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of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum
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As the COVID-19 pandemic continues to create uncertainty for the U.S. economy, different states and industries have seen many changes with each passing month. In our July edition of the State of the Economy report, written by Principal Economist Joseph Mayans, we’ll be breaking down the data that financial institutions can use to navigate a recovery. Labor markets and state-level employment impact Prior to the pandemic, unemployment in the U.S. was at a 50-year low, at an astonishing rate of 3.5%. Following the start of the pandemic, research shows that unemployment rose from 6.2 million in February to 20.5 million in May 2020, and sent the unemployment rate soaring to 14.7%. However, the data from last month’s State of the Economy Report revealed that the unemployment rate began to decline, with 46 states seeing rises in new job opportunities. Although unemployment started to increase, many states (like Nevada) saw a 25.3% unemployment rate statewide. The numbers for June are much more promising, and reveal a continuous uptick in the number of jobs added. The unemployment rate in the U.S. also fell from 13.3% to 11.1%. The impact to industries COVID-19 had major impacts on every industry in the U.S., with the leisure and hospitality industry being the hardest-hit at 7.7 millions job lost. According to CNBC, “The large number of layoffs in this industry led the U.S. economy to its worst month of job losses in modern history.” However, job growth for the leisure and hospitality industry began to gain momentum in May, with 1.2 million jobs added. This can be attributed to a slow and gradual rollback of stay-at-home orders nationwide. As of June 2020, 4.8 million jobs have been added to this industry. The trade, transportation, and utilities, as well as education and health services, manufacturing, and business services industries also saw improvements in employment. The impact to retail sales Clothing stores, furniture, and sporting goods stores were only a few of the many retailers that saw heavy declines following lockdown orders. After two consecutive months of decline, retail sales finally rebounded by 17.7% in May, with the largest gains occurring in clothing stores (+188%). In June, retail sales continued to rise substantially, resulting in saw a v-shaped bounce. However, with unemployment benefits nearing the expiration date and the number of pandemic cases continuing to increase, recovery remains tentative. Our State of the Economy report also covers manufacturing, homebuilders, consumer sentiments, and more. To see the rest of the data, download our report for July 2020. We’ll be sharing a new report every month, so keep an eye out! Download Now
Do consumers pay certain types of credit accounts before others during financial distress? For instance, do they prioritize paying mortgage bills over credit card bills or personal loans? During the Great Recession, the traditional notion of payment priority among multiple credit accounts was upended, throwing strategies employed by financial institutions into disarray. Similarly, current circumstances in the context of COVID-19 might cause sudden shifts in prioritization of payments which might have a dramatic impact on your credit portfolio. Financial institutions would be better able to forecast and control exposure to credit risk, and to optimize servicing practices such as forbearance and collections treatments if they could understand changing customer payment behaviors and priorities of their existing customers across all open trades. Unfortunately, financial institutions’ data—including their own behavioral data and refreshed credit bureau data–are limited to information about their own portfolio. Experian data provides insight which complements the financial institutions’ data expanding understanding of consumer payment behavior and priorities spanning all trades. Experian recently completed a study aimed at providing financial institutions valuable insights about their customer portfolios prior to COVID-19 and during the initial months of COVID-19. Using the Experian Ascend Technology Platform™, our data scientists evaluated a random 10% sample of U.S. consumers from its national credit file. Data from multiple vintages were pulled (June 2006, June 2008 and February 2018) and the payment trends were studied over the subsequent performance period. Experian tabulated the counts of consumers who had various combinations of open and active trade types and selected several trade type combinations with volume to differentiate performance by trade type. The selected combinations collectively span a variety of scenarios involving six trade types (Auto Loans, Bankcard, Student Loan, Unsecured Personal Loans, Retail Cards and First Mortgages). The trade combinations selected accommodate a variety of lenders offering different products. For each of the consumer groups identified, Experian calculated default rates associated with each trade type across several performance periods. For brevity, this blog will focus on customers identified as of February 2018 and their subsequent performance through February 2020. As the recession evolves and when the economy eventually recovers, we will continue to monitor the impacts of COVID-19 on consumer payment behavior and priorities and share updates to this analysis. Consumers with Bankcard, Mortgage, Auto and Retail accounts Among consumers having open and recently active Bankcard, Mortgage, Auto and Retail accounts, bankcard delinquency was highest throughout the 24-month performance window, followed by Retail. Delinquency rates for Auto and Mortgage were the lowest. During the pre-COVID-19 period, consumers paid their secured loans before their unsecured loans. As demonstrated in the table below, customer payment priority was stable across the entire 24-month period, with no significant shift in payment priorities between trade types. Consumers with Unsecured Personal Loan, Retail Card and Bankcard accounts. Among consumers having open and recently active Unsecured Personal Loan, Retail Card and Bankcard accounts, consumers are likely to pay unsecured personal loans first when in financial distress. Retail is the second priority, followed by Bankcard. KEY FINDINGS From February 2018 through April 2020, relative payment priority by trade type has been stable Auto and Mortgage trades, when present, show very high payment priority Download the full Payment Hierarchy Report here. Download Now Learn more about how Experian can create a custom payment hierarchy for the customers in your own portfolio, contact your Experian Account Executive, or visit our website.
Stay at home orders are beginning to lift across the country, and dealers are beginning to move forward. But, even as these orders lift, that doesn’t mean dealers can or should go back to the strategies they had laid out for the year, as so much has changed these last few months. As reopening occurs, it’s important to keep in mind that the situation is still fluid for many consumers, and marketing strategies need to reflect that. While creating dynamic strategies may sound like a large ask, data can help you create informed decisions that quickly adapt to a changing environment. Among the available data sets, one of the most telling right now is consumer sentiment, which can help you create a more human connection with consumers. Better understanding consumers’ situations enables you to create more effective strategies that show consumers you’re here to help them meet their most pressing needs. Experian’s research found that 23 percent of consumers are looking to purchase a vehicle in the next few months, as of July 1. Of those consumers, 59 percent plan to move forward with their purchases, and 34 percent plan to purchase something less expensive than planned. While these are informative metrics, the data becomes truly actionable when analyzed by generation and population size. Consumer sentiment across populations We looked at the same data across urban, suburban and rural areas, and found that urban residents show the highest propensity to be in-market for a vehicle in the next few months at 42 percent—which is even higher than the national average of 23 percent. In contrast, only 14 percent of consumers in suburban areas and 13 percent of consumers in rural areas are looking for a new vehicle in the next few months. If your dealership is in an urban area, now is a great time to identify your local in-market vehicle shoppers, typically located within three zip codes around your dealership, and identify their most pressing needs. Where is the consumer in their car-buying journey? Do they want to buy something in a few weeks, or a few months? Do they need to exchange a lease? Was there a vehicle incident? Once you identify where they are in their journey, your communication can help point them to the right option. When you take a closer look at the urban data, it also shows us that consumers are interested in exploring all their options. Of the 42 percent of urban consumers looking to purchase a vehicle in the coming months, 69 percent plan to continue with the purchase as planned, though 32 percent are planning to purchase something less expensive than originally planned, and 27 percent of these consumers are considering leasing, instead of purchasing. It’s important for you to understand this and meet consumers where they are by presenting a variety of options. This shows that you’re helping to meet their most pressing needs – and budget. if your dealership has more rural customers, a different tactic, such as focusing on bringing customers into the service drive, could be more effective. You could also use this time to analyze the vehicles are in your surrounding market to see which have open recalls or maintenance needs. This can help build a relationship that will encourage consumers to return to your dealership when they’re ready for a purchase. Generational differences Another way to focus on the data is by generation, where several interesting insights emerge. As of July 1: Only 8 percent of Baby Boomers are considering a vehicle purchase in the next few months Millennials (29 percent) and Gen X (35 percent) are the most interested in purchasing a vehicle in the next few months Of those looking to purchase a new vehicle, Gen Z (28 percent) is the most interested in leasing instead While these insights are informative on a national level, that data will only take you so far. Dealers need to drill down and focus on your local market and identify who’s around your dealership. When is the last time you did a profile of the area? It may be time for an update to better understand who your most likely consumers are and in what they are most interested. Understanding your local market, has always been key to success for dealerships. But now, you need to understand the attitudes of your potential customers in order to manage the current environment and to address consumers’ most pressing needs. Strategies that are informed by data, such as consumer sentiment, will ensure that you lead with empathy and build relationships that will thrive in the days to come.
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With the National Automobile Dealers Association (NADA) Show set to kickoff later this week, it seemed fitting to explore how the shifting dynamics of the used vehicle market might impact dealers and buyers over the coming year. Shedding light on some of the registration and finance trends, as well as purchasing behaviors, can help dealers and manufacturers stay ahead of the curve. And just like that, the Special Report: Automotive Consumer Trends Report was born. As I was sifting through the data, one of the trends that stood out to me was the neck-and-neck race between Millennials and Gen X for supremacy in the used vehicle market. Five years ago, in 2019, Millennials were responsible for 33.3% of used retail registrations, followed by Gen X (29.5%) and Baby Boomers (26.8%). Since then, Baby Boomers have gradually fallen off, and Gen X continues to close the already minuscule gap. Through October 2024, Millennials accounted for 31.6%, while Gen X accounted for 30.4%. But trends can turn on a dime if the last year offers any indication. Over the last rolling 12 months (October 2023-October 2024), Gen X (31.4%) accounted for the majority of used vehicle registrations compared to Millennials (30.9%). Of course, the data is still close, and what 2025 holds is anyone’s guess, but understanding even the smallest changes in market share and consumer purchasing behaviors can help dealers and manufacturers adapt and navigate the road ahead. Although there are similarities between Millennials and Gen X, there are drastic differences, including motivations and preferences. Dealers and manufacturers should engage them on a generational level. What are they buying? Some of the data might not come as a surprise but it’s a good reminder that consumers are in different phases of life, meaning priorities change. Over the last rolling 12 months, Millennials over-indexed on used vans, accounting for more than one-third of registrations. Meanwhile, Gen X over-indexed on used trucks, making up nearly one-third of registrations, and Gen Z over-indexed on cars (accounting for 17.1% of used car registrations compared to 14.6% of overall used vehicle registrations). This isn’t surprising. Many Millennials have young families and may need extra space and functionality, while Gen Xers might prefer the versatility of the pickup truck—the ability to use it for work and personal use. On the other hand, Gen Zers are still early in their careers and gravitate towards the affordability and efficiency of smaller cars. Interestingly, although used electric vehicles only make up a small portion of used retail registrations (less than 1%), Millennials made up nearly 40% over the last rolling 12 months, followed by Gen X (32.2%) and Baby Boomers (15.8%). The market at a bird’s eye view Pulling back a bit on the used vehicle landscape, over the last rolling 12 months, CUVs/SUVs (38.9%) and cars (36.6%) accounted for the majority of used retail registrations. And nearly nine-in-ten used registrations were non-luxury vehicles. What’s more, ICE vehicles made up 88.5% of used retail registrations over the same period, while alternative-fuel vehicles (not including BEVs) made up 10.7% and electric vehicles made up 0.8%. At the finance level, we’re seeing the market shift ever so slightly. Since the beginning of the pandemic, one of the constant narratives in the industry has been the rising cost of owning a vehicle, both new and used. And while the average loan amount for a used non-luxury vehicle has gone up over the past five years, we’re seeing a gradual decline since 2022. In 2019, the average loan amount was $22,636 and spiked $29,983 in 2022. In 2024, the average loan amount reached $28,895. Much of the decline in average loan amounts can be attributed to the resurgence of new vehicle inventory, which has resulted in lower used values. With new leasing climbing over the past several quarters, we may see more late-model used inventory hit the market in the next few years, which will most certainly impact used financing. The used market moving forward Relying on historical data and trends can help dealers and manufacturers prepare and navigate the road ahead. Used vehicles will always fit the need for shoppers looking for their next vehicle; understanding some market trends will help ensure dealers and manufacturers can be at the forefront of helping those shoppers. For more information on the Special Report: Automotive Consumer Trends Report, visit Experian booth #627 at the NADA Show in New Orleans, January 23-26.
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.
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typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.