Near- and Non-Prime Consumers Face Shrinking Access to Automotive Financing in 2023, Open Lending Research Finds
13 Dezembro 2023 - 10:00AM
Business Wire
Lending enablement provider shares
first-in-series quarterly data report on automotive lending trends
in near- and non-prime credit segments
Open Lending Corporation (NASDAQ: LPRO) (“Open Lending” or the
“Company”), an industry trailblazer in automotive lending
enablement and risk analytics solutions for financial institutions,
today released its first Near- and Non-Prime Consumer Update, a
quarterly proprietary data report on automotive lending trends in
the near- and non-prime credit segments.
Using data on new and used vehicle loan originations, interest
rates, sales and more, the report illustrates how current
macroeconomic and automotive market trends shape vehicle
accessibility for consumers with credit scores below 699. These
trends provide critical insights for automotive lenders on how to
serve near- and non-prime borrowers while managing risk and
exceeding ROA targets.
“Between high interest rates and increased vehicle prices, car
ownership is out of reach for many underserved but qualified
consumers today — an obstacle that makes it difficult to build a
better life. For automotive lenders, this is an opportunity to
engage near- and non-prime borrowers and start long-term, mutually
beneficial relationships,” said Matt Roe, Chief Revenue Officer of
Open Lending. “At Open Lending, we’ve been keeping a pulse on this
market for over twenty years and are excited to start sharing
quarterly insights that automotive lenders can use to drive vehicle
accessibility with AI-powered decisioning and risk analysis while
building resilient portfolios.”
Key findings from the report include:
- Near- and non-prime consumers face diminishing access to
automotive financing. In the third quarter of 2023, used car
originations for near- and non-prime borrowers fell 33%
year-over-year. Comparatively, used car originations for prime
borrowers fell 22% year-over-year. Additionally, the Federal
Reserve’s rate increases have disproportionately impacted near-and
non-prime borrowers. By the second quarter of 2023, near- and
non-prime registrations decreased by 7,000 for every basis point
increase in the interest rate. Prime registrations, on the other
hand, continued to rise steadily despite the rate increases.
- Among near- and non-prime consumers, Chevrolet is the top
choice for new car purchases, but Ford stands out as a leader in
the used car market. Understanding the make and model
preferences of near- and non-prime consumers is critical in making
informed lending decisions, managing risk, and remaining
competitive in an increasingly crowded market. In the second
quarter of 2023, Chevrolet ranked first in new car purchases by
near- and non-prime consumers. But Ford was a formidable opponent
in the used-car market, where the two automakers tied for most used
cars sold in the second quarter of 2023. The data indicates that
Chevrolet and Ford have appealed to the near- and non-prime market,
more so than their competing OEMs, and are planting the seeds for
customer loyalty in this segment.
- Electric vehicle (“EV”) financing lags dramatically among
near- and non-prime consumers. While cost is the primary reason
near- and non-prime borrowers often don’t consider EVs, the lack of
charging infrastructure also contributes to inaccessibility.
Low-income communities have far fewer total chargers per capita,
while high-income communities have the most. While the “charging
deserts” that exist in low-income neighborhoods need to be
addressed, it is important for automotive lenders and dealers to
keep an eye on EV sales and data in this segment, as tailoring EV
financing to these customers could drive a more diverse borrower
base.
Read the full report and sign up here to receive quarterly Near-
and Non-Prime Consumer Updates from Open Lending.
About Open Lending
Open Lending (NASDAQ: LPRO) provides loan analytics, risk-based
pricing, risk modeling, and default insurance to auto lenders
throughout the United States. For over 20 years we have been
empowering financial institutions to create profitable auto loan
portfolios with less risk and more reward. For more information,
please visit www.openlending.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20231213597927/en/
Alison Smith for Open Lending openlending@ink-co.com Investor
Relations Inquiries openlending@icrinc.com
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