Table of Contents
Scope and Themes
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- What you need to know
- Data Sources
- Consumer survey data
- Advertising creative
- Abbreviations and terms
- Abbreviations
Executive Summary
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- Consumers choosing financing or paying fully in cash
- Consumers want low interest rates, convenience in their choice
- Consumers paying fully in cash mainly to avoid interest rates
- A quarter of financers put down 0% cash for their vehicle
- 5.56% average finance rate secured
- Consumers choosing long loan terms to finance vehicles
- Online plays leading role for researching auto financing
- The U.S. automotive industry has been on a wild ride
- GMAC (now Ally) posts profitability
- Ford ‘most popular’ automaker
- But consumer debt is staggering
- Unemployment still high, new auto/light truck sales down from peak
- Consumer credit scores are dropping
- Default risk on subprime borrowing rises 406%
- But how will industry react?
- Credit unions gaining traction
Insights and Opportunities
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- Industry websites important to buyers
- Credit unions need better advertising creative
- Consequences of the “New Normal”
Inspire Insights
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- Trend—Solid as a Rock
Market Drivers
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- Key points
- Cut-rate financing, shorter loan terms trending to help drive up sales
- Persistent unemployment drives consumers to consider low financing
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- Figure 1: U.S. unemployment rate, by month, July 2008-October 2010
- Disposable income remains limited in many households
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- Figure 2: Real disposable personal income, January 2007-January 2010
- Consumer confidence remains at historically low level
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- Figure 3: Consumer Sentiment Index, 2007-09
- New auto/light truck sales in decline from peak
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- Figure 4: New car and light truck sales, 2000-10
- Recalls by top automotive manufacturers hurt public confidence
- Increase in consumer debt forcing consumers to slow spending
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- Figure 5: Consumer debt, Q1 1999-Q1 2010
Segment Performance
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- Key points
- Dealership finance and paying fully in cash top ways to finance
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- Figure 6: Financing chosen for the last new, used or leased vehicle, by gender, September 2010
- Those aged 18-24 and 65+ most likely to pay in cash for vehicle
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- Figure 7: Financing chosen for the last new, used or leased vehicle, by age, September 2010
- Dealership financing and cash main ways to finance
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- Figure 8: Financing chosen for the last new, used or leased vehicle, by household income, September 2010
- Trends show slightly more financing through credit unions
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- Figure 9: Type of financing obtained for new/used vehicles, 2004-10
Dealership Financing—Domestics
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- Key points
- Ford Credit
- Ally (General Motors and Chrysler)
- General Motors Financial Company
- GM offers cashback or low interest rates
- Chrysler Financial
Dealership Financing—Imports
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- Key points
- BMW Financial Services
- Toyota Financial Services
- Hyundai Motor Finance
- American Honda Finance Corporation
- Other Imports
Commercial Bank Auto Loans
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- Key points
- Capital One Pre-Approvals
- Wells Fargo Refinancing
- Chase $100 cashback
- SunTrust Bank
- PNC Bank
- Bank of America
Credit Unions
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- Key point
- Credit union APRs among the lowest
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- Figure 10: Select credit union auto finance offerings, October 2010
Brand Qualities
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- Key points
- Credit unions, small banks have highest satisfaction rates
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- Figure 11: Customer satisfaction with financial products companies, among current and former customers, December 2009
- BMW, Ford Credit rate high for financial services
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- Figure 12: New vehicle consumer financing ratings*, 2008
Innovations and Innovators
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- Power flat financing less risk to dealers, more incentive to sell aftermarket
- BMW Financial reaches out to owners to get them better rates
- BMW incorporating iPad, faster software to speed transactions
- Automakers tailor incentives to reflect recession theme
Marketing Strategies
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- Overview
- Online Advertising
- U.S. Bank
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- Figure 13: U.S. Bank Auto Loan online advertisement, 2010
- USAA Auto Circle
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- Figure 14: USAA Auto Circle online advertisement, 2010
- Chevrolet
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- Figure 15: Chevrolet 2011 Silverado online advertisement, 2010
- Honda
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- Figure 16: Honda CBR600RR Wanna Ride? online advertisement, 2010
- Summit Federal Credit Union
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- Figure 17: Summit Federal Credit Union online advertisement, 2010
- Volkswagen Jetta
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- Figure 18: Volkswagen Sign Then Drive online advertisement, 2010
- Direct Mail
- San Diego County Credit Union
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- Figure 19: San Diego County Credit Union Auto Loans direct mail ad, 2010
- Wells Fargo
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- Figure 20: Wells Fargo Auto Refinance direct mail ad, 2010
- State Farm Bank Auto Loans
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- Figure 21: State Farm Bank Auto Loans direct mail ad, 2010
- Toyota
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- Figure 22: Toyota 100% of MSRP financing direct mail ad, 2010
- Print Advertising
- PNC Bank
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- Figure 23: PNC Bank Auto Loan print ad, 2010
- First Community Credit Union
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- Figure 24: First Community Credit Union Auto Loan print ad, 2010
- Keesler Federal Credit Union
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- Figure 25: Keesler Federal Credit Union Auto Loan print ad, 2010
- Financial Resources Credit Union
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- Figure 26: Financial Resources Credit Union Auto Loan print ad, 2010
- Capital One Auto Loan
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- Figure 27: Capital One Auto Loans email ad, 2010
- Lending Tree
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- Figure 28: Lending Tree Auto Loan Refinancing email ad, 2010
- Chase Auto Loans
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- Figure 29: Chase Auto Loans email ad, 2010
- Broadcast advertising
- Honda
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- Figure 30: Mr. Opportunity Night on the Town Honda Clearance TV ad, 2010
- Toyota
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- Figure 31: Toyota Sienna TV ad, 2010
- BMW
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- Figure 32: BMW Ultimate Driving Machine TV ad, 2010
Vehicle Purchasing
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- Key point
- Four in 10 have purchased a vehicle in past three years
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- Figure 33: Vehicle purchasing, by gender, age and household income, September 2010
Vehicle Purchasing—New Versus Used
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- Key points
- Buy new still most prevalent
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- Figure 34: Whether last vehicle bought was new, used or leased, by gender, September 2010
- Buying a new vehicle skews to older segments
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- Figure 35: Whether last vehicle bought was new, used or leased, by age, September 2010
- Buying new skews to higher incomes
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- Figure 36: Whether last vehicle bought was new, used or leased, by household income, September 2010
Reasons for Choosing Vehicle Financing
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- Key points
- Interest charges top reason to pay cash
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- Figure 37: Reasons why paid 100% cash for the vehicle, September 2010
- For those who financed, low interest rate key
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- Figure 38: Reasons for using this type of financing to pay for auto loan, by source of financing, September 2010
- Low interest rates, convenience top reasons why financing is chosen
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- Figure 39: Reasons for using this source of financing to pay for auto loan, by gender, September 2010
- Low interest rates especially important to those aged 25-34
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- Figure 40: Reasons for using this source of financing to pay for auto loan, by age, September 2010
- Low interest rates more valued as household income increases
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- Figure 41: Reasons for using this source of financing to pay for auto loan, by household income, September 2010
How Much is Put Down to Finance Vehicle
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- Key points
- A quarter of financers put down 0%
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- Figure 42: Percentage of cash put down when financing vehicle in last three years, by gender, September 2010
- Zero cash down highest among the over-45s
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- Figure 43: Percentage of cash put down when financing vehicle in last three years, by age, September 2010
- Middle-income households most likely to put 5-19% of cash down
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- Figure 44: Percentage of cash put down when financing vehicle in last three years, by household income, September 2010
Finance Rate Locked in For Vehicle Purchase
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- Key points
- Average finance rate secured is 5.56%
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- Figure 45: Finance rate among those who secured auto financing, by gender, September 2010
Length of Loan For New Car Purchase
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- Key points
- Most choosing second-longest loan term
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- Figure 46: Length of loan for vehicle, by gender, September 2010
- 25-34 year olds most likely financing the longest
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- Figure 47: Length of loan for vehicle, by age, September 2010
- High-income households invested in long loan terms
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- Figure 48: Length of loan for vehicle, by household income, September 2010
Ways to Prepare for Auto Financing
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- Key points
- Majority of financers creating budget to determine rates
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- Figure 49: Steps taken before entering the vehicle financing process, by gender, September 2010
- 25-44-year-olds most involved in preparations
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- Figure 50: Steps taken before entering the vehicle financing process, by age, September 2010
- Respondents from households earning $75K-99.9K research online
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- Figure 51: Steps taken before entering the vehicle financing process, by household income, September 2010
Ways to Research Auto Financing
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- Key points
- Online plays leading role for researching auto financing
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- Figure 52: How buyers researched the vehicle financing process, by gender, September 2010
- Online research rated highest among those aged 25-44
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- Figure 53: How buyers researched the vehicle financing process, by age, September 2010
- Online research lowest among households earning the least
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- Figure 54: How buyers researched the vehicle financing process, by household income, September 2010
Impact of Race and Hispanic Origin
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- Key points
- Hispanics most active in purchasing new
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- Figure 55: Whether vehicle bought was new, used or leased, by race and Hispanic origin, September 2010
- Hispanics least likely to pay fully in cash
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- Figure 56: Financing chosen for the last new, used or leased vehicle, by race and Hispanic origin, September 2010
- Hispanics show greater value for ease of negotiation
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- Figure 57: Reasons for using this type of financing to pay for auto loan, by race and Hispanic origin, September 2010
- Hispanics putting down greater amount of cash
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- Figure 58: Percentage of cash put down when financing vehicle in last three years—whites vs. Hispanics, September 2010
- Blacks paying higher interest rates
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- Figure 59: Finance rate among those who secured financing, by race and Hispanic origin, September 2010
- Hispanics most likely to develop budget
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- Figure 60: Steps taken before entering the vehicle financing process, by race and Hispanic origin, September 2010
- Hispanics most active in online research
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- Figure 61: How buyers researched the vehicle financing process, by race and Hispanic origin, September 2010
Attitudes and Opinions about Personal Finance
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- Key points
- Consumers very conservative about money
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- Figure 62: Attitudes and opinions about personal finance, by gender, April 2009-June 2010
- Confidence with money grows with age
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- Figure 63: Attitudes and opinions about personal finance, by age, April 2009-June 2010
Cluster Analysis
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- Shoppers
- Demographics
- Characteristics
- Opportunity
- Pokers
- Demographics
- Characteristics
- Opportunity
- Divers
- Demographics
- Characteristics
- Opportunity
- Cluster characteristics
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- Figure 64: Vehicle financing clusters, September 2010
- Figure 65: Financing chosen for the last new, used or leased vehicle, by vehicle financing clusters, September 2010
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- Figure 66: Reasons why buyers used this type of financing to pay for auto loan, by vehicle financing clusters, September 2010
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- Figure 67: Steps taken before entering the vehicle financing process, by vehicle financing clusters, September 2010
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- Figure 68: How buyers researched the vehicle financing process, by vehicle financing clusters, September 2010
- Cluster demographics
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- Figure 69: Vehicle financing clusters, by gender, September 2010
- Figure 70: Vehicle financing clusters, by age, September 2010
- Figure 71: Vehicle financing clusters by household income, September 2010
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- Figure 72: Vehicle financing clusters, by race, September 2010
- Figure 73: Vehicle financing clusters, by Hispanic origin, September 2010
- Cluster methodology
Appendix—Simmons Mosaic Analysis
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- Key points
- Mosaic segments vary slightly in usage of financing channels
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- Figure 74: Type of purchase method of new/used vehicle, by Mosaic segment, April 2009-June 2010
- Affluent segments more inspired about cars
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- Figure 75: Attitudes and opinions about automobiles, percent who agree with statement, by Mosaic segment (part 1), April 2009-June 2010
- Figure 76: Attitudes and opinions about automobiles, percent who agree with statement, by Mosaic segment (part 2), April 2009-June 2010
- Affluent sectors likely to be well informed financially
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- Figure 77: Attitudes and opinions about personal finance, percent who agree with statement, by Mosaic segment (part 1), April 2009-June 2010
- Figure 78: Attitudes and opinions about personal finance, percent who agree with statement, by Mosaic segment (part 2), April 2009-June 2010
Appendix—Trade Associations
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