The Auto Finance Roadmap

Used-vehicle prices rise, EV financing share up

The Manheim Used-Vehicle Value Index ticked up 0.2% YoY and 1.3% month over month in November to 205.4. High car prices have contributed to affordability pressures for consumers, but incentives are helping drive sales. The latest edition of the Beige Book, citing data collected on or before Nov. 22 by the Federal Reserve, highlights areas of the country where sales activity has rebounded with incentives, while inventory continues to build. EV sales also grew in November, with nearly every major ...

Incentives pick up, dealers eye LTV requirements

Affordability, credit performance, leasing and digital innovation have been top of mind for auto lenders in 2024. Car shoppers saw some relief over the holiday weekend as Black Friday deals offered low interest rates and cash-back incentives. Lenders are also focused on sustainable growth. U.S. Bank is investing in digital capabilities across auto, recreational vehicle and marine product financing. It aims to support growth as rates decline. Meanwhile, a rise in negative equity is adding to chal...

Weekly Wrap discussion on nonprime consumers, improvements on affordability

Near prime and nonprime consumers are seeing some relief from affordability challenges in the automotive industry following rate cuts by the Federal Reserve but remain cautious about elevated monthly payments. New-vehicle registrations among near prime and nonprime consumers increased 1% year over year and 7% month over month to 161,435 in the second quarter, highlighting an increase in supply and incentives for consumers, according to a report from automation fintech Open Lending published Nov....

Podcast: Synthetic fraud rises in powersports, auto

Auto originations have picked up industrywide even as average payments remain elevated, while manufacturers are increasing incentives to move inventory. Originations totaled 6.4 million contracts in the second quarter, up 0.7% year over year, according to the latest data from TransUnion. The return of leasing and an uptick in incentives are helping address affordability concerns and drive sales. As of October, the average transaction price (ATP) of a new vehicle landed at $48,623, up 1.7% YoY, a...

Podcast: Discussion on automakers' October sales

Sales at most major automakers increased in October, driven in part by an increase in EV sales. Overall sales increased for American Honda , Ford Motor Co ., Hyundai Motor America , Mazda North America and Subaru of America in October. Volvo, however, saw U.S. sales fall 17% year over year to 9,360 vehicles. American Honda’s EV sales rose 31.1% YoY in October . Honda joined Hyundai Motor America and Volvo in reporting EV sales increases . Ford Motor Co., however, saw EV sales dip 8.3% YoY while ...

Podcast: Discussion on Q3 earnings, auto lease ABS issuance

More auto lenders announced year-over-year origination growth last week in their third-quarter earnings reports. Carvana posted a 35.5% YoY increase in originations in Q3 as retail sales jumped 34.2% YoY and 7.1% quarter over quarter to 108,651 units. The increase in originations comes as the financier and retailer saw “record performance in virtually every key financial measure,” Carvana Chief Executive Ernie Garcia said during the company’s Oct. 30 earnings call. Subprime lender Credit Accepta...

Podcast: Q3 captive originations are mixed

Q3 bank earnings offer mixed results

Bank earnings last week highlighted mixed results as some institutions saw an uptick in auto originations while others’ portfolios shrank. Bank of America’s auto originations rose 16.2% year over year to $7.9 billion in the third quarter, while U.S. Bank’s indirect auto loan and lease originations jumped 65% YoY to $1.8 billion. Huntington Bank’s auto originations rose 71.4% YoY to $2.4 billion. Ally Financial’s originations, however, declined 11.3% YoY to $9.4 billion in Q3. Other regional bank...

Q3 earnings season kicks off, Octane enters marine market

Chase Auto and Wells Fargo kicked off the Q3 earnings season last week, with both lenders reporting flat or lower origination volume on a year-over-year basis. Wells Fargo’s auto originations hit $4.1 billion in Q3 , up 11% sequentially and unchanged compared with Q3 2023, according to the bank’s earnings supplement published Oct. 11. The bank's auto loans 30-plus days delinquent remained flat sequentially at 2.3%, down from 2.6% during the same period last year. Chase Auto, however, saw origina...

Auto credit performance worsens, prompts provision spike

High rates and rising consumer debt levels still drive a worsening auto loan landscape. Delinquencies and losses rose across prime and nonprime securitized auto loans in Kroll Bond Rating Agency’s August auto loan asset-backed securitization index published Sept. 23. Prime recovery rates increased while nonprime recoveries declined. CarMax Auto Finance (CAF) also increased its provision for credit losses by 25.4% to $112.6 million for the fiscal second quarter of 2025, ended Aug. 31, according t...

Podcast: Unlocking EV potential through leases, used market

Leasing an EV or buying a used one offers a more affordable option in today's challenging market, but many consumers remain hesitant. Nearly 8.5% of new purchases were EVs, and more than 46% of those are leased , according to Experian ’s second-quarter state of the auto market report, published on Sept. 5. Part of the drive in EV leasing is affordability. The average payment difference between a lease and a loan across all EV models is $88 per month, according to Experian. EV lease deals often q...

Used-car demand strong amid tight credit, rising DQs

Demand for used vehicles is strong as supply remains limited and affordability is top of mind for consumers. The used-car turnover rate rose 8.4% year over year in August to 43 days for franchise dealers, signifying that inventory is being sold quickly. As consumers look for more affordable cars, inflationary pressures weigh on credit performance. Auto loans 30-plus days delinquent increased 16 basis points YoY to 2.88% in the second quarter. Credit access tightened in August, with the Dealertra...

Automakers pull back on DEI amid social shifts

Several companies in the automotive and powersports industries made changes to their diversity, equity and inclusion initiatives following social pressure to scale back targeted DEI strategies. Ford Motor Co. joined Harley-Davidson, Tractor Supply, John Deere and Polaris in publicly announcing changes to their DEI programs, including in how the companies define and measure DEI at the organizations. Still, several auto lenders are maintaining their inclusion-based DEI initiatives. Meanwhile, mark...

Regulators eye AI, aftermarket sales practices

Regulators are scrutinizing practices surrounding the use of artificial intelligence and machine learning as well as aftermarket product sales, prompting auto lenders to review processes for themselves and their dealer partners. The Consumer Financial Protection Bureau this month published a letter to the U.S. Treasury making it clear that emerging AI-based technology isn’t exempt from long-standing consumer protection laws. Lenders must test and monitor the use of new technology and tools and e...

Lenders weighing benefits of force-placed insurance

Subprime lenders are weighing the risks and benefits of protecting assets through force-placed insurance as credit-challenged borrowers face continued affordability issues, while some lenders tap into “buy here, pay here” opportunities, in this episode of the Weekly Wrap.

Weekly Wrap discussion on originations, AI-driven lending

In this episode of the “Weekly Wrap,” Auto Finance News Associate Editors Ashley Savage and James Van Bramer discuss trends in financier earnings, AI-based lending updates, finance and insurance revenue and the powersports market for the week ended Aug. 9.

Weekly Wrap discussion on Q2 earnings, e-contracting

In this episode of the “Weekly Wrap,” Auto Finance News Associate Editors Ashley Savage and James Van Bramer discuss trends in financier earnings, technology, EVs and the powersports market for the week ending Aug. 2.

Weekly Wrap discussion on leasing, HOG earnings

Captives’ second-quarter earnings last week reflected portfolio growth despite affordability and incentive challenges. Leases are a key driver for dealers as consumers continue to be hesitant amid inflationary pressures, high interest rates and elevated vehicle prices. In powersports, Harley-Davidson Financial Services’ originations ticked down 4% year over year in Q2 and retail finance receivables were flat YoY at $7 billion.

Weekly Wrap discussion on leasing, earnings, sales

Second-quarter bank earnings continue to point to mixed loan production volume and a rise in leasing spurred by EVs. U.S. Bank originated $1.9 billion in Q2, up 21.5% year over year while outstandings fell 30.6% YoY to $8 billion. PNC Financial’s auto outstandings dipped 1.6% YoY to $14.8 billion, and Citizens’ auto book continued to run off. Ally Financial originated $639 million in battery EV and hybrid leases during Q2.

Weekly Wrap discussion on Q2 earnings kickoff

Second-quarter bank earnings kicked off this week and showed a continued slowdown in auto originations compared with a year ago. Chase Auto’s originations declined 10% year over year to $10.8 billion and Wells Fargo Auto’s originations decreased 22.9% YoY to $3.7 billion. Powersports sales slowed in June.

Weekly Wrap discussion on sales, incentives

June marked mixed vehicle sales and an uptick in incentives ahead of the July Fourth holiday, while the industry continues to keep an eye on impacts from cyberattacks that halted dealer operations.

Weekly Wrap discussion on rising debt, tech, compliance

Higher costs for everyday expenses such as gas, groceries and vehicle insurance have prompted many consumers to turn to credit cards, with rising expenses making it harder for consumers buried in debt to qualify for auto loans.

Discussion on retail POS lending as an opportunity for lenders

Point-of-sale financing as an alternative payment method is a growing opportunity for lenders, technology company Pagaya’s President Sanjiv Das says on this episode of “The Buzz” podcast, shared to The Roadmap. According to auto lender and Pagaya partner Ally Financial, POS financing is expected to reach a value of more than $81 billion by 2030.

Weekly Wrap discussion on CDK attacks, powersports

Car dealerships are leaning on manual processes following consecutive cyberattacks against software provider CDK Global last week. In powersports, RV and marine manufacturer Winnebago Industries’ promotional liabilities decreased 26.4% year over year as demand for RVs was sluggish during Q3.

Weekly Wrap discussion on loan production, inflationary pressures

The auto finance industry is showing slight improvements in affordability and loan production while worsening credit performance and inflationary pressures remain concerns. Auto outstandings held steady above $1.5 trillion in the first quarter, down 0.2% sequentially but up 2.4% year over year. Access to auto credit worsened for the second month in a row but improved YoY in May.

Weekly Wrap discussion on leasing, NAF Summit

Leasing is picking up in tandem with incentives while used-vehicle values decreased in May — positive signs toward improving affordability. While some measures indicate better deals and lower prices, external costs such as vehicle insurance continue to burden borrowers, especially affecting consumers with lower credit scores.

Weekly Wrap discussion on market share, powersports

Auto lenders were active in the capital markets last month as credit union issuance picked up, while market share among banks and credit unions shifted in the first quarter. In powersports, Canadian manufacturer Bombardier Recreational Products’ North American retail sales fell 5% year over year. Motorhome values, too, fell 9.4% YoY in April while towables values declined 7.2% YoY. Recreational vehicle values increased sequentially, in line with seasonal demand.

Weekly Wrap discussion on AI adoption, affordability

Optimizing efficiency, improving accuracy and customer experience, and automating credit decisions are core uses of artificial intelligence in the auto finance industry as lenders look to grow their portfolios and manage risk.

Weekly Wrap discussion on underwriting themes at AFS East 2024

Several auto lenders had to adjust their underwriting strategies in 2023 to account for worsening credit performance across loans originated in 2021 and 2022, a theme prevalent during Auto Finance Summit East 2024.

Weekly Wrap discussion on Auto Finance Summit East 2024

Gaining operational efficiencies through artificial intelligence, navigating a challenging EV market and embracing the return of leasing were top themes at Auto Finance Summit East 2024 last week in Nashville.