According to Experian's State of the Automotive Finance Market Report: Q2 2023, captives (automaker-owned financing companies) have regained the majority share of total vehicle financing in the U.S., surpassing banks and credit unions. Captives made up 29.05% of the total vehicle financing market, up from 22.15% the previous year. They were followed by banks (24.84%), credit unions (22.49%), finance companies (13.09%), and buy-here-pay-here (BHPH)/others (10.52%). Captives also dominated the new vehicle financing market, accounting for 58.47% of new vehicle financing, followed by banks (22.25%), credit unions (13.70%), finance companies (4.45%), and BHPH/others (1.13%).

The report also highlighted a trend of consumers opting for shorter-term loans amid rising interest rates. The growth in shorter-term loans for new vehicles was particularly notable, with the 1- to 48-month segment increasing from 9.53% in Q2 2022 to 14.58% in Q2 2023. This trend was also observed in used vehicle loans. As a result of shorter-term loans, the average monthly payment for new and used vehicles increased. The average monthly payment for a new vehicle rose to $729 in Q2 2023, from $672 in Q2 2022, while the average monthly payment for a used vehicle increased slightly from $519 last year to $528 this quarter.

Interest rates for both new and used vehicles also saw significant increases. The average interest rate for a new vehicle rose to 6.63% in Q2 2023, up from 4.60% in Q2 2022. The average interest rate for a used vehicle increased to 11.38% this quarter, compared to 8.84% last year.

Leasing, which had decreased significantly since 2020, experienced a slight uptick to 21.29% in Q2 2023, up from 19.92% the previous year. The Tesla Model 3 became the first electric vehicle to appear in the top 10 leased models.

Other findings from the report include a 6.5% year-over-year growth in the total outstanding U.S. vehicle loan balance, reaching $1.45 trillion in Q2 2023. Prime and super prime borrowers accounted for over 67% of total financing in Q2 2023. The average new vehicle loan amount increased by $70 year-over-year to $40,657, while the average used vehicle loan amount decreased by $1,744 to $26,863. Delinquency rates also increased, with 30-day delinquencies reaching 2.28% and 60-day delinquencies reaching 0.82% in Q2 2023.

Overall, the report suggests that captives have recaptured the majority share of the total vehicle financing market in the U.S., driven by incentives in the market and consumer preference for new vehicles. The trend of shorter-term loans and increased interest rates has also impacted the average monthly payments for vehicles.