Affordability and Leasing Trends Dominate Q2 2024 – Melinda Zabritski

As the automotive market undergoes significant changes, affordability remains a critical issue for consumers. However, emerging trends in leasing and cash transactions offer a positive outlook. In the latest episode of CBT Now, Melinda Zabritski, Head of Automotive Financial Insights at Experian, shares key insights from the Q2 2024 Automotive Finance Market Report. Zabritski discusses how consumer purchasing behavior is evolving in response to rising car prices and increasing financial pressures.

During the interview, Zabritski highlights several key trends from Experian's Q2 2024 Automotive Finance Market Report. One of the most notable is the increased share of cash purchases. The share of cash transactions for new vehicles remains steady at 20%, while cash purchases of used vehicles have increased to a record high of 62%, driven by an increase in the average age of used vehicles purchased.

Leasing is also making a comeback, now accounting for 25% of new car purchases – up from 17% at the height of the inventory shortage. This rebound in leasing is driven by improved inventory availability and renewed incentives, giving consumers a more affordable option with average payments up to $150 lower than traditional loans.

Zabritski also points to a shift in the types of vehicles being leased. SUVs dominate leasing at 15%, while trucks have declined from 14% to 11%. Additionally, electric vehicle leasing is on the rise thanks to attractive tax credits and incentives that help lower payments.

Despite rising delinquency rates, currently hovering around 1% for amounts 60 days past due, Zabritski notes that the situation is different from the 2009 financial crisis. Due to the high used car values ​​and the lower level of losses, the automotive industry is better equipped to deal with these challenges.

Affordability still remains an issue, but we saw cash purchases of used vehicles reach a record high of 62% in the second quarter of 2024, while leasing is making a respectable comeback at 25%, offering consumers the opportunity to increase their payments by around $150 -Dollar to lower average.” – Melinda Zabritski.