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Despite the finance market stabilizing over recent months, elevated interest rates and high vehicle prices are continuing to influence consumers’ purchasing decisions – resulting in market share fluctuation.
In the third quarter of 2024, captives continued to lead the new vehicle market share at 58.67%, a slight increase from 58.36% last year, according to Experian’s latest State of the Automotive Finance Market Report. They were followed by banks at 22.65%, from 21.98% in Q3 2023 and credit unions at 10.07%, from 13.11% the year prior.
While credit unions may not capture a significant portion of the new vehicle market, they continue to play a central role in the used space.
In Q3 2024, credit unions led the used market at 28.77%, though slightly down from 30.30% in Q3 2023. Banks followed closely at 28.09%, up from 26.65% last year, while captives declined from 9.43% to 8.18% year-over-year.
With banks growing in market share and captives increasingly offering incentives, credit unions need to refocus efforts to capitalize on consumer demand in the used market as more prime consumers are moving in that direction.
Prime-Plus Consumers Shift Into the Used Vehicle Space
One of the more notable trends in the third quarter of 2024 was a slight uptick in prime and super prime borrowers opting for used financing. In fact, prime and super prime were the only risk tiers that experienced growth in used financing. Nearly 66% of prime borrowers opted for used financing in Q3 2024, up from 65.47%, while 48.92% of super prime borrowers chose used financing, up from 47.96% of the same period.
The rise of prime borrowers in the used vehicle segment is a positive sign for credit unions as that is typically their target audience. Leveraging this shift can allow them to reach new members and gain market share.
Overall Vehicle Finance Market Trends
The vehicle finance market continues to find stability year-after-year, signaling a return to more consistent trends even with recent market fluctuations and consumer preferences shifting.
Data found that the average interest rate for a new vehicle declined in Q3 2024 to 6.61%, from 7.09% in Q3 2023. However, the average loan amount was $736 more than this time last year, coming in at $41,068 this quarter and resulting in the average monthly payment rising from $732 to $737 during the same period.
For used financing, the trends appeared to be reversed, with the average loan amount declining $1,195 from last year to reach $26,091 this quarter and the average monthly payment dropping from $538 to $520 in the same time frame. However, the average interest rate slightly grew from 11.56% in Q3 2023 to 11.74% in Q3 2024.
While the used vehicle market is stabilizing, prices are still relatively higher than pre-pandemic levels, and credit unions’ continued resilience throughout the years underscores their ability to provide consumers with feasible financing solutions – further solidifying their role in the used vehicle space.
Analyzing the most current data allows them to plan strategically as they reach consumers to a greater extent while offering competitive rates and loan terms to stay ahead of the market.
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