Auto originations continue to increase — particularly within prime categories. According to Experian’s latest State of the Automotive Finance Market report: Prime consumers grabbed the lion’s share of the total finance market, at 40.9%. Super-prime buyers showed the largest increase, reaching 20.2%. Consumers outside the prime category (credit score of 600 or lower) decreased to the lowest share on record since 2012. Credit unions and captive lenders increased market share of total vehicle financing, growing to 21% and 29.8% — an increase of 6.9% and 35.1%, respectively. As auto loan originations continue their upward trend, lenders can stay ahead of the competition by using advanced analytics to target the right customers and increase profitability.  

Alternative Data Shedding New Light on Consumers Why Investors Want Alternative Data Banks and Tech Firms Battle Over Something Akin to Gold: Your Data Alternative data for credit has created national headlines in the past year and a lasting buzz in the financial services world. But what exactly qualifies as alternative data in credit? How can it benefit lenders? Consumers? Ask two people these questions and you may get very different answers. Experian defines alternative data as FCRA-compliant data points that are not typically considered when evaluating a potential customer’s creditworthiness. These data points may include rent payments; utility payments, including gas, electric; telecommunications payments, such as mobile telephones; insurance payments; and any other recurring financial obligations. Taking these alternative data points into account can benefit consumers and lenders in multiple ways. Consider that roughly 45 million Americans have either no credit history, or a credit history that is too scarce or outdated to manufacture a credit score. This group of consumers includes not only minority consumers or those from low income neighborhoods, but also the shared economy workforce and millennials without traditional credit histories. Some estimate 121 million U.S. adults are credit-challenged with thin-to-no credit file and subprime credit scores below 600. “People with little or no credit history, or who lack a credit score, have fewer opportunities to borrow money to build a future, and any credit that is available usually costs more,” said Richard Cordray, while he was director of the Consumer Financial Protection Bureau. Indeed, these consumers are in a catch-22; many lenders will not lend to consumers with credit scores of under 620. In turn, these consumers have trouble building credit, and they are blocked from achieving goals like buying a car, owning a home or starting a business. By combining credit reports with alternative data, a more complete picture of subprime, near-prime and thin-file consumers can develop. And analysis of this data can help lenders evaluate a consumer’s ability to pay. When alternative data like rent payments and an individual’s short term lending history are trended appropriately, it can be an accurate predictor of an individual’s financial behavior, and can be an important step toward promoting greater financial inclusion for more consumers. In addition to using alternative data in underwriting, lenders can leverage the data to help with: Expanding the prospecting universe. Data can be used to enrich batch prospecting decisioning criteria to identify better qualified prospects, suppress high-risk consumers, and offer a more complete borrowing history Account review. Alternative data can help signal a consumer’s financial distress earlier, better manage credit lines and grow relationships with existing consumers. Collections. Identify consumers who are rebuilding credit with specialty finance trades, or who are exhibiting high-risk behaviors in the alternative financial services space. More info on Alternative Credit Data More Info on Alternative Financial Services

Everyone loves a story.  Correction, everyone loves a GOOD story. A customer journey map is a fantastic tool to help you understand your customer’s story from their perspective. Perspective being the operative word. This is not your perspective on what YOU think your customer wants. This is your CUSTOMER’S perspective based on actual customer feedback – and you need to understand where they are from those initial prospecting and acquisition phases all the way through collections (if needed). Communication channels have expanded from letters and phone calls to landlines, SMS, chat, chat bots, voicemail drops, email, social media and virtual negotiation. When you create a customer journey map, you will understand what channel makes sense for your customer, what messages will resonate, and when your customer expects to hear from you. While it may sound daunting, journey mapping is not a complicated process. The first step is to simply look at each opportunity where the customer interacts with your organization. A best practice is to include every department that interacts with the customer in some way, shape or form. When looking at those touchpoints, it is important to drill down into behavior history (why is the customer interacting), sociodemographic data (what do you know about this customer), and customer contact patterns (Is the customer calling in? Emailing? Tweeting?). Then, look at your customer’s experience with each interaction. Again, from the customer’s viewpoint: Was it easy to get in touch with you? Was the issue resolved or must the customer call back? Was the customer able to direct the communication channel or did you impose the method? Did you offer self-serve options to the right population? Did you deliver an email to someone who wanted an email? Do you know who prefers to self-serve and who prefers conversation with an agent, not an IVR? Once these two points are defined: when the customer interacts and the customer experience with each interaction, the next step is simply refining your process. Once you have established your baseline (right channel, right message, right time for each customer), you need to continually reassess your decisions.  Having a system in place that allows you to track and measure the success of your communication campaigns and refine the method based on real-time feedback is essential. A system that imports attribute – both risk and demographic – and tracks communication preferences and campaign success will make for a seamless deployment of an omnichannel strategy. Once deployed, your customer’s experience with your company will be transformed and they will move from a satisfied customer to one that is a fan and an advocate of your brand.

It should come as no surprise that the process of trying to collect on past-due accounts has been evolving. We’ve seen the migration from traditional mail and outbound calls, to offering an electronic payment portal, to digital collections and virtual negotiators. Being able to get consumers who have past-due debt on the phone to discuss payments is almost impossible. In fact, a recent informal survey divulged a success rate of a 15% contact rate to be considered the best by several first-party collectors; most reported contact rates in the 8%-range. One can only imagine what it must be like for collection agencies and debt buyers. Perhaps, inviting the consumer to establish a non-threatening dialog with an online system can be a better approach?  Now that collectors have had time to test virtual collections, we’ve collected some data points. Conversion rates, revisits, and time of day An analysis of several clients found that on average 52% of consumers that visit a digital site will proceed to a payment schedule if the right offer is made. 21% of the visits were outside the core hours of 8 a.m. to 8 p.m., an indication that consumers were taking advantage of the flexibility of reaching out at any time of the day or night to explore their payment and settlement options. The traditional business hours don’t always work. Here is where it really gets interesting, and invites a clear comparison to the traditional phone calls that collectors make trying to get the consumer to commit to a payment  plan on the line. Of the consumers that committed to a payment plan, only 56% did it in a single visit. The remaining 44% that committed to payments did so mostly later that day, or on a subsequent day. This strongly suggests they either took time to check their financial status, or perhaps asked a friend or family to help with the payment. In other words, rather than refusing to agree to an instantaneous agreement pressured by a collector, the consumer took time to reflect and decide what was the best course of action to settle the amount due. On a similar note, the attrition rate of “Promises to Pay” were 24% lower using online digital solutions versus the traditional collector phone call. This would be consistent with more time to agree to a payment plan that could be met, rather than weakly agreeing to a collector phone call just to get the collector off the phone. Another possible reason for a lower attrition rate may be that a well-defined digital collection solution can send out reminders to consumers via email or text in advance of the next scheduled payment, so that the consumer can be reminded to have the funds available when the next payment hits their account. For accounts where settlement offers are part of the mix, a higher percentage of balances is being resolved versus the collection floor. In fact, the average payment improvement is 12% over what collectors tend to get on the collections floor. The reason for this significant change is unclear, but the suspicion is that a digital collection solution will negotiate stronger than a collector, who is often moving to the bottom of an acceptable range too soon. What's next? Further assessing the consumer’s needs and capabilities during the negotiation session will undoubtedly be a theme going forward. Logical next steps will include a “behind-the-scenes” look at the consumer’s entire credit picture to help the creditor craft an optimal settlement amount that both the consumer can meet, and at the same time optimizes recovery. Potential impact to credit scores will also come into the picture.  Depending on where the consumer and his past-due debt is in the credit lifecycle, being able to reasonably forecast the negative impact of a missed payment can act as an additional argument for making a past-due or delinquent payment now. As more financial institutions test this new virtual approach, we anticipate customer satisfaction and resolutions will continue to climb.

We regularly hear from clients that charge-offs are increasing and they’re struggling to keep up with the credit loss. Many clients use the same debt collection strategy they’ve used for years – when businesses or consumers can’t repay a loan, the creditor or collection agency aggressively contacts them via phone or mail to obtain repayment – never considering the customer experience for the debtor. Our data shows that consumers accounted for $37.24 billion in bankcard charge-offs in Q2 2017, a 17.1 percent increase from Q2 2016. Absorbing credit losses at such a high rate can impact the sustainability of the institution. Clearly the process could use some adjusting. Traditionally, debt collection has been solely about the money. The priority was ensuring that as much of the outstanding debt as possible was repaid. But collecting needs to be about more than that. It also should focus on the customer and his or her individual situation. When it comes to debt collection, customers should not all be treated the same way. I recently shared some tips in Credit Union Business Magazine about how to actively engage and collect from members. The same holds true for other financial institutions – they need to know the difference between a customer who has simply forgotten to make a payment and one who is dealing with financial hardship. As an example, if a person is current on his or her mortgage payment but has slipped behind on his or her credit card payment, that doesn’t necessarily signify financial hardship. It’s an opportunity to work with the customer to manage the debt and get back to current. Modern financial institutions build acquisition and customer management strategies targeted at individuals, so why should the collection process be any different? The challenge is keeping the customer at the center while also managing against potential increases in delinquencies. This holistic approach may be slightly more complex, but technology and analytics will simplify the process and bring about a more engaging experience for customers. The Power of Data and Technology Instead of relying on the same outdated collections approach – which results in uncomfortable exchanges on the phone that don’t ensure repayment –leverage data to your advantage. The data and technology exists to help you make more informed decisions, such as: What’s the most effective communication channel to reach the defaulting customer? When should you contact him or her? How often? The best course of action could be high-touch outreach, but sometimes doing nothing is the right approach. It all depends on the situation. Data and analytics can help uncover which customers are most likely to pay on their own and those who may need a little more help, allowing you to adjust your treatment strategy accordingly. By catering to the preferences of the customer, there’s a greater chance for a positive experience on both sides. The results: less charge-off debt, higher customer satisfaction and a stronger relationship. Explore the Digital Age In 2016, 36 million Americans made some form of mobile payment—paying a bill, purchasing something online, or paying for fast food, or making a Mobile Wallet purchase at a retailer. By 2020, nearly 184 million consumers will have done so, according to Aite. Consumers expect and deserve convenience. In the digital world, financial institutions have an opportunity to provide that expectation and then some. Imagine a customer being able to negotiate and manage his or her past-due account virtually, in the privacy of his or her own home, when it’s most convenient, to set their payment dates and terms. Luckily, the technology exists to make this vision a reality. Customers, not money, need to be at the heart of every debt collections strategy. Gone are the days of mass phone calls to debtors. That strategy made consumers unhappy, embarrassed and resentful. Successful debt collection comes down to a basic philosophy: Treat customers and his or her unique situation individually rather than as a portfolio profile. The creditors who live by that philosophy have an opportunity to reap the rewards on the back-end.

Millennials have long been the hot topic over the course of the past few years with researchers, brands and businesses all seeking to understand this large group of people. As they buy homes, start families and try to conquest their hefty student loan burdens, all will be watching. Still, there is a new crew coming of age. Enter Gen Z. It is estimated that they make up ¼ of the U.S. population, and by 2020 they will account for 40% of all consumers. Understanding them will be critical to companies wanting to succeed in the next decade and beyond. The oldest members of this next cohort are between the ages of 18 and 20, and the youngest are still in elementary school. But ultimately, they will be larger than the mystical Millennials, and that means more bodies, more buying power, more to learn. Experian recently took a first look at the oldest members of this generation, seeking to gain insights into how they are beginning to use credit. In regards to credit scores, the eldest Gen Z members sported a VantageScore® credit score of 631 in 2016. By comparison, younger Millennials were at 626 and older Millennials were at 638. Given their young age, Gen Z debt levels are low with an average debt-to-income at just 5.7%. Their tradelines largely consist of bankcards, auto and student loans. Their average income is at $33.8k. Surprisingly, there was a very small group of Gen Z already on file with a mortgage, but this figure was less than .5%. Auto loans were also small, but likely to grow. Of those Gen Z members who have a credit file, an estimated 12% have an auto trade. This is just the beginning, and as they age, their credit files will thicken, and more insights will be gained around how they are managing credit, debt and savings. While they are young today, some studies say they already receive about $17 a week in allowance, equating to about $44 billion annually in purchase power in the U.S. Factor in their influence on parental or household purchases and the number could be closer to $200 billion! For all brands, financial services companies included, it is obvious they will need to engage with this generation in not just a digital manner, but a mobile manner. They are being raised in an era of instant, always-on access. They expect a quick, seamless and customized mobile experience.  Retailers have 8 seconds or less — err on the side of less — to capture their attention. In general, marketers and lenders should consider the following suggestions: Message with authenticity Maintain a long-term vision Connect them with something bigger Provide education for financial literacy and of course Keep up with technological advances. Learn more by accessing our recorded webinar, A First Look at Gen Z and Credit.

Subprime vehicle loans When discussing automotive lending, it seems like one term is on everyone’s lips: “subprime auto loan bubble.” But what is the data telling us? Subprime auto lending reached a 10-year record low for Q1. The 30-day delinquency rate dropped 0.5% from Q1 2016 to Q1 2017. Super-prime share of new vehicle loans increased from 27.4% in Q1 2016 to 29.12% in Q1 2017. The truth is, lenders are making rational decisions based on shifts in the market. When delinquencies started going up, the lending industry shifted to more creditworthy customers — average credit scores for both new and used vehicle loans are on the rise. Read more>

When discussing automotive lending, it seems like one term is on everyone’s lips: “subprime auto loan bubble.” There’s always someone who claims that the bubble is bursting. But a level-headed look at the data shows otherwise. According to our Q1 2017 State of the Automotive Finance Market report, 30-day delinquencies dropped and subprime auto lending reached a 10-year record low for Q1. The 30-day delinquency rate dropped from 2.1 percent in Q1 2016 to 1.96 percent in Q1 2017, while the total share of subprime and deep-subprime loans dropped from 26.48 percent in Q1 2016 to 24.1 percent in Q1 2017. The truth is, lenders are making rational decisions based on shifts in the market. When delinquencies started to go up, the lending industry shifted to more creditworthy customers. This is borne out in the rise in customers’ average credit scores for both new and used vehicle loans: The average customer credit score for a new vehicle loan rose from 712 in Q1 2016 to 717 in Q1 2017. The average customer credit score for a used vehicle loan rose from 645 in Q1 2016 to 652 in Q1 2017. In a clear indication that lenders have shifted focus to more creditworthy customers, super prime was the only risk tier to grow for new vehicle loans from Q1 2016 to Q1 2017. Super-prime share moved from 27.4 percent in Q1 2016 to 29.12 percent in Q1 2017. All other risk tiers lost share in the new vehicle loan category:   Prime — 43.36 percent, Q1 2016 to 43.04 percent, Q1 2017. Nonprime — 17.83 percent, Q1 2016 to 16.96 percent in Q1 2017. Subprime — 10.64 percent, Q1 2016 to 10.1 percent in Q1 2017.   For used vehicle loans, there was a similar upward shift in creditworthiness. Prime and super-prime risk tiers combined for 47.4 percent market share in Q1 2017, up from 43.99 percent in Q1 2017. At the low end of the credit spectrum, subprime and deep-subprime share fell from 34.31 percent in Q1 2016 to 31.27 percent in Q1 2017.   The upward shift in used vehicle loan creditworthiness is likely caused by an ample supply of late model used vehicles. Leasing has been on the rise for the past several years (and is at 31.06 percent of all new vehicle financing today). Many of these leased vehicles have come back to the market as low-mileage used vehicles, perfect for CPO programs.   Another key indicator of the lease-to-CPO impact is the rise in used vehicle loan share for captives. In Q1 2017, captives had 8.3 percent used vehicle loan share, compared with 7.2 percent in Q1 2016.   In other findings:   Captives continued to dominate new vehicle loan share, moving from 49.4 percent in Q1 2016 to 53.9 percent in Q1 2017. 60-day delinquencies showed a slight rise, going from 0.61 percent in Q1 2016 to 0.67 percent in Q1 2017. The average new vehicle loan reached a record high: $30,534. The average monthly payment for a new vehicle loan reached a record high: $509.   For more information regarding Experian’s insights into the automotive marketplace, visit https://www.experian.com/automotive.

Today is a great day for Experian and our automotive clients. We’ve been working with String Automotive for several years, and have now taken the next step in our relationship, as String Automotive has become part of the Experian family. In today’s generally flat new-car market, successful dealers need the perfect mix of data and market intelligence to drive more sales, cultivate deeper customer relationships and develop new ways of better conquesting customers from their competition. String Automotive’s Dealer Positioning System, matched with our own information and data-driven insights, provides our automotive dealer clients with an ideal solution to grow their businesses. It is the only platform to combine dealership website analytics and inventory information with automotive market, consumer demographic and purchasing behavior data. Simply put, it takes the pulse of each dealership’s local market and guides dealers to make the most profitable, proactive decisions for every store and unique situation. This powerful analytics solution simplifies choices like how to spend marketing dollars and where to target conquesting efforts by letting market and dealership data drive decisions. What’s the bottom line? The Dealer Positioning System increases profitability across the dealership. It’s one thing to hear that message from us, but we also hear of the benefits from our clients. Paul Schnell, digital marketing director at Wilsonville Toyota in Oregon, had this to say: "There is no 'I wonder if...' with the Dealer Positioning System®. Now it is, 'I know it and I can act on it today’. Their latest tools give us zip-code-level intelligence that's just not available at the dealer level any other way. We are micro-targeting the perfect message with the perfect vehicle to the perfect prospect." For more information on Experian or our other automotive products and services, please visit www.experian.com/automotive. For more information about String Automotive and the Dealer Positioning System, please visit http://stringautomotive.com/Dealer_Positioning_System.

For an industry that has grown accustomed to sustained year-over-year growth, recent trends are concerning. The automotive industry continued to make progress in the fourth quarter of 2016 as total automotive loan balances grew 8.6% over the previous year and exceeded $1 trillion. However, the positive trend is slowing and 2017 may be the first year since 2009 to see a market contraction. With interest rates on the rise and demand peaking, automotive lending will continue to become more competitive. Lenders can be successful in this environment, but must implement data-driven targeting strategies. Credit Unions Triumph Credit unions experienced the largest year-over-year growth in the fourth quarter of 2016, increasing 15% over the previous period. As lending faces increasing headwinds amid rising rates, credit unions can continue to play a greater role by offering members more competitive rates. For many consumers, a casual weekend trip to the auto mall turns into a big new purchase. Unfortunately, many get caught up in researching the vehicle and don’t think to shop for financing options until they’re in the F&I office. With approximately 25% share of total auto loan balances, credit unions have significant potential to recapture loans of existing members. Successful targeting starts with a review of your portfolio for opportunities with current members who have off-book loans that could be refinanced at a lower rate. After developing a strategy, many credit unions find success targeting these members with refinance offers. Helping members reduce monthly payments and interest expense provides an unexpected service that can deepen loyalty and engagement. But what criteria should you use to identify prospects? Target Receptive Consumers As originations continue to slow, marketing response rates will as well, leading to reduced marketing ROI. Maintaining performance is possible, but requires a proactive approach. Propensity models can help identify consumers who are more likely to respond, while estimated interest rates can provide insight on who is likely to benefit from refinance offers. Propensity models identify who is most likely to open a new trade. By focusing on these populations, you can cut a mail list in half or more while still focusing on the most viable prospects. It may be okay in a booming economy to send as many offers as possible, but as things slow down, getting more targeted can maintain campaign performance while saving resources for other projects. When it comes to recapture, consumers refinance to reduce their payment, interest rate, or both. Payments can often be reduced simply by ‘resetting’ the clock on a loan, or taking the remaining balance and resetting the term. Many consumers, however, will be aware of their current interest rate and only consider offers that reduce the rate as well. Estimated interest rates can provide valuable insight into a consumer’s current terms. By targeting those with high rates, you are more likely to make an offer that will be accepted. Successful targeting means getting the right message to the right consumers. Propensity models help identify “who” to target while estimated interest rates determine “what” to offer. Combining these two strategies will maximize results in even the most challenging markets. Lend Deeper with Trended Data Much of the growth in the auto market has been driven by relatively low-risk consumers, with more than 60% of outstanding balances rated prime and above. This means hypercompetition and great rates for the best consumers, while those in lower risk tiers are underserved. Many lenders are reluctant to compete for these consumers and avoid taking on additional risk for the portfolio. But trended data holds the key to finding consumers who are currently in a lower risk tier but carry significantly less risk than their current score suggests. In fact, historical data can provide much deeper insight on a consumer’s past use of credit. As an example, consider two consumers with the same risk score at a point in time. While they may be judged as carrying similar risk, trended data shows one has taken out two new trades in the past 6 months and has increasing utilization, while the other is consolidating and paying down balances. They may have the same risk score today, but what will the impact be on your future profitability? Most risk scores take a snapshot approach to gauging risk. While effective in general, it misses out on the nuance of consumers who are trending up or down based on recent behavior. Trended data attributes tell a deeper story and allow lenders to find underserved consumers who carry less risk than their current score suggests. Making timely offers to underserved consumers is a great way to grow your portfolio while managing risk. Uncertain Future The automotive industry has been a bright spot for the US economy for several years. It’s difficult to say what will happen in 2017, but there will likely be a continued slowing in originations. When markets get more competitive, data-driven targeting becomes even more important. Propensity models, estimated interest rates, and trended data should be part of every prescreen campaign. Those that integrate them now will likely shrug off any downturn and continue growing their portfolio by providing valuable and timely offers to their members.

With steady sales growth the past several years, the auto industry has had a great run since the trough of the Great Recession in 2009. Based on the latest data published in the State of the Automotive Finance Market report, the auto industry’s robust sales totaled more than 17 million vehicles in 2016, pushing the total open auto loan balances to a record high of $1.072 trillion, up from $987 billion in Q4 2015. Despite the current boom, new vehicle affordability is becoming more challenging. The average monthly payment for a new vehicle loan jumped from $493 in Q4 2015 to $506 in Q4 2016, while the average new vehicle loan reached an all-time high in Q4 2016, at $30,621. In addition, the chasm between new vehicle loan and used vehicle loan average amounts is wider than ever at $11,292. This trend appears to be pushing more credit-worthy customers into the used vehicle market. In Q4 2016, the percentage of used vehicle loans going to prime and super prime customers was up from 45.49 percent in Q4 2015 to 47.76 percent in Q4 2016. In addition, the average credit score for used vehicle loans is up from 649 in Q4 2015 to 654 in Q4 2016. Consumers also appear to be combating the vehicle affordability issue by shifting into leases or longer-term loans to keep their monthly payments low. Leasing was up from 28.87 percent of all new vehicle financing in Q4 2015 to 28.94 percent in Q4 2016. Loan terms of 73 to 84 months now account for 32.1 percent of all new vehicle loans, up from 29 percent in Q4 2015. Keeping payments manageable will help keep people out of delinquencies, which is good for consumers and their lenders. Data shows that 30-day delinquencies were relatively flat, moving from 2.42 percent in Q4 2015 to 2.44 percent in Q4 2016, while 60-day delinquencies are growing, moving from 0.71 percent to 0.78 percent. It seems that as long as new vehicle costs rise, it is likely that more people will move toward leasing, longer term loans and used vehicles. While none of these trends are inherently bad, they could re-shape dealer strategy moving forward. Many analysts predict flat new vehicle sales in 2017, making used vehicle, F&I and service business more important to overall dealership growth this year.

The auto industry has had an impressive recovery from the Great Recession and has enjoyed steady growth for the past seven years. After bottoming out in 2009 at 10.5 million new vehicle registrations, the industry has grown each year since, culminating in 17.3 million new vehicle registrations in 2016. However, the rate of growth has been slowing over the past several years, increasing just 1.03 percent from 2015 to 2016. While retail registrations were nearly flat, the growth came from fleet, with a 13.69 percent spike in registrations by government entities and a 5.59 percent increase in commercial/taxi registrations. When automotive sales growth begins to taper, hanging onto existing customers becomes more important than ever. Fortunately, customer loyalty in the auto industry is rising for manufacturers, dealers and lenders. The manufacturer loyalty rate through November 2016 was 62.8 percent, up from 59 percent in 2010. At the make level, the loyalty rate went from 50.6 percent in 2010 to 54.5 percent through November 2016.  Loyalty to a specific dealer is significantly lower but still on the rise, moving from 19.5 percent in 2010 to 23 percent through November 2016. Interestingly, 61.3 percent of all new vehicle registrations in 2016 were to customers 45 years old and older. Manufacturers and dealers who can keep these customers in the fold in the next several years are likely to maintain and grow their overall share. Our recent analysis also looked as how age impacts vehicle purchasing loyalty. In general, older customers tend to be more loyal than younger customers. Manufacturer loyalty rates by age include: 18-24 years old – 58.3 percent 25-34 years old – 55.4 percent 35-44 years old – 59.9 percent 45-54 years old – 64.4 percent 55-64 years old – 68.2 percent 65+ years old – 70.4 percent General Motors market share still number one For manufacturer market share in 2016, General Motors led the way at 16.91 percent. However, this is a significant drop from the 24 percent share of total vehicles in operation (VIO) enjoyed by GM. Toyota was second in manufacturer market share at 15.46 percent, followed by Ford Motor Co. at 12.59 percent and FCA US at 11.77 percent. Honda rounded out the top five manufacturers at 11.19 percent. For manufacturer customer loyalty, however, Tesla came out on top at 73.6 percent, followed by Toyota at 68.7 percent and Subaru at 66.8 percent. Ford and GM round out the top five at 65.7 percent and 64.7 percent respectively. Pickup trucks claim top model share, loyalty rankings Pickup trucks again held the top two positions among the most popular vehicles, with the Ford F-150 at 3.06 percent and the Chevy Silverado at 2.61 percent. Honda claimed the next three spots with the Honda Civic (2.53 percent), the Honda CR-V (2.46 percent) and the Honda Accord (2.37 percent). While the F-150 and Silverado were the most popular models, their competition led the way in customer loyalty. The Ram 1500 full-size pickup truck had a customer loyalty rate of 50.9 percent, followed by the F-150 at 46.3 percent and the Lincoln MKZ at 43.9 percent. In other trends: Non-luxury small CUV/SUVs were tops in segment market at 17.81 percent, followed by non-luxury mid-size sedans (13.89 percent) and non-luxury mid-size SUVs (13.22 percent). Tesla led the industry with a Conquest/Defection ratio of 13.77 to 1. 4-cylinder engines overtook 6-cylinder engines as the top engine type, 38 percent to 37.4 percent Vehicles in Operation are expected to reach 292 million by 2020 For more information on how to drive customer loyalty rates, visit Experian Automotive.

If you listen to some of the latest auto industry analysis, you might get the impression that the industry is doomed because younger consumers aren’t interested in buying cars. It is true the vast majority – 61.3 percent – of new vehicle registrations in 2016 were from customers 45 years old and older, but is that really a cause for concern? Or are automotive marketers simply doing a better job of identifying customers with the means to buy their product? Remember Willie Sutton’s response when asked why he robbed banks? “Because that’s where the money is.” Maybe, just maybe, automotive marketers are getting better at market segmentation and finding the right customers for their vehicles. Maybe, they’re simply going to “where the money is” like Willie Sutton. How do auto marketers know where to look? Experian’s Mosaic® USA consumer lifestyle segmentation is a good place to start. It is made up of 71 different consumer groupings from the most affluent suburbanites to the most economically challenged. Understanding who and where these customers are and knowing which vehicles fit their current lifestyles and economic standing can help automakers and retailers boost sales. Take luxury vehicles, for example. In Q4 2016, the top three Mosaic® consumer segments in the luxury vehicle category included: American Royalty – 12.67 percent Silver Sophisticates – 7.69 percent Aging in Aquarius – 5.01 percent Who are these folks? Individuals and households in the: American Royalty include wealthy, empty nest Baby Boomers with million dollar homes; Silver Sophisticates include a mix of older and retired couples and singles living in suburban comfort; and Aging in Aquarius include empty-nesting couples between 50 and 65 years old with no children at home who are finally enjoying the kick-back-and-relax stage of their lives. What do each of these segments have in common? Their members have the disposable income to pamper themselves a bit, and a luxury vehicle might just be the way to do it. But, what if you sell minivans? The Mosaic consumer segment Babies and Bliss is one target audience to consider targeting.  These large families with multiple children live in homes valued over $250,000 and should be at the top of your prospecting list. How about those younger customers who seem so anti-auto? Fast Track Couples -- families on the road to upward mobility, under the age of 35, with good jobs and own their homes are ripe for a CUV. Or perhaps Status Seeking Singles -- younger, middle-class singles preoccupied with balancing work and leisure lifestyles? There’s got to be a hybrid vehicles waiting for them, right? Just because younger customers are still in the minority of auto buyers, it doesn’t mean the industry is in crisis. The right customer segment for the right vehicle is out there – even in the younger demographics. And besides…younger customers get older so now is the time to win their hearts and minds and begin building a long-term relationship with them. But, if you’re not the patient type and you’ve got a vehicle to sell, you can find your next best customer by using Mosaic USA to create cross-channel messaging that connects with the lifestyle and values of your audience. For more information on automotive target marketing, visit Experian Automotive.

Latest results from Experian's Market Trends report shows that 17.3 million new vehicles have been added to the U.S. Market of light-duty vehicles on the road.

With Detroit’s Motor City being the epicenter of the North American automotive manufacturing industry, that detail should come as no surprise. Furthermore, a recent analysis of Experian data showed that of the nearly 12.6 million consumers who returned to market to purchase a new vehicle, 60.9 percent remained loyal to their brand. Consumers going from a Certified Pre-Owned (CPO) vehicle to another CPO vehicle from the same original equipment manufacturer (OEM) showed even higher loyalty rates at 75 percent. Seeing as how pre-owned vehicle purchases are on the rise, and becoming more and more popular among consumers across all credit risk tiers, it isn’t unexpected to see higher loyalty rates in the CPO category. CPO vehicles are an attractive option for both auto manufacturers and consumers. Auto manufacturers continue to increase sales through higher rates of lease penetration, then channel these off-lease vehicles into certified pre-owned fleets. In essence, they are controlling both supply and demand of their off-lease used vehicles and building an amazingly loyal customer base. By understanding these loyalty rates, manufacturers, dealers and resellers are able to make smarter decisions that create more opportunities for themselves and in-market consumers. Buying a CPO vehicle can also give consumers an extra layer of confidence when making a purchasing decision because of the multi-point inspections included in the manufacturer’s program. Now, what about Michigan you ask? Well, if you are a Michiganian, you are 63 percent more likely to remain loyal to your particular brand of car. The analysis showed North Dakota (62.4 percent) and South Dakota (61.4 percent) round out the top three states with the most brand-loyal consumers. But, regardless of home state, which brands do consumers choose time and time again? Well, for overall brand loyalty including all purchase types, Tesla ranked highest, with 70.3 percent of Tesla owners choosing to buy another. Subaru was second, with 65.9 percent of its owners coming back, followed by Ford at 65 percent, Toyota at 63.5 percent and Mercedes-Benz at 63.1 percent. Other findings: CUV/SUV owners were most loyal when returning to market, with 69.6 percent returning to buy another CUV/SUV, followed by pickup owners (59.6 percent), sedan owners (58.4 percent), minivan owners (33.2 percent) and hatchback owners (29.4 percent). CPO owners choosing to purchase another CPO vehicle, were loyal to: Ford, 84.6% Mercedes-Benz, 82.8% Honda, 81.9% Toyota, 81.6% Lincoln, 78.1% CPO owners that chose to buy a new vehicle, were loyal to: Kia, 65% Ford, 63.5% Toyota, 63.1% Honda, 60.5% Chevrolet, 58.4% To find out more about Experian Automotive’s research into the automotive marketplace, visit https://www.experian.com/automotive/auto-industry-analysis.html.