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How Consumer Preferences Continue to Shift the Auto Industry

Published: January 11, 2021 by Melinda Zabritski

Happy senior car salesperson working on touchpad in a showroom.

The automotive industry has experienced extreme change over the past nine months. And while most of the attention has centered on the transition to digital retailing and inventory shortages, a lesser known shift has occurred: consumers opting for larger vehicles. The change has reverberated throughout the automotive finance market, and as dealers and lenders navigate the upcoming months, it’ll be important for them to assess how this trend evolves.

What Types of Vehicles Are Consumers Buying?

At the beginning of the pandemic, we observed the return of full-sized pickups as the vehicle of choice for consumers, making up nearly 16% of financed vehicles in Q2 2020. This was likely driven by automaker incentives, such as lower interest rates and cashback programs, that made purchasing an expensive vehicle more manageable. But as the year progressed, consumer preferences have shifted once again.

According to Experian’s Q3 2020 State of the Automotive Finance Market, small SUVs became the most financed vehicle segment, making up 26.01% of all financed vehicles during the quarter. They are followed by mid-size SUV’s (24.15%) and full-sized pickup trucks (14.61%). With incentives scaling back, it will be interesting to see how consumer preferences evolve over the coming months.

Consumer Preference Drove the Loan Amounts Higher

Based on the most popular vehicle segments, the reasons behind increased loan amounts becomes clearer, even with incentive programs.  The average new loan amount was roughly $34,600, rising more than $2,000 compared to Q3 2019. But used vehicle loans also saw an increase, with the average used loan amount coming in at $21,438, a $945 increase.

Considering the difference in loan amounts between new and used, it makes sense that some consumers have shifted back to the used vehicle market, particularly as the pullback on incentives begins.

Consumers Lean into Longer Loans

Somewhat surprising, considering the significant increase in the average loan amount, the average monthly payment saw a modest increase, rising $11 to reach $563. We saw a similar pattern in the used market, with the average monthly payment for a used vehicle increasing only $6 to $397 compared to last year. Much of this has been driven by consumers continuing to opt for longer loan terms.

The average loan term for a new vehicle was 69.68 months, up from 68.98 last year. In fact, more than 44% of new vehicle loans had terms between the 61- and 72-month range, while more than 28% had loan terms between 73- and 84-months. Combined with lower interest rates, the extension of loan terms contributed to making monthly vehicle payments more manageable for consumers.

As we continue to navigate the recovery, consumers’ unique needs and preferences will continue to evolve. With automakers pulling back on incentives, how will consumer purchasing behaviors be impacted? There are many unknowns about the months and years ahead, but by staying close to the trends, the industry will be better positioned to help consumers stay within budget and minimize risk in their portfolios.

To view the full Q3 2020 State of the Automotive Finance Market report, click here.

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Published: March 1, 2025 by Jon Mostajo, test user

The automotive industry is constantly changing. Shifting consumer demands and preferences, as well as dynamic economic factors, make the need for data-driven insights more important than ever. As we head into the National Automobile Dealers Association (NADA) Show this week, we wanted to explore some of the trends in the used vehicle market in our Special Report: State of the Automotive Finance Market Report. Packed with valuable insights and the latest trends, we’ll take a deep dive into the multi-faceted used vehicle market and better understand how consumers are financing used vehicles. 9+ model years grow Although late-model vehicles tend to represent much of the used vehicle finance market, we were surprised by the gradual growth of 9+ model year (MY) vehicles. In 2019, 9+MY vehicles accounted for 26.6% of the used vehicle sales. Since then, we’ve seen year-over-year growth, culminating with 9+MY vehicles making up a little more than 30% of used vehicle sales in 2024. Perhaps more interesting though, is who is financing these vehicles. Five years ago, prime and super prime borrowers represented 42.5% of 9+MY vehicles, however, in 2024, those consumers accounted for nearly 54% of 9+MY originations. Among the more popular 9+MY segments, CUVs and SUVs comprised 36.9% of sales in 2024, up from 35.2% in 2023, while cars went from 44.3% to 42.9% year-over-year and pickup trucks decreased from 15.9% to 15.6%. 2024 highlights by used vehicle age group To get a better sense of the overall used market, the segments were broken down into three age groups—9+MY, 4-8MY, and current +3MY—and to no surprise, the finance attributes vary widely. While we’ve seen the return of new vehicle inventory drive used vehicle values lower, it could be a sign that consumers are continuing to seek out affordable options that fit their lifestyle. In fact, the average loan amount for a 9+MY vehicle was $19,376 in 2024, compared to $24,198 for a vehicle between 4-8 years old and $32,381 for +3MY vehicle. Plus, more than 55% of 9+MY vehicles have monthly payments under $400. That’s not an insignificant number for people shopping with the monthly payment in mind. In 2024, the average monthly payment for a used vehicle that falls under current+3MY was $608. Meanwhile, 4-8MY vehicles came in at an average monthly payment of $498, and 9+MY vehicles had a $431 monthly payment. Taking a deeper dive into average loan amounts based on specific vehicle types—as of 2024, current +3MY cars came in at $28,721, followed by CUVs/SUVs ($31,589) and pickup trucks ($40,618). As for 4-8MY vehicles, cars came in with a loan amount of $22,013, CUVs/SUVs were at $23,133, and pickup trucks at $31,114. Used 9+MY cars had a loan amount of $19,506, CUVs/SUVs came in at $17,350, and pickup trucks at $22,369. With interest rates remaining top of mind for most consumers as we’ve seen them increase in recent years, understanding the growth from 2019-2024 can give a holistic picture of how the market has shifted over time. For instance, the average interest rate for a used current+3MY vehicle was 8.0% in 2019 and grew to 10.2% in 2024, the average rate for a 4-8MY vehicle went from 10.3% to 12.9%, and the average rate for a 9+MY vehicle increased from 11.4% to 13.8% in the same time frame. Looking ahead to the used vehicle market It’s important for automotive professionals to understand and leverage the data of the used market as it can provide valuable insights into trending consumer behavior and pricing patterns. While we don’t exactly know where the market will stand in a few years—adapting strategies based on historical data and anticipating shifts can help professionals better prepare for both challenges and opportunities in the future. As used vehicles remain a staple piece of the automotive industry, making informed decisions and optimizing inventory management will ensure agility as the market continues to shift. For more information, visit us at the Experian booth (#627) during the NADA Show in New Orleans from January 23-26.

Published: January 21, 2025 by Melinda Zabritski

Scott Brown, Group President at Experian, recently presented at Reuters Next on the power of AI innovation in financial services.

Published: December 13, 2024 by Brian Funicelli

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