What’s ahead for auto financing?

The Canadian automotive industry is entering a period of transition. New car sales are falling from their previously torrid pace and more consumers are selecting leasing as an option when loan terms shorten. Used cars and certified pre-owned vehicles remain popular, but, along with the rise in leasing, this has implications for lenders. Understanding the potential impact on portfolio volumes and delinquency will become increasingly important in the months ahead. A review of Equifax and Dealertrack information shows:

  • New auto financing volumes are slowing significantly and will constrain portfolio growth through 2019, delivering greater competition for new deals and increasing need to deliver better customer experiences.

  • Auto finance delinquency rates are already edging higher. The impact of longer terms and high loan-to-value in recent years will weigh on recoveries as losses rise.

  • New underwriting approaches that account for key attributes of the deal will allow for a stronger alignment between revenue and losses.

 

This post is published by Equifax Canada Co.© 2019 All rights reserved. No part of this blog post may be reproduced, copied or transmitted in any form or by any means, or stored in a retrieval system of any nature, without the prior permission of Equifax Canada Co. post  s for informational purposes only and is not legal advice and should not be used, or interpreted, as legal advice.  The information in this  post is provided as is without any representation, warranty or guarantee of any kind, whether express or implied. Equifax will not under any circumstances be liable to you or to any other person for any loss or damage arising from, connected with, or relating to the use of this post by you or any other person.  Users of this informational post should consult with their own lawyer for legal advice. 

About the Author

Bill Johnston

Bill is the VP Data & Analytics at Equifax Canada. With more than 20 years leading Data & Analytics teams in Credit Risk, Marketing and Loyalty Management, Bill specializes in presenting complex analytical solutions through meaningful business stories to address customer’s true business needs. Bill has experience implementing an Analytical Centre of Excellence for Canada Post, and leading analytics teams at Chase Credit Card Services and Citi Credit Cards. Bill holds a MA in Economics from the University of Guelph.

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