Dealerships are flocking back to captive finance companies, which have gained their highest market share in almost 15 years while banks and credit unions have lost shares, according to just-released first-quarter auto finance results from Experian Automotive.
F&I managers are directing business to captives, right along with the twin comeback in new-vehicle inventory and factory-backed incentives. It’s a “ripple effect,” says Melinda Zabritski, Experian head of automotive financial insights.
Of course, incentives are a key advantage over banks and credit unions, except for some banks, which sometimes participate in manufacturers’ incentive programs because they provide captive finance-style services to OEM partners. Chase Auto Finance is a prominent example.
Leasing, another auto finance product dominated by captives and a few partner banks, is also making a comeback and is also fueled by factory-backed incentives, Experian says. This trend applies to electric vehicles in particular.
According to Experian Automotive, the captives’ new-vehicle financing share, including loans and leases, for the first quarter was 61.8%, up from 54.2% a year ago and the highest since 2010.
Bank new-car share was 20.7% for the quarter, down from 23.4% a year ago. Credit union new-car share was 9.7%, down from 17%.
Used-vehicle loans were a mirror image, with banks and credit unions virtually tied for No.1 at 28% share each in the first quarter. That dwarfs the captives, at 8.7% share in used, Experian reports.
Looking more closely at EV financing, Experian says EVs accounted for about 8.6% of new purchases for the quarter, with a lease share of 35.2%. Some new EVs must be leased, not purchased, to get the maximum $7,500 tax incentive.
For the entire U.S. market, leases accounted for 24.1% of new-vehicle volume in the first quarter, up from 19.3% a year ago, Experian says.