Captive total auto finance share surpasses 30%

Captives continued to hold the largest share of the overall auto finance market in the second quarter, driven by incentives, while credit union share held strong in the used-vehicle market. Banks and credit unions lost share across loans and leases during the quarter. . Captive share rose to 30.9% of the total market in Q2, up 242 basis points (bps) year over year , while bank share landed at 24.4% and credit unions held 20.2% of the market, a decline of 26 bps YoY and 313 bps YoY, respectively, according to Experian ’s state of the automotive finance market report published Sept. 5. "From the total market, captives are still doing very well,” Melinda Zabritski , head of automotive financial insights at Experian, told Auto Finance News . “Especially on the new-vehicle side; with captives running incentives, that share is going to the captives.” [caption id="attachment_58344339" align="aligncenter" width="1024"] Source/Experian[/caption] For loans specifically, banks led the market with 26.7% share, up 10 bps YoY, followed by credit unions at 23.1% of the market, down 260 bps YoY, according to Experian. [caption id="attachment_58344338" align="aligncenter" width="1024"] Source/Experian[/caption] Captives lead new, CUs lead used Captives also led the new-vehicle financing market with a share of 60.6% in Q2 compared with 57.3% a year prior, while bank share increased 115 bps YoY to 21.3% and credit union share declined to 10.3% compared with 14.4% in Q2 2023, according to Experian. [caption id="attachment_58344336" align="aligncenter" width="1024"] Source/Experian[/caption] Credit unions held the largest share of used-car loans with 27.6% of the market, a dip of 183 bps YoY, followed by banks at 26.8%, up 62 bps YoY. [caption id="attachment_58344337" align="aligncenter" width="1024"] Source/Experian[/caption] "A lot of the share shifting in the credit union space is a strategic rebalancing,” Zabritski said. “With mortgage still low on the origination front, their portfolios are increasingly being made up of auto.” Bank share is partly driven by private-label relationships , Zabritski said. “With the bank share, you have some of the bank relationships, like with Chase doing the financing for Subaru and [ Jaguar Land Rover ], so if they're running incentives that can help bring that bank share up,” she said. Finance company share is also driven by nuanced relationships in the market, Zabritski said. “ Southeast Toyota [Finance] gets classified as a finance company, so if Toyota is running incentives in the southeast, the share is going to that finance company,” she said. “You also have the relationship with some of the finance companies and Tesla , so that pushes some of that share increase as well.” Prime-plus share nears 70% Across all loans and leases as of Q2, the combined share of prime and super prime sat at 69.4%, up from 68.8% a year prior, according to Experian. Deep subprime continued to decline , landing at 1.8% in Q2 compared with 1.9% in Q2 2023 and 2.1% in Q2 2022. Leasing and incentives drive up prime share, Zabritski said. “With new-vehicle sales, you're automatically looking at a very prime consumer, and then when it comes to leasing, that's an even more prime consumer,” she said. “When you look at incentive programs, they are typically high-credit-scoring consumers.” The average monthly payment for a new-car loan increased by $1 YoY to $734, with the average term in line with a year ago at 68.5 months and the average amount financed at $40,927, according to Experian. The average rate for a new-car loan was 6.84% in Q2 compared with 6.78% a year prior. . Incentives drove down rates on shorter-term loans; the average new-vehicle loan rate for a term of one to 48 months was 3.87% in Q2 compared with 6.86% for a 61- to 72-month term and 9.22% for terms of 85-plus months. On the used-car side, the average payment was $525 in Q2 compared with $536 a year prior, with an average amount financed of $26,248, down from $27,316 in Q2 2023, according to Experian. . The average rate rose 57 bps YoY to 12%, while the average used loan term inched up to 67.41 months from 67.38 months in Q2 2023. “The [financed] amount coming down as much as it did, and the rates going up slightly, and then increase on the term, helped bring the payment down,” Zabritski said, noting that used-car payments on a sequential basis have been “stable.” -- Additional reporting by Ashley Savage Auto Finance Summit, the premier industry event for auto lending and leasing, returns Oct. 7-9 at Wynn Las Vegas. . To learn more about the 2024 event and register, visit www. .AutoFinanceSummit.com.

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