Incentives pulled prime customers back to new-car market in Q2
September 9, 2020
Prime and above customers fled the new-car market in recent years, finding quality and cost-effective alternatives on used-car lots. But aggressive incentive activity from automakers in the second quarter reversed that trend, credit bureau Experian said last week, allowing captive automakers to reclaim market share of its most desired consumer base.
Amid a sharp drop in second-quarter sales across the industry, consumers with prime and above credit made up 75 percent of new-vehicle loans, up from 72 percent last year.
The captive finance arms of automakers also collectively secured the largest slice of the new-vehicle financing market among auto lenders, raising market share to 31 percent of the industry compared with 29 percent last year at that time.
Many uncertainties lie ahead as the pandemic rages on in the U.S. How long will the economy, already in a recession, continue to tread water amid the crisis? What changes will be necessary to retain consumer interest in the increasingly expensive new-car market in the coming months?
What’s clear is the success of these incentives in bolstering sales during the darkest months of the outbreak, and proving the captive finance model to be a strong support system for dealerships.