The Industry's Leading Source For F&I, Sales And Technology

Top News

Black Book: Pickups Represent Growth Opportunity for Finance Sources

July 25, 2013

GAINESVILLE, Ga. — The full-sized pickup segment is expected to perform exceptionally well over the next 24 months, according to data from Black Book Lender Solutions.

Black Book analyzed historical vehicle segment data and has developed projected retention levels for the next 12 to 24 months. The analysis showed that in addition to pickups, full-size CUVs are expected to make a strong showing.

“In the past, we've used a lot of historical data to try to predict what the values will be down the road —whereas now we're using that historical value, but we're also looking at our residual values which really gives [lenders] a much clearer picture of what to expect over the next two years,” Jeff Bunch, VP of Black Book Lender Solutions, told F&I and Showroom.

Compact, mid-size and full-size pickups have enjoyed strong retention during the past 12 months, and over the next two years should offer a strong growth opportunity for auto lenders looking to expand their portfolios, according to the company. For full-sized pickups, the average retention over the past year was at 95.22 percent. Mid-size and company pickups were at 94.97 and 94.78 percent, respectively. The average for all three segments for 24 month retention hovered between 69 and 71 percent.

“We see [the strength of pickups] continuing…the economy is picking up, construction is kicking in, so a lot of the people who are using trucks as their primary vehicle or work source are getting back to work,” Bunch said. “There's still, with the drop off a few years ago with the number of new cars and trucks sold, a supply issue as far as pickups are concerned. So with the low supply and the higher demand due to the boost in the economy, we see the full size pick up segment doing exceptionally well over the next 24 months.”

Full-size CUVs such as the GMC Acadia, Buick Enclave, Ford Flex and Cadillac SRX are also expected to outperform average retention. Consumers are replacing full-size SUVs with vehicles in this segment, which also has low supply and is less competitive than the SUVs.

Underperformers include entry-level cars and mini-vans, which Bunch said are facing stiff competition. “Because the functionality of a crossover SUV is so much greater than a regular mini-van, and you've got good gas mileage, the size and the pricing, we project [passenger mini-vans] to underperform compared to the average,” he said.

And because fuel prices have remained steady, car buyers who would have purchased entry-level cars like the Chevrolet Aveo, Honda Fit, Toyota Yaris and Hyundai Accent are moving to the mid-sized segments.

The data, Bunch said, “encourages [lenders] to take a look out for a couple years to see what's going to happen in the market.”

“Knowing your customer is very important, but a lot of our banks or financial institutions are looking at the collateral because down the road, they want to know their risk exposure. So by taking a look at [the data], it allows them to take each particular segment that we are looking at with higher retention as a better opportunity.”

—     Brittany-Marie Swanson

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  

CLOSE [X]

READ NEXT

Autobytel Nets Big SEM Results With Google AdWords Enhanced Campaigns

Autobytel conversions increase 10 percent and tablet conversions increase 15 percent, while marketing costs decrease across many of the company’s online marketing campaigns, the company reports.