For many lenders, the coronavirus and subsequent economic challenges have ushered in considerably declining levels of direct auto loan originations and loan growth across the auto lending landscape.
Starting in March of this year, vehicle sales dropped off of the proverbial cliff, reaching their worst levels since March 2010, in the middle of the Great Recession.In 2020, the annual vehicle sales rate fell from 16.8 million to 11.8 million. For some perspective, in March of 2010, the seasonally adjusted annual rate of sales dropped all the way to 11.7 million, which was the worst dip in 10 years—we just surpassed that. The trend continued through the summer months.
Finally, in Q4 of 2020, there is some favorable news on the horizon. According to Globe News Wire, “The automotive industry continues to perform better than initially expected with retail sales down just six percent compared with last year. We’re also seeing one of the best seasonally adjusted annualized rates (SAARs) since March and used vehicles forecast to be up year-over-year for the fourth consecutive month. From a quarterly perspective, new vehicle retail sales are up 27% and used vehicle sales are up 26% quarter over quarter.
Despite this good news, there’s no doubt that the past several months of unprecedented disruptions have left many financial institutions struggling to pivot their direct loan growth strategies. In this blog post, we’ll discuss some actionable steps you can take to set your institution up to survive 2020 and thrive in the year to come.
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