Latest / Leaders in Lending / 2024 Auto Trends: Financing, Sales, and Consumer Behavior

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2024 Auto Trends: Financing, Sales, and Consumer Behavior · Leaders in Lending

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You are listening to leaders in lending from Upstart, a podcast dedicated to helping
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consumer lenders grow their programs and improve their product offerings. Each week, here,
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decision makers in the finance industry offer insights into the future of the lending
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industry, best practices around digital transformation, and more. Let's get into the
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show, all right, Welcome everyone. This is Matt Snow live from the
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CBA conference here in DC with Mark and Melenda. Thank you both for joining
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me. When we take a minute and introduce yourself, tell everyone where you
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are today. You've been about your role and how you got to it.
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Sure, so, Melnda Szabritski and with experience automotive and have been for twenty
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years. I do a lot of product development, product positioning, but probably
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the biggest role that I have is I host a quarterly industry presentation, say
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in the automotive finance market, talking about the trends occurring in auto finance.
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Great, I know that's something we look forward to and I'm started as well
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to really in depth great look at the industry. So appreciate you doing that.
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Mark, Mark Brkman a general manager at USA Financial Savings Bank and so
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I run consumer lending. So that's basically all our lending proc with exception of
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real estate and credit cards. So I think auto lending, unsecured personal loans
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marine RV been there about four years, but in the industry over thirty plus
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years previous that was with P and C Bank and Truest Bank. So but
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out of finance my whole career and a returning podcast guest, early early guests
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with Jef during the pandemic. Oh right, so it's going to be doing
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this in person then exactly. And I know you know. One of Jeff's
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things was to ask a few questions at the end, and one was to
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ask for a bold prediction. I don't know if you remember yours. I
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went back to your your episode today. Remember what did I say? So
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your your bold prediction was that banks would still be around. And I know
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you know between now and then there we've had some banks failed, but it
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seems like they're still around. You stick with that prediction, Yeah, I
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do. I think thanks generally are healthy. I think everybody's going to the
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stress test again now. But I think you'll see with the new Cecil rules
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out there, with the way you have to reserve for loan losses and take
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care of those those ups and downs you see because of the industry or just
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because of what's going on with the economy. I think banks are much stronger
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position now underrunning standards because I've been consumer credit. I think are much stronger,
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especially in real estate, and I've done real estate underrunning before. I
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don't do that here, you'll say, but I think the qualify for loans
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now there's the kind of the asset test I think is much better in colouteral
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values. So I mean, I think we're cloutteral values were generally pretty strong.
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Yeah, yeah, so much stronger from a credit perspective. How about
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deposits, I know, you know, getting deposits now is a pretty hot
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topic. I feel like that's not my forte deposits, but just being adjacent
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to it with my peer. I think banks are still pretty flush with deposits.
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I think the pandemic added to that, with everybody and their balance sheets
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got strong because of all the stimulus, or didn't have to make your mortgage
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payment, you're student loan payment. But I think the industry in general is
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starting to see draw down and their savings. Another checking accounts, we just
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don't have that. I think mainly because it's going towards inflationary type. On
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is just trying to keep the lifestyle that they have out there, whether it's
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travel, whether it's just food on the table. We're seeing, we're seeing
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the industry in general seeing a flight from deposits. Yeah, and I know
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we'll dig into that much more with Melina. Maybe you can give us a
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thirty thousand foot view of the state and industry. You had a really good
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session earlier today. What are some of the trends that have stuck out to
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you? So there's of course, affordability still remains, you know, top
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of mind for most of the industry. Availability is getting better. You know,
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originations a bit, we're a little suppressed. But what's been nice to
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see is over the past six months or so six eight months, is the
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growth and loan amounts to slowed down. You know, average new loan amounts
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been hovering around forty thousand. Used has come down a bit as well,
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still high, but of course the raising interest rates still continue to push those
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payments even higher. And then with those rates and now incentives coming back,
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there's been a lot of shifting and share as far as you know who's who's
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doing the originating. I mean, captives started coming out of blood incentives towards
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the end of last year, and that shifted a lot of share back towards
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the captive way. Yeah, I was really surprised with that. I mean,
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the market moving primer in general, but captives more incentives. Is the
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rising price of cars helping them do that? Or how was that value coming
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in? Really tied into the fact that there was inventory, you know,
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without in any inventory, we really saw no incentives. That was, of
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course the same time that the rates were going up. Credit unions being slow
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to raise their rates, really took on share became the largest lending segment,
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especially unused But with day's supply coming back, inventory back, we did start
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to see the incentives back in the industry and that really just pushed the captives
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share. Gotcha, And I know you had a stat mark you mentioned you
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talked about like inflation and the cost going up not only for vehicles, but
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the total cost of ownership with the vehicle really adding burden to the consolatory.
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Today, just in CPI, we came out of auto insurance across industry,
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the share of the last years up twenty percent. It was just a little
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bit north until twenty point five. I saw. So when you look at
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the consumer of the average car payment with interest rates being a we just looked
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at average the number one car finances, the F one fifty, and so
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that's pretty much all banks for finances. But you look at the average cost
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of last year versus day with interest rates going up, cost to insure and
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gas, it's almost two y forty dollars a month difference between this time last
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year. It's huge. It's it's I think what Linda talked about it,
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that's what's impacting. I think affordability in general. I think that's also why
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the captives are out there subventing. I think if they did, if their
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cars weren't selling themselves like they were in the pandemic, I don't think they
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would do that. I think at interest rates were normal, they probably wouldn't
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have to do it either. Yeah, and I think that. I think
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the last time I looked at the F one fifty, I think the average
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loan payment was around twelve hundred dollars. That's insane. I remember, like
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you think a truck in and out like forty thousand dollars f one fifty you're
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talking minimum seventy yeah, I mean yeah, so our consumers making different choices
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given that burden. Are they choosing lower models? Are they changing the way
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they financed these cars? You know, it's it's funny because I've been doing
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this for a long time and people would always ask, like, what's the
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consumer stress or will we see consumers that they start getting stressed going back into
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cars and like away from the big trucks in the SUVs. And that's just
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not the case. You know, We're we're still, like I said,
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f one fifty CRV the SUVs. It's it's sixty over sixty percent of what
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we finance are SUVs and cuvs, and they have price points higher than cars.
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Of course, we're also not making as many cars, but we're not
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seeing consumers, you know, shy away from those vehicles. You know,
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leasing's coming back, so that's helping because that's bringing a lower payment. But
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consumer behavior hasn't changed. The most interesting shift in consumer behavior that I've seen
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in the data is with the raising interest rates is cash. We've seen a
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lot more cash come into the market. You know, we used to do
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about fifteen percent cash. We're now over twenty for new used as like over
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seventy percent cash or a little over sixty percent cash, so a lot more
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cash. Yeah, So was that fuel do you think by the stimulus or
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what now? It was after that? It was it was really tight hand
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in hand with the raising interest rates. Okay, And if the captors weren't
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running incentives, if you did have that zero percent or one to nine.
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And I asked you a question in the seminar today, but basic last is
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is it home equity when they come up to the table, and it's not.
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It's cash, it's real cash for people have that. I understand bright
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the chuck and go off the line as they get the text ductibility and I
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could do it over maybe twenty years. You know, Yeah, they get
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that payment down, but I said the true cash which you can which is
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kind of surprised me. But I think that affordabilities is the biggestue. I
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think I looked at their going longer terms, but I do think some of
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the consumers out there just sit on the sidelines. I think that's why you
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see the sub bench out there. Car dealers are coming off the price that
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they were MSRP only. So I think there's start to see them come off
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the price before and so. But I think it's just over affordability. You
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said sixteen percent over one thousand dollars. I was like, yeah, my
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first house payment maybe thousand dollars, but I can't even imagine a thousand dollars
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car payment. And it's on the lower credits scores, is what you told
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me. It's well for new I mean, new car buying is always going
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to be very prime. But it's still a prime score, but it's one
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of the lower scores compared to like the six hundred payments of the you know,
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four hundred dollars payments, but yeah, it was one of the lower
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and even on the U side four and a half percent over one thousand.
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Yeah, and they're they're those big trucks. Well, I think it's it's
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I saw a statue for the banking I don't not include the capsus, just
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banks and prime lenders out there. Thirty percent of the market is terms greater
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than seventy two months thirty percent and so, but the average liquiment, I
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mean, the average term is still sixty eight on average, And what's your
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book on that on average? But thirty percent I was shocked at that number.
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Two that's across the industry. So I think consumers are just choosing those
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longer those longer terms to get the payment, just to get the pay out
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out there. So other than extending term to get the payment down, are
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there other things you're seeing in terms of how people are financing these cars or
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innovations in the automotive, the dealer, the lendings based this is pretty playing
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vanilla lending. I just I think we're seeing longer terms. There's nothing exotic
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out there. I mean, acts just do balloon lending a long time ago
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to kind of keep up with the leasing. I just don't I think for
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auto lees to stick to the tribes, I've not seen anything innovative out there.
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And the consumer I think we're seeing put more money down. You just
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try to get that payment down as well. And then people along the sidelines
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I think too as well. So you can't create demand, you just can't.
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Well, I think we also one thing that really helped from a consumer
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standpoint was even though inventory was scarce, it drove up used values and that
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led to the past couple of years consumers having a lot more equity in their
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vehicle. I mean you could look at the top, like the top ten
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most commonly purchased used vehicles and the trade in values or even just that the
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retail value on those cars were higher than the original MSRP from when they were
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bought two or three years ago. So that really helped. And so that's
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it's been beneficial fort thanks but also beneficial for consumers and bringing those loan to
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values down quite a bit on us. Now we're still kind of seeing the
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opposite of that. On the new vehicle side, it's getting better, but
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with the inventory scarcities and things selling well over MSRP, we saw those loan
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to values just really skyrockets. So we're kind of recovering from that, but
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it's still looking really good for the used market. And I'll give you my
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personal experiences. So my daughter went to school in DC. Her car got
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stolen Shesing crad school. So that's what I had to pay MSRPN. Never
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paid MSRP in my life. So two years ago, go to the car
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dealer and there was like, hey, we got three we got three subers
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coming in meat or they're going to be gone. So I had that.
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We let the truck pulled up. Cars got off. So her car got
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stolen, they recovered. The crowds like, oh car, I did the
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post found it and it was it was a totyter rep for we paid twenty
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one thousand dollars for she went to school, and I think I'm going to
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get it was a total loss claim. Okay, I said, I'm going
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to get The value I got was fifteen thousand dollars and the car is five
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years old, and I was like twenty I paid twenty one for it.
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So then I had the other shock I had was like going to the car,
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You're like, while we're waiting for the Semi Darted to pull up with
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the cars, were looking at used cars and the price of the same car
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was more expensive on the new car. I was shocked. Yeah, yeah,
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definitely, those values were really surprising. I'm not the only one that
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during you know, twenty twenty one made money selling a car, which is
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that doesn't happen now. The cases of people, especially with trucks, saying
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you know, hey I made fifteen thousand on this truck. You know,
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it's just it was crazy. But yeah, so those those days are gone.
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Yeah, I was just so where do you see that end? Like
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or are we in a new normal or what where's the industry go from here?
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Yeah, I mean, well, values are still a little inflated,
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and I don't expect that to third. They're down, they're still yeah,
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they're still high. I don't expect that really to change because when you do
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look at the used car market, you know, so much of the used
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car market is content and upon off lease vehicles. You know, that constant
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supply of late model used vehicles coming back. And we're still doing strong on
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the returns from three years ago when we were leasing over thirty percent, But
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keep in mind we've had you know, a year and a half rereleasing was
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under twenty So in the future, starting towards the end of this year and
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really into twenty twenty five, we're going to be down over a million units
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of off lease vehicles that we were used to So I think we've got the
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potential for that to impact values in the future. The off lease is still
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doing well right now, but it's the reduction's coming. Interesting. Do you
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see have you seen any changes to underwriting in terms of you said, like
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the landing side usually have tried and true. Yeah, I will say this,
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I said for the indirect lenders out there, not for the direct lenders.
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In general, the industry, we've seen it typening in both pricing and
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also in credit policy, especially when you come into a recession. You're going
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to see that. When your directly, that's a little bit differ because it's
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a known customer, it's a known member for USA, you know them,
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and they probably have another product service with you. But when I'm buying paper
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from a car dealers, it's a brokeren loan, So there's some risk.
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You carry higher risk because of that, because they don't see you as their
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primary bank and the consumer that gets the car. So there's a little bit
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more risk in this. But I think the indirect letters and the large lenders
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have tightened up their bybox. I don't think there's been wholesale changes, but
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they think they've tightened it up, and then they've also priced up to take
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on because they're looking for more risk down the road and losses or with the
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economy now, I think we're coming to a soft landing. I don't know
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what you want to call it. Economy. Yeah, Rice, it is
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weird, So I do think you'll see it again. It will open back
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up. I think again too when it does, I don't know yet what
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are you saying, because you have access to again to a lot of data
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and experience in terms of trends, what are other lenders doing? You see
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pockets of that loosening up. Yeah, so I don't see it loosening per
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se. You know, credit scores continue to increase, just overall, sumer
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credit is increasing, more consumers are prime scores are just rising. But when
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I look very specifically, like if i'm if I'm looking like the top ten
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banks, you know, almost everybody your your credit score increases, you know,
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fewer originations and subprime, and it's a bit of a mix because yes,
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there are fewer subprime consumers out there, but the reduction, especially in
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the bank population, is well well beyond what just normal increase credit scores.
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So I definitely see the banks tightening up. Like I said, the loan
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to values for the banks on the U side, it has been really really
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strong. It's like ninety percent rates versus you know, well over one hundred.
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So I definitely see trends like that, and I think you know a
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lot of also, you know, there's been reduction in banks share, but
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so much of that was credit union driven and you know, captive driven and
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a few banks leaving. It'll be interesting to see as the market continues to
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rebound and you know, win delinquency start to come down, which are not
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coming down right now, it'll be interesting to see if those lenders come back
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to the market. Yeah, so that was actually going to be my next
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question, are you are you seeing the delinquency is kind of just returned to
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a normal So we're seeing that spike right now, but it's just kind of
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renormalizing. But for the most part, you know, if you look across
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the various trade types that we're tracking delinquency, you know, bank, card
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and mortgage and you know, unsecured lending, et cetera, they're kind of
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returning to you know, pre COVID levels, which was extremely suppressed. So
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those are sort of returning to more you know, normal type levels. Auto
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is a little inflated right now. The auto delinquency numbers that I'm seeing are
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relatively high, Like the percentage of loans themselves are kind of similar to what
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the peak was in two thousand and nine. The balances are higher, but
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in part we also have twice the amount of balances, you know, one
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point four trillion in automotive loan balances. It was half of that in two
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thousand and nine, so of course it's going to be higher. To ask,
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question, yeah, yeah, right ahead, question I answer. But
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curious with the FICO scores going up is just in your experience, maybe the
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numbers one should but as delinquencies arising, charge us a rising and revolving balances,
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debt's going up on revolvers right this one, you think you'll see a
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natural scores come down. You know, it's interesting because the score increase has
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been going on for years and years. It's it's not a relatively new phenomena.
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Like I said, it's been like six points every year since twenty thirteen.
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We didn't see it come down when the delinquencies declined after two thousand and
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nine, so it's been kind of continuing to go up. I think the
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rate of acceleration will probably decrease because you also have to look at that whole
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you know, the aged mix of the consumer population. And you know,
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people ask, well, how can scores go up and delinquency increase. It's
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like, well, the delinquency is increasing in the younger population, which is
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where the lower scores are and you know your aging population has higher scores.
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Yeah, yeah, so that I agree with that. I'm curious what you
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think is there's a lot of I think consumers are more aware of their FCAL
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score. Now they're more aware, they can go to places and they can
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say, how do I improve my score? I'm wondering if that's some of
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it too. It is, We've done a lot of analysis around that,
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because there's of course there's there's aging, but the awareness of consumer credit.
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I think every single credit card I have, probably USA included, gives me
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the opportunity to see my credit score, every single one. And we did
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a survey recently of consumers asking them do you know your credit score? And
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universally people were like, yes, I know my credit score. If they
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didn't know it exactly, they knew the rough range that their credit was in.
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You know, it is an everyday discussion, which is like when I
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travel and people ask where I work, I'm very hesitant to sometimes saying because
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everyone wants to discuss, you know, credit score, how can I exactly
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vice? But yeah, people are well aware. It is crazy how that's
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changed, even in my lifetime, from the point where like you would only
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know maybe as you're going in to apply for credit or if you got the
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cartage especially right, Yeah, and that's the only time you really would know,
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but never before you shop for a car. Now. And so we're
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seeing consumers in general, not not just artment but they're like general population out
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there. But they're going to say how much what's my score because I know
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it's tied to my rate? What can I do? Then? And then
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you see and there's some aggregators out there that are and that they're not banks,
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but there you go there and they'll help you figure out what you can
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do get your score to get a better price. Or I have a loan
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it's at this rate. Now, I had to get a high rate because
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my credit score was good. What can I do? When can I rEFInd
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to get them down? So I can rEFInd my rate down. So there's
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a lot of accuracy that just they didn't exist before. Yeah. Well,
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they like experience boost, you know, booster, use alternative data boost your
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credit scores, a lot more consumer education. Yeah, exactly, I want
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to go back maybe a little bit. Mark. I think you have,
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especially with the member based at the USA, a lot more connection to uh,
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you know, their their story and how they interact with the banking world.
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Are you hearing from them as delinquencies are going up? Like why you
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know, because we're seeing primer consumers and delinquencies going up. Are there different
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reasons? Are they they calling in looking for helpers, insights? And pretty
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much what my coal experiences. Maybe it's just there's some type of a hardship
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going on, you know, loss of the job, but it's still very
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good. So it's it's like you had dual income coming in and then one
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lost their job or it's between jobs, and so it's a short term kind
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of event. But there's nothing I think out of just like there's any new
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things that we're seeing out there. I think in the industry now, that's
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just it's just a regular thing. It's just normal. I think it's again
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affordability. Everything's expensive, yeah, and so I just everything's more expensive now,
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and I think that's what's also leading to us seeing delinquency occur in segments
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that traditionally don't account for the majority of delinquency. You know, your lowest
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credit scoring consumers will of course represent the majority of delinquency scores work, but
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we're increasingly seeing them near prime consumer and we're talking like a you know,
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consumer scores and are six hundred to six sixty. You know, that's kind
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of middle of the road. They're increasingly representing more of what's going to linkuent
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and that really started with COVID. Like you would see you know, near
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prime be five percent of you know, delinquency accounts and now it's like twelve.
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So that's that's I think where we're starting to see that. And you're
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starting to see these consumers also use more alternative finance and or you know,
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like you know, short term loans and hitting you know online kind of those
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those online loan brokers and such, and you would know more than I.
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I read a stat was that comes Wall Street Journal that was like sixty percent
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of consumers or paycheck to paycheck. Yeah, and if that's the case,
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and with inflation up, one paycheck missed, I mean that's that's a big
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deal. Yeah. No, we see lots of stats like that. Do
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I think I've seen that same one or the average household can absorb you know,
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maybe a three to four hundred dollars or something emergency, you know,
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they have to fix something ac goes out. I mean that's that's a big
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event. Right. You can't delay put off the AC to live in Texas
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in the summer, right, you can't do it. Yeah, And you
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can't miss a car payment because you need your car to get at the job
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and you probably have your job. Right. But but I but that's some
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life event because things. I mean, just look at the cost of repair
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a car, cost to fix your home. I mean, I got I
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replaced my AC is like it was almost three x pre COVID. I mean,
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it's crazy come home from business trip and you're fully stopped, refrigerator stopped
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working. Yeah. Life is full of them. So you know, we're
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day one maybe more. If you're involved in the CBA into the conference,
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what have you guys picked up so far? If you attended other sessions,
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anything that you're learning. Yeah, I've mostly focused on the AUTO sessions.
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You know, went to the EV session before ours and then I honestly,
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I've had meetings. It's been catching up and just kind of getting work.
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I've been on the AUTO too as well, but I haven't had a chance
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to go to that one thing. I just thought just the CBA, that's
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what this is one of the best events out there, I mean, no
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doubt. I think the other thing is is that the energy here. I
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think you all, like the folks here that are in the exhibit all,
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I think energy is up. And it's a tough year. I mean,
22:06
but the energy is still up, which is good. And for me,
22:07
it just it just more confirms on we're not the only one. I mean,
22:11
it's it's it's just it's it isn't and so it's like it's like we're
22:15
experiencing everybody's experiencing the same thing. So I think it's just it's a whole
22:18
general just like you learned that like a confirms more confirmation of things. I
22:22
don't think anything yet. I still still we can still with the conference ahead
22:26
of us. Nothing new, aha, But some of your stats were all
22:29
hot. But other than some of that, I mean, like big,
22:32
like am I missing something? I didn't think we're missing something big. I
22:36
read a stat last year that auto fraud finance fraud outpaced card and deposit fraud.
22:44
That was that was a I saw that the industry stat, and so
22:47
I'm seeing a lot of people talking about fraud here at that that it was
22:49
always talked about. But I think because in auto lending. I'm hearing more
22:52
of the auto lenders out there talking about frauds. I think it's been increasing,
22:56
so I think all those things. AI is probably behind on the fraud's
23:00
side right to do those type of things, but I think that's one thing
23:02
I have. I haven't yet to go to that, so but I'm hearing
23:04
a more interesting attendant of the fraud sessions. Yeah, focus on I think
23:08
with any tool, like, the bad guys tend to get all of them
23:11
before the good guys. So it's good that we're able to have some of
23:12
the I mean the fraud of the industry. Because there was an expert that
23:15
was talking about it at another conference and the thing that shocking was, it's
23:21
not the hacker in the basement, it's sovereign nation fraud. It's like it's
23:26
big yeah, yeah, yeah. Auto is always a little different because it's
23:30
not like credit card where you're worried about you know, bust out fraud and
23:33
sure and all of that. It's you know that car is I mean that
23:37
what didn't make it makes sense you think about it. But the reason why
23:40
the frosts have moved on from credit card deposits is because it takes I have
23:44
to do sixty one thousand dollars do sixty accounts to take over a thousand dollars
23:48
for a credit card. I do one auto loan, and it's so I
23:52
think the severities higher, frequencies less. But if you can get three or
23:56
four cars, I mean you're talking, you could be a couple hundre thousand,
24:00
you know, as a fraudster. So you actually have some involvement with
24:04
the CBA. I'm sure there's a reason you really enjoy this conference. Maybe
24:07
you can talk a little bit about it. All the CBA, probably thirty
24:11
plus years. I think I would not be where I'm at in my position
24:15
today without the CBA. One is it's just the relationships you forward. You
24:18
come to events like this, you get to know other lenders. The committees
24:21
are very strong, I think the committees of the health. And then I
24:22
think the other piece is I went to the graduate school banking school. So
24:26
what I love about CBA is I send my teammates to that school because I
24:30
learned so much from it. Because a lot of us, as bankers,
24:33
we come up, we're a specialists, and what that school teacher how to
24:37
do is teach you how to run a bank. So when they're talking about
24:41
balance sheet and you may be in lending and you don't know what what deposits
24:44
does? You learn what deposit, you learn how what cecil means? You
24:47
learn what makes the bank healthy because like a lot of us come up,
24:51
I'm a collector, I'm an underwriter and product measum in pricing. You don't
24:53
get that. You may get a little bit exposure across the bank, but
24:56
it really gets you horizontally and grows. Just that's the And then what they
24:59
do on I think four banks, the Trade Association, piece of what they
25:03
do on Capitol Hill for us and all what they do to like help with
25:06
the legislation that make sure it's crafted in a way you know that that makes
25:10
sense. Yeah, yeah, I know that those can also be sometimes touchy
25:15
subjects. But you know, what are you guys seeing in terms of,
25:18
you know, maybe rate reductions, changes in legislation, anything you're watching out
25:22
for. Definitely waiting for rates to come down is not going to happening time
25:26
soon. I think to me, the one of the hot topics is really
25:33
tied more to the election as far as what direction it's going to go in
25:36
the impact that could have on the electric vehicle market. You know, that's
25:40
something that there's a lot of speculation around. You know, goes one direction,
25:42
EV gets pushed, it goes another direction, and EV is not going
25:45
to be pushed. So I think there's a lot of speculation around that,
25:49
and I think that's that's probably the biggest thing. The FEST signaling three rate
25:55
decreases. I think it's probably been closer to two. Personal opinion. Yeah,
25:57
I'm just my experience, but I think it will come down, but
26:00
I think meaningful won't happen till next year. Sure, and they just try.
26:03
They're trying to balance out because employment is still strong, but it's inflation,
26:07
right, They're still to balance it out. Yeah, So maybe dig
26:10
in a little more about the EV, like what what changes do you think
26:12
that would have further down market depending on the well I think the like I
26:17
mean, Toyota has already come out and talked about you know, their pushed
26:19
more towards just pure hybrid and more the hybrid plugins, and I think that's
26:22
probably more the direction. I think we'll start to see, you know,
26:26
less emphasis on EV and also, you know, will there be the the
26:30
you know, the infrastructure, you know, the dollars spent on the infrastructure
26:33
to truly support where you know thirty forty percent EV rates are supposed to be,
26:40
and of course what you know for me, I look at the EV
26:42
market. I'm a little mixed on the EV market in part because I think,
26:48
yes, you know, increased fuel economy always extremely beneficial, but you
26:52
also have to consider, you know, today's new car becomes tomorrow's used car,
26:56
and your subprime borrower is looking for cars and looking for forty ability.
27:00
And yes, more inventory, prices will come down, but you're still looking
27:03
at a vehicle that is going to cost more, at least initially upfront.
27:07
So you know, we've got a large still prime population out there. What
27:11
are they going to be buying? I think it calates two with gas prices,
27:14
right, So I mean you do the math how much more I pay
27:15
on that versus of gases you know, moderate not way after you're paying European
27:19
rights. That's a different story, right, But I think you do the
27:22
math, and it takes a while to get paid back. And I think
27:25
it cold off of the two is saying the same fear as it was it
27:27
was. There are a lot of incentives out there to do it. But
27:30
I think also too, is that it's that fear how long is that going
27:33
to go? The charges are pain in the rear. I mean it's like
27:36
that's and those are legitim it's just your commuter car, but to be your
27:38
primary car. Most people, I know, if it's their prima, they're
27:41
just going back and forth to work. Maybe the Gros story, but not
27:44
like because you know a long distance trip, you're going to think about it.
27:48
I mean if people do it, and people do it, but I
27:49
think for consumers as a whole to embrace it, there's still some things that
27:53
are holding them back. But the thing I remember was like okase, when
27:57
the United States went from horse and buggy todmobile. The government didn't force them
28:00
to go, right, I mean, it had to make economical sense.
28:04
It was a better product. I get there faster, it was. You
28:07
know, whatever the cost of maintaining whatever those things were is what drove that
28:11
consumer to them adopt you know, the horse and buggy. I think it's
28:15
the same thing here. Yeah, I mean we were running some numbers on
28:18
it. If you think about it, you know there's two hundred and eighty
28:18
eight million vehicles on the road. Light light duty, not even including medium
28:23
heavy. Yeah, and just in the US, and it's only about one
28:27
one point seven eight percent of households have an electric vehicle and one point five
28:33
have an electric vehicle and another fuel type. So to the point of it's
28:37
it's not necessarily the true hybrid of that, the true plug in hybrid,
28:41
but they're expensive and there's not that many out there. Like when you wanted
28:44
to get that electric car EV years ago, it was just that you had.
28:45
You had the Prius, but it was spartan. It's like now then
28:48
the other ones came out there, they're more luxury now and everything else.
28:52
But I do think the true the true plug in hybrid, I think I
28:55
think I think that's where I think this might go. There first, i'd
28:59
even up better adopt there. But the prices are expensive too there, and
29:02
you're right, there's not as there's not that many of them. Yeah.
29:04
So those there's mine and there's like very few. Yeah, those don't seem
29:10
to relieve some of the pressures we were talking about earlier. On the consumer
29:11
there's one two electric that are true hybrid. They don't have the distance of
29:15
a true EV. So it's like that maybe I've seen sixty miles at most,
29:19
and my memories could be wrong, but I think it's not like three
29:25
hundred miles and get with the tests or whatever else. So I think that's
29:27
but the true hybrid if they get longer distance and you had that gash,
29:30
you have to worry about that from going across the country going long distance that
29:33
we're about charging. Yeah, And I don't remember the numbers, but I
29:37
saw somebody presented at another conference recently. They were showing I think it was
29:41
Cox. They were showing the number of the percentages, like the percentages of
29:44
households that actually have a garage, so like if you are doing home charging,
29:48
are you do you have a driveway, do you have a garage?
29:51
Do you have a place to park to actually charge your vehicle? And I
29:53
was surprised at some of the very low figures, and I just look at
29:57
my neighborhood. Of course, I also in a snow so yeah, you
30:00
know Colorado, ice know, et cetera. But I look at the fact
30:04
up, I think I am the only person in my entire neighborhood that parks
30:07
their car in the garage. Everyone else at storage. But my house is
30:11
also one hundred and twenty years old. I can't accommodate an electric vehicle.
30:15
I can't charge it. They're cool. I like that. It's just I
30:18
just it's meat. I'm sidling bug now. But I think about it.
30:23
But it'd have to be my third car. Yeah, And you know,
30:26
that's just like the other thing I read. It was I forgot where it
30:30
was, but it was about apartment comp how many how many they're in an
30:32
apartment complexes? And then the apartment complex the large communities, the ones that
30:37
like the post homes and stuff like that, the cost to put a charger
30:41
in an apartment complex, and it's like they're expensive and and and then even
30:45
if they charged somebody to charge their car, the payback was a long time.
30:48
So I think there's look, how many, how many people are in
30:52
apartments? Yeah? You think you got to thick through those things. Yeah.
30:55
Is there anything that those OEMs are doing differently to disrupt the buying process
30:59
to financing experience with the consumer the Yeah, nothing that I've really seen,
31:03
I think, you know, outside of the captive I still hear some lenders
31:07
talk about just some uncertainty with financing, you know, EV's I think there's
31:11
there's always that speculation around battery fear, which I think is for the most
31:15
part unfounded. You know, you do see instances where you've got lenders who
31:19
are doing products where there's an additional insurance on the battery as part of you
31:25
know, as part of the financing. So you do see things like that,
31:29
But overall, I don't really see that much of a difference when it
31:32
comes to the EV space versus traditional I haven't either. I think the thing
31:37
I think that the real legit is is that COSTU and should talk about the
31:41
cost insure a f one fifty. The cost to ensure EV is up there
31:47
too. It's higher, it's a higher preme. That's why TEST offers insurance
31:51
because but then you're going to wonder that's now, but later when they have
31:53
loss rates down the road, is it going to change? I don't.
31:56
I don't know. That's that's still uncertainly out there. But I think that
31:59
having to get that insurance in there. So I think what the automakers are
32:01
doing nothing that I think the lenders I've seen out that are doing. Yeah,
32:05
I've heard mixed on that where they are cheaper to maintain, there's fewer
32:07
mechanical parts, but in terms of repair these Well, if you get in
32:12
that stamp car, you get in an accident, you're not just taking off
32:15
the bumper, it's the whole front of the car, right, or it's
32:17
the battery on top of it, right, So it's six more expensive or
32:20
repair great. Well, I appreciate you guys joining me today. Any of
32:23
our thoughts you want to leave us with. I'm just I'm looking for rates
32:30
come down, please. I think that's probably unanimous sentiment at the comments.
32:34
But no, I mean it's it's I'm just seeing a lot of positivity in
32:37
the data. And like I said, the loan amounts are stabilizing, We're
32:38
still growing, consumers are out there buying, we're financing. It's still plugging
32:45
away. I think for I think for banks, to think for prime auto
32:49
finance lenders been two cycles before in my career. I think this is gonna
32:52
be a tough year. There's more headwinds. We've talked about it today in
32:55
our conference this morning, but I said more headwinds and tail was But I
32:59
do see green shoots for next year with rates coming down, inflation coming up,
33:05
and I think the links will come down to as well. I think
33:07
that as inflation starts to come down. Think things will improve about that,
33:09
I do feel, and they'll be pent up demand. So I think for
33:12
those lenders out there, because people have a love affair with cars, and
33:15
I think you'll they're there on the sidelines double when those things kind of return,
33:19
they feel more comfortable. I think. I think for lenders will next
33:22
year will be a better year. Right and Melenda Mark, thank you both
33:24
for joining me. Yeah, thank you. I'll start partners with banks and
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