz and learned the financier originated more than 1.1 billion in auto loans in 2023, a 50% year over year jump. Lendbuzz does expect originations will again increase about 50% year over year in 2024, driven by geographic expansion and the lenders once again loosening standards following tightening last year. CUDL two is expecting to launch a Universal Credit application this year to allow dealers to access an application that would be expected accepted by all credit unions within the Fintech Credit unions Lending network CUDL also is eyeing an E contracting solution this year following several technology initiatives last year. … CUDL’s Network funded $46.7 billion in auto loans for 2023, a decline from 59 billion in 2022.
Amid the liquidity challenges and credit tightening, cuddle doesn’t expect financing volume to pick up this year as standards once again loosen in the powersports Harley Davidson Financial Services reported Q4 earnings and saw 1% dip in originations year over year. Retail finance receivables rose 1.2% year over year to 6.8 billion annualized retail credit losses increased 110 basis points to 3% for their full year and the lenders allowance for loan losses was flat at 5.4% in Q4, but HDFS did increase is provision for credit losses during the quarter. The manufacturer also introduced incentives to drive motorcycle sales as inventory set at 49,000 units worldwide are from 32,000 a year prior and Harley Davidson Electric motorcycle subsidiary LiveWire sold 514 units in Q4 and this is compared with about 69 units a year earlier. Riley also attended AIM Expo in Las Vegas last week and is here to share several updates on the powersports market.
So Riley, take it away.Riley Wolfbauer 4:12
Yeah. So while I was at the show, I sat in on a couple sessions and talked.
I spoke with some dealers just walking around the floor as they were looking at inventory, so I’ll just run down a few of those takeaways from the event.
So one thing to start is I spoke with chief executive of National Powersport Auctions.
Jim Woodruff, I spoke with him about his sales outlook in 2024 and he he’s pretty positive about it. He expects that motorcycle sales will should stay about flat from 2023 to 2024. Sales in 2023 came in at 660,000 units, which was up 2% year over year. He does expect there to be a little bit of that consumer hesitancy as there is still some consumer concern over the economy in general, high interest rates and just being able to have that discretionary spending for powersports units. Another takeaway I spoke with Scott Yarbrough on uh vehicle valuations, and he generally expects unit prices to normalize further going into 2024 and get back to the normal seasonality trends of values declining and the cold weather months and values increasing in that spring and summertime selling season because over the last couple of years up to now, values continue to rise. The only impact that seasonality really had over the last couple of years is in those cold months, although values rose, they didn’t rise at that same rate as it would or as they did in the spring and summer selling seasons. So seasonality was always there, but it wasn’t the same type of seasonality as when we would see prices fall a little bit of finance color on the off road motorcycle front finance penetration came in at 59% for off road adventure motorcycles in 2023.
There were about 184,000 off road motorcycles sold during the year. So pretty decent rate of finance penetration. I do not have a number to compare to. See how it changed from 2022, but the the general outlook on finance is that it it has been pretty solid and then just a little bit of rundown of speaking with dealers on the floor. Uh, they’re seeing the same thing that we’ve kind of been covering over the last few months, that there is a large amount of 2022 inventory still sitting on their lots and they are taking a little bit of loss on that inventory because now as the 2024 model year comes in, some consumers who are looking for a new unit, they’re opting for that 2024. But on the other hand, one there are consumers coming in looking for a newer unit. There are some that they like. The lower price on the 2022? Umm, so they will elect for that. So that’s kind of how dealers are moving that old inventory. It is putting pressure on their margins as they’re having this inventory build up for the higher floor plan costs, but the general outlook is that there will be more manufacturers discounting on 2022 and 2023 units to move that and make way for 2024 to get caught up on a little bit better of a selling cadence that we used to see in the market before COVID screwed up all the supply chain and back orders and the influx of consumer demand as well. So that’s pretty much the the high level takeaways from the event.
Amanda Harris 7:58
And you got to ride on an ebike, right?
Riley Wolfbauer 8:00
Yeah. For the first time.
Amanda Harris 8:03
Pretty cool. Pretty cool. Yeah, definitely great. Well, we’ll have some more powersports coverage coming up this week as well as some more coverage on different lenders and what they’re doing in the industry. So make sure to stay tuned for the rest of our covers this week, but that will do it for today’s episode. Thanks for joining us on the roadmap and be sure to follow us on X, formerly known as Twitter, and LinkedIn. We will see you online at autofinance news.net and here next time.