Driving Away Profits

As dealers struggle to raise profits, near- and non-prime consumers continue to be shut out of the retail vehicle market, according to Open Lending’s latest report.

That’s true even though access to auto credit improved in March across all channels and lender types compared to February, according to the Dealertrack Credit Availability Index. Subprime share of loans increased, and approval rates increased, which were moves that showed improvement for consumers. Still, credit remains tighter than a year ago, effectively forcing some non-prime consumers out of the market, reports Dealertrack.

That causes missed opportunities. As we’ve previously reported, alternative data can prove near- and on-prime consumers creditworthy.

“That traditional score should be the start of assessing the application, not the end,” Kevin Filan, Open Lending’s senior vice president of marketing, tells WardsAuto. “Dealers who partner with automotive lenders that utilize flexible, data-driven programs can get a wider spectrum of high-yielding loans and offer accessible vehicle ownership to deserving but often overlooked near- and non-prime borrowers."

Below are some of the points in this recent Open Lending report. Data was sourced from S&P Global’s AutoCreditInsight.

Many industry insiders had hoped credit relief would come from the Fed in the form of interest rate reductions, reports Jonathan Gregory, senior manager, economic and industry insights, at Cox Automotive.

Although interest rates aren’t currently increasing vehicle prices, borrowing costs and total costs of ownership remain at levels well above historical trends, he says.