Consumers Shift Back to Used Vehicles as Inventory Shortages Continue

Used Vehicle Purchases Grow as Inventory Shortages Continue

According to a recent report from Experian, 61.78% of all vehicle financing in Q2 2022 was for used vehicles.

As the automotive market continues to face inventory shortages, consumers are shifting back to the used vehicle market. According to Experian’s “State of the Automotive Finance Market Report: Q2 2022,” 61.78% of all vehicle financing was for used vehicles, up from 58.48% in Q2 2021.

The shift back to used vehicles was present across all credit tiers, though near prime saw the largest increase, going from 72.3% in Q2 2021 to 77.69% in Q2 2022, according to Experian. Subprime consumers saw the percentage of used vehicle loans grow from 86.28% in Q2 2021 to 89.29% in Q2 2022, while prime consumers saw growth from 61.02% to 63.59% in the same time frame.

“Between the inventory shortage and rising vehicle costs, consumers are looking to make the most cost-effective decision, which is often a used vehicle,” said Melinda Zabritski, Experian’s senior director of automotive financial solutions. “The benefit of higher vehicle values is that consumers are able to get more for their trade-ins, which can help offset the increased cost of their next vehicle.”

The shift to used comes amid rising average vehicle loan amounts and monthly payments for both new and used vehicles. The average new vehicle loan amount increased 13.21% year-over-year to reach $40,290 in Q2 2022, with a monthly payment of $667 compared to $582 in Q2 2021. Average used vehicle loan amounts saw a sharper increase of 18.66% year-over-year, clocking in at $28,534, with an average monthly payment of $515, an increase from $440 in Q2 2021.

Credit unions see jump in market share

As consumers financed more used vehicles, credit unions experienced significant growth. Credit unions saw a jump in overall market share, reaching 25.81% in Q1 2022, up from 18.32% in Q1 2021, coming in second only to banks (27.94%) and surpassing captive lenders (22.64%).

Credit unions achieved growth in both new and used vehicle financing, though the growth was more pronounced in the used vehicle space. Though captives still led new vehicle financing at 46.14% in Q2 2021, credit unions increased to 21.35%, up from 11.15% last year. For used vehicle financing, credit unions comprised 28.62% in Q1 2022, up from 23.49% in Q1 2021. The growth places credit unions just behind banks, which held 29.19% of used vehicle financing in Q1 2022.

“With the market dynamics we’re seeing right now, the shift in lender market share makes sense, as credit unions often offer two things that consumers are seeking: lower interest rates and longer terms,” Zabritski continued. “This helps to manage their monthly payment, which is often what consumers prioritize when looking at financing options. Understanding these trends will ensure lenders and dealers can help consumers make the most informed decisions when purchasing a vehicle.”

Additional findings for Q2 2022:

  • Leasing decreased to 19.65% of new vehicles in Q2 2022, down from 27.82% in Q2 2021;
  • The market continues to move more prime with prime (45.74%) and super prime (19.57%) comprising more than 63% of all originations in Q2 2022;
  • SUVs surpassed 60% of total financing in Q2 2022 at 60.43%, up from 58.57% in Q2 2021;
  • The average difference between a new vehicle loan and lease payment was $127 in Q2 2022; and
  • The average loan term for new vehicle loans remained flat going from 69.45 to 69.46 months from Q2 2021 to Q2 2022; average used vehicle loan terms grew from 66.14 months to 68.01 months, year-over-year.

To learn more, watch the entire State of the Automotive Finance Market: Q2 2022 webinar.

You May Also Like

360-Degree Imagery: A Picture Is Worth a Thousand Words

Captivating imagery takes auto parts sales to new heights.

A few clicks can take you anywhere these days, especially in the world of automotive parts e-commerce. Think you found the part you’re looking for? Well, you’ll want to be sure you can see it from all angles to make sure it’s the right one. You’ll also want a cornucopia of product information – title, product description, specs and fitments to name a few. Lastly, your customers might want to see what others bought when they purchased a certain product to go along with their purchase. This is the norm for buying all types of things online. 

Mobility as a Service and the Impact on the Aftermarket

MaaS stands to disrupt and transform how we think of transportation in the coming years.

mobility-as-a-service-aftermarket
Continental Presents Face Recognition Tech for Vehicles

The technology unlocks the vehicle safely and conveniently using biometric facial recognition, while a display seamlessly integrated into the B-pillar provides additional information.

Continental Presents ‘Face Authentication Display’ Vehicle Control System
Connected Vehicles Need the Right to Repair

A fleet of connected vehicles delivers many benefits to society and the motoring public, but critical technical decisions need to be made.

connected-vehicles
Opus IVS Adds Tech Advancements, Extended ADAS Support

The new Giotto software update offers comprehensive support for MY24 vehicles.

Other Posts
AAM’s Next-Gen Electric Drive Systems on Display at CES

Among the products showcased at CES will be AAM’s electric drive units, e-Beam technology and component technology.

AAM's Next Gen Electric Drive Systems on Display at CES 2024
Shop-Ware Partners with Amazing 7 on Phone Integration

The integration allows repair shop staff members to gain valuable context to incoming phone calls and respond to customers accordingly.

Shop-Ware-Amazing-7-phone-integration
Continental, Synopsys Team Up on Automotive Software Development

The collaboration aims to accelerate the development and validation of software features and applications for the Software-Defined Vehicle.

Epicor Unveils Digital Cataloging, Future Plans

The new catalogs use Epicor-validated, ACES-compliant data and an “Intelligent Search” feature to find the right part quickly.

Epicor digital catalog