TD Auto Finance shifted its new-to-used mix in favor of used vehicles last year amid a “deteriorating” new-car market, President and Chief Executive Andrew Stuart told Auto Finance News.
Year-to-date, TD Auto is financing 56% used and 44% new, on a unit basis — a “significant change” from the lender’s previous mix of about 40% used and 60% new last year, Stuart said. As recently as May, the company reported a 50/50 split to AFN.
“The shift has occurred exactly as planned,” he said. “There were a couple of reasons for doing this. Obviously, we see a deterioration in the overall new-car market. We’ve had so many years of growth, and I think most economists watching the industry think that 2017 is going to wind up with a reduction in new-car sales, as compared to 2016. We think there is opportunity in the used-car space. We saw this cycle coming, we saw an increase in off-lease vehicles and the opportunity that might present, so we are focusing the business on used.”
The shift to a higher concentration of used financing is mostly complete for TD Auto, Stuart said. “We are quite comfortable with the margins,” adding that TD Auto might move further into the used market with a 60/40 mix.
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