Tag Archives: Experian

The Price to Take a Trip

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The rise in insurance is immense. . .

By Gary S. Vasilash

One of the aspects of electric vehicles that is regularly not talked about is that because they tend to be pricier than vehicles with gas engines (according to KBB the average transaction price for an EV is $54,021 compared to $47,218 for vehicles in general) is that insurance rates are higher.

Higher because the vehicle itself is more expensive.

Higher because the cost of repairs is higher.

(When people talk about the need for more EV infrastructure, it is mainly about charging stations. But here’s something to consider: what is the level of availability of repair shops for EVs? I recently went to a repair shop on a Monday to find out when I could get some simple service performed for a non-EV. The scheduler said, “Erm, how about Friday? We’re understaffed.” I suspect that had it been an EV I would have heard, “Well, the EV guy is pretty much booked through. . .” and it would have been beyond Friday.)

According to the U.S. Bureau of Labor Statistic’s Consumer Price Index, while prices for goods and services across the board is up 3.4% from April ’23 to April ’24, motor vehicle insurance over the same period is up 22.6%.

Experian has surveyed consumers and found that 71% say that inflation has “impacted their road trip plans.”

However, over the past 12 months food away from home is up 4.1% and gasoline 1.2%, so it is hard to understand why so many people see inflation as being a big problem.

That 22% rise in car insurance, however. . .

Are There Enough Exclamation Points for EV Sales?

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By Gary S. Vasilash

This won’t garner any headlines:

78.81% of vehicle purchases in the U.S. in 2023 were for vehicles with gasoline engines, according to Experian’s “State of the Automotive Finance Market, Q4 2023.”

The number that will is:

8.55% of the vehicles purchased were electric vehicles.

But of that “purchase,” 30.7% of the EVs were leased, which is essentially renting with the option to buy, not outright obtaining (i.e., according to the Oxford English Dictionary, the verb purchase means “To acquire in exchange for payment in money or any equivalent; to buy.” And the way the Inflation Reduction Act is constructed, for many OEMs leases are the only way that consumers can get a $7,500 purchase incentive).

A number that also won’t get large type:

9.83% were hybrids.

That number alone is about 13% greater than the EV number.

But arguably the 2.02% of vehicles purchased in 2023 that were plug-in hybrids could be added to the hybrid number, which would go to 11.85%.

Odds are that hybrid number is going to continue to grow, as will the EV number, but even though it will continue to be higher than the EV number for the next several years, you can bet every rise in EV sales will continue to get outsized attention—until the novelty passes.

Serious Concerns About Money

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By Gary S. Vasilash

Although it isn’t exactly “buyer’s remorse,” according to a survey conducted in the U.K., 50% of vehicle buyers in the past 12 months express concern about whether or not they’re going to be able to afford the financing.

Specifically, when asked “How concerned are you about whether you can afford the payments under your current finance agreement?”

  • 10% responded “very concerned”
  • 40% responded “somewhat concerned”

Notably, in the “somewhat concerned” cohort, 55% were younger buyers. Perhaps reflecting a certain financial conservatism, only 16% of those 65 or older expressed that.

The survey was sponsored by ALPHERA, a part of BMW Group Financial Services.

While not auto-specific, findings of research conducted in the U.S. by Experian are more concerning.

It found that 68% of U.S. adults have or are suffering from “financial trauma.”

Including “negative thoughts, flashbacks and anxiety.”

And, again, the younger cohorts stand out:

  • 73% of Gen Z adults
  • 77% of Millennials

Seems like greater consideration before hitting the “buy” button might alleviate some concerns, both in the U.S. and the U.K.

The Auto Market Right Now

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Yes, it is hot, as the pent-up demand looks for a release valve. But. . .

“The quarter ended strong, setting the market up for an incredible spring from a demand perspective, with $1,400 stimulus payments starting to be issued, tax refund season beginning, rising consumer sentiment because of the vaccination progress, and, literally, it is spring which normally causes people to think more about buying vehicles. All those things are coming together right now, and the industry would likely be setting all-time sales records if it were not for tight supplies and elevated prices.”—Jonathan Smoke, chief economist, Cox Automotive

It’s that second thing that can be troubling.

According to Experian, in 2020 U.S. consumer debt was $14.88 trillion, which is a 6% increase compared to 2019 and the highest growth rate in more than a decade.

And of that, auto loan debt was at an all-time high of $1.35 trillion, a 3.8% increase over 2019.

Gen X has the largest auto loan debt balance, at $22,307, followed by the Boomers, at $19,306, which is just ahead of the Millennials, at $19,011.

(Seems like Gen X is big on debt, as it leads all generations in all categories, including credit card debt, student loans and mortgages.)