Experian (EXPN) 49th Annual Automotive Symposium summary

Market trends and retail finance

• Retail auto financing rose nearly 2% year-over-year, with about 17 million transactions through August, and cash transactions in new and used vehicles are at all-time highs, especially for used cars.

• Leasing remains below historical levels, with off-lease returns at a trough in 2023 and only partial recovery expected by 2027, leading to scarcity of late-model vehicles and pushing consumers toward older cars.

• EVs are increasingly present in off-lease returns, with about 25% of Q3 leases being EVs, and used EV purchases are projected to reach 500,000 for the year, with Tesla dominating the segment.

• Banks have become the largest auto lenders, now holding nearly 29% market share, driven by aggressive expansion and new OEM relationships, while credit unions' share has declined.

• Average new loan amounts have climbed to the mid-$42,000s, with $1,000+ monthly payments now common (nearly 18% of new loans), and loan terms extending up to 120 months for prime borrowers.

Consumer credit and affordability

• Consumer credit scores have steadily improved, with new car buyers mostly in the prime segment, while subprime participation remains below pre-COVID levels due to affordability constraints.

• Higher-earning households now represent a growing share of both new and used car buyers, with those earning over $200,000 approaching 20% of new car purchases.

• Millennials are rapidly increasing their share of the market, though they also account for a rising portion of delinquencies.

• Used car loans have risen to over $27,000, with average payments in the $500–$550 range, and longer loan terms (67–72 months) are now standard.

• Affordability issues are pushing more consumers into older vehicles, with 9+ year-old cars now making up nearly 44% of the used market, and half of these buyers are prime credit consumers.

Delinquency, risk, and fraud

• Outstanding auto loan balances reached $1.6 trillion in Q3, with subprime balances growing and 60-day delinquency rates at a record 0.91% of balances.

• Delinquency is cyclical and currently concentrated in the finance company (Finco) segment, with roll rates increasing and more consumers moving to higher delinquency statuses.

• Fraud is a growing concern, with $4 billion in auto loan losses attributed to fraud last year and more tools being deployed to combat it at both lender and dealer levels.

• Despite elevated delinquency, severity is down due to high auction values and lower loan-to-value ratios, and recent loan vintages are performing better than those from 2021–2022.

• Leasing is unlikely to return to previous highs, and ongoing tariff and delivery charge increases are expected to further impact affordability and market dynamics.