The percentage of electric vehicle financing has doubled year over year, according to a new report from Experian
SCHAUMBURG, Ill.–(BUSINESS WIRE)–With the increasing availability and popularity of electric vehicles, the percentage of these vehicles funded is growing at a rapid pace, according to Experian State of the automotive financing market: 4th quarter 2021 report. Electric vehicles (EVs) accounted for 4.56% of new vehicle financing, compared to 2.25% in Q4 2020 and 1.34% in Q4 2019. While gasoline vehicles continue to dominate new vehicle financing, there There was growth in several alternative fuel vehicle segments, which included 15.91% of new vehicle financing in Q4 2021, compared to 11.8% in Q4 2020. This includes plug-in/gasoline electric vehicles, flex fuels and hybrids, in addition to electric vehicles.
Focusing on EV financing, the data shows that consumers are more likely to buy a new EV than to lease it, with 72.3% of new EV financing being loans, the remaining 27.7% being loans. leases. The majority of new EV financing comes from banks (55.72%), followed by captives (29.81%) and credit unions (12.14%). The average monthly payment for a new EV was $774 in Q4 2021, up slightly from Q4 2020, when it was $738.
“The exponential growth in electric vehicle financing shows us just how important this type of fuel is becoming, providing additional context to the industry buzz,” said Melinda Zabritski, senior director of automotive finance solutions at Experian. “Understanding the financing landscape will help lenders and dealers understand consumer preferences and make informed decisions as new models continue to be introduced.
Two Tesla models were the most funded new electric vehicles in Q4 2021: the Tesla Model 3 at 36.62% and the Tesla Model Y at 34.18%. Rounding out the top five were the Ford Mustang Mach-E at 6.02%, the Tesla Model S at 5.3% and the Volkswagen ID.4 at 3.4%.
Global Vehicle Financing Continues to See Strong Increases
Auto financing continues to reflect the effects of the chip shortage, including sharp increases in average loan amounts and monthly payments. Average new vehicle loan size increased 12% year-over-year, from $35,421 in Q4 2020 to $39,721 in Q4 2021. Used vehicle loan size increased more notable, jumping 20% year over year from $22,630 to $27,291.
These increases were also reflected in average monthly payments. In the fourth quarter of 2021, the average monthly payment for new vehicles reached $644, while the average monthly payment for used vehicles jumped to $488 from $579 and $417 a year ago, respectively. In addition to the chip shortage, another driving factor behind these increases is that consumers continue to choose larger vehicles, such as SUVs, which are more expensive. In Q4 2021, 59.43% of all new vehicle financings were for SUVs and station wagons. The shift to larger vehicles in recent years has had a ripple effect as many of these larger vehicles are now re-entering the market as used vehicles.
Delinquency rates saw an uptick in Q4 2021, with 30-day delinquencies dropping from 1.81% to 1.86% from Q4 2020 to Q4 2021, while 60-day delinquencies increased from 0.64% to 0.66% over the same period. For a more complete context of market performance, the data shows that these rates are still lower than in the fourth quarter of 2019, when 30 and 60 day past due were 2.42% and 0.83%, respectively.
“The increases we’re seeing in chargebacks are small, so it’s important to consider this another sign that the market is continuing to return to pre-pandemic trends. However, the rates are still significantly lower than in 2019, which is a positive sign overall,” Zabritski continued. “Especially with the increases in average auto loan amounts and monthly payments we’ve seen in recent quarters, this will be an important metric to watch in the quarters to come. »
Additional results for the fourth quarter of 2021:
Used vehicle finance was a larger segment of vehicle finance overall, at 58.66% of finance in Q4 2021, compared to 55.2% in Q4 2020.
Banks increased their share of financing year-over-year, accounting for 31.84% of all vehicle financing in Q4 2021, up from 29.73% in Q4 2020
The Honda Civic was the most rented vehicle in the fourth quarter of 2021 with 2.85%, followed by the Honda CRV (2.37%) and the Mazda CX-5 (1.92%).
Prime and super prime consumers are beginning to return to buying used vehicles, with 63.39% of prime consumers and 46.76% of super prime consumers choosing used vehicles, compared to 60.46% and 44 .02%, respectively, in the fourth quarter of 2020.
The average duration of loans used increased sharply year-on-year, from 65.66 months in the fourth quarter of 2020 to 67.36 months in the fourth quarter of 2021.
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