The auto industry is changing. Consumers are approaching vehicle purchases differently, resulting in new trends, challenges and opportunities. Using data-driven insights, the auto industry can develop a deep understanding of current patterns, allowing it to make smart financial decisions that benefit dealerships and customers alike.
Many customers are struggling economically, which impacts the auto industry as well. For example, rising prices and interest rates have led to slower auto sales. In 2016, the average new vehicle price was $34,450. In 2024, the average new vehicle price rose to $48,397, which is a 34% increase over just eight years. Likewise, the average vehicle interest rate was 4.26% in 2016, and rose to 7.57% in 2024.
Financial Auto Industry Trends
Debt is also on the rise. In fact, auto is the fastest growing category in non-mortgage consumer debt, and is now higher than student loans, bankcards, personal loans and private label cards. More specifically, auto loans and leases make up 35.9% of the total non-mortgage consumer debt.
Another concern is score bands. The YoY percentage of deep subprime and subprime borrowers with auto loans and leases is growing the most compared to other bands, such as prime and super-prime. Currently, 13.2% of accounts are deep subprime, which is 4.8% YoY change. 8.1% of accounts are subprime, which is also a 4.8% YoY change.
These financial pressures have led to plummeting auto sales. In fact, auto loan and lease originations dropped 1.6% YoY in September 2024, which equals a $9.2 billion decrease. This is a problem on its own, but is further concerning when considered in conjunction with fraud.
Increased financial stress on consumers can lead to higher fraud rates. In 2023, synthetic identity (Syn ID) fraud rose by 98%. Auto loan credit applications with a risk of Syn ID rose from ~5% in 2019 to +8% in 2023, marking a 60% increase in just four years.
Despite these grim statistics, hope remains. Using Know Your Customer (KYC) tools, the auto industry can improve the buying experience, which can make a huge difference in sales. For example, 72% of consumers say that they would visit dealerships more if the buying process was improved. 54% of consumers say that they would purchase from dealerships with a preferred experience, even if that dealership didn’t have the lowest prices.
KYC tools also help the dealership identify its most interested and qualified customers. Across the board, using data and KYC tools can streamline the buying process for dealers, lenders and customers alike, and is a key strategy moving forward.
Another important tool will be proactive fraud prevention. Working with companies like Equifax, auto dealerships can tackle fraud before it appears through solutions like Digital Identity Trust. Preventing fraud before it has a chance to impact sales can save money and time, and is vital as the auto industry contends with rising fraud and delinquency levels.
Conclusion
As consumer behavior changes in the world of auto industry trends, new challenges and opportunities crop up. Being aware of these changes is the first step to better financial solutions. Using KYC tools to build better consumer experiences is also important, as are preventative measures regarding fraud. With these tools, the auto industry can adapt to the current state of the industry, thriving with the help of new tactics and data.
from WebProNews https://ift.tt/wkCtdfY
No comments:
Post a Comment