We are only days into this new year of 2021 and already we’re seeing some notable trends beginning to emerge in the auto lending industry. Some of these trends have carried over from 2020, but as we are still dealing with coronavirus and continuing to get vaccines distributed to the rest of America, it’s safe to say they will continue well into this year. Even so, this year is already looking to be a good one for automakers and lenders!
Increasing Demand For New Cars: While the economy as a whole is still looking uncertain, this has not deterred consumers looking to buy a new vehicle. According to a TrueCar survey, 82% of vehicle buyers say that despite the pandemic, their need for a new vehicle remains the same or has increased. That demand is likely to increase through the early months of the year, and automakers are beginning to catch up with that demand as the manufacturing plants have reopened. Another aspect of this trend is the decreased use of public transportation and ride-hailing services. A CarGurus report said that 39% of those who previously used ride-hailing services- and 45% of those previously used public transportation- expect to decrease or stop using these services entirely. Among those numbers, 41% expect to purchase a vehicle.
Lower Payments to Deal With Higher Prices: At the same time demand for vehicles is rising, prices for both new and used vehicles are going up. According to a CNN Business interview with AutoTrader senior analyst Michelle Krebs, automakers are now offering fewer models that cost less than $30,000. This will make it tricky for consumers who need new wheels but are still dealing with a troubling financial situation, such reduced hours at work. Consumers will want lower payments to be able to stomach the increasing prices. Hope is not lost. As long as auto lenders use the data and take the time to understand what a buyer needs and what they can afford, both consumers and lenders that benefits each of you.
There are plenty of reasons for the automotive industry to be optimistic in 2021 as long as lenders remain vigilant to risks and opportunities. We at Open Lending can help you make the most of this year with our data-driven solutions so you can take on more auto loans with less risk, so let’s together make this year much better than the last! Contact us to today to learn how we can help you say ‘yes’ to more loans!