WESTLAKE VILLAGE, Calif. – Power Information Network (PIN) has reported that captive finance companies' share of the retail loan market has declined from 68.7 percent in the third quarter of 2005 to 55.2 percent in the same period of this year, according to AutoRemarketing.com. The decrease has appeared in the three largest vehicle segments, including mid-size, full-size pickup and premium compact cars.

PIN executives attribute the decrease to reductions in captive incentive programs as automakers pushed their employee price discount programs. Another factor is that captive loan rates have recently increased at a greater rate than the non-captive rates, with non-captive APR dropping by almost 50 percent, which gives retail customers less of a reason to choose the captive alternative.

The company also pointed out that captive rates are largely influenced by the rates for the Big 3 captives, and after looking at the Big 3 financial arms, their rates have risen as their costs of funds have climbed due to declines in credit ratings. The trend has in turn made it more expensive for domestic OEMs to run sub-vented rate programs through their financing arms.