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It’s true that interest rates have been a challenge in the auto market lately. With rates steadily increasing and loans becoming more difficult to obtain, car buyers have faced obstacles in financing their purchases. On average, term lengths for car loans have been reaching 72 months, while rates for new and used cars are around 7% and 10.5% respectively.
Despite these challenges, auto sales have been surprisingly robust, which is encouraging. It seems that even with higher rates, customers have been finding ways to make their purchases work. It’s worth noting that the Federal Reserve has indicated a possible shift in their approach to rising costs. They may pause or even reverse their series of rate hikes, which could stabilize rates in the latter half of this year and potentially lead to a decrease in 2024.
The Car Sales Industry in 2022 increased focus on branding and EV marketing. That combined with anticipated improvements in production this year, is looks like auto marketing is poised for growth in 2023. Experts predict that the automotive category will experience an increase in marketing spending for the first time in a few years.
Notably, commercials promoting EVs made up 24% of auto makers’ TV spending in 2022, up from 13.8% in 2021, indicating a greater emphasis on promoting electric vehicles. Kia, for example, continued its marketing spend in support of future demand, recognizing the ongoing transformation to EVs. They even utilized the Super Bowl to introduce their EV6, not for immediate high sales volume, but to establish themselves as a legitimate EV brand and generate interest in their forthcoming models like the EV9.
However, not all brands are adopting the same approach. Ford CEO Jim Farley, for instance, expressed skepticism about spending on traditional marketing, advocating for customer incentives and vehicle updates instead. Nevertheless, the focus on EVs has become more prominent, as automakers shift their advertising efforts towards vehicles that they want consumers to be aware of, given the decreased need for sales incentives.
Overall, with the importance placed on branding, the rise of EVs, and an anticipated rebound in production, the outlook for auto marketing in 2023 appears promising.
Personal and business bankruptcy filings rose 10 percent in the twelve-month period ending June 30, 2023, compared with the previous year.
Business filings rose 23.3 percent, from 12,748 to 15,724 in the year ending June 30, 2023. Non-business bankruptcy filings rose 9.5 percent to 403,000, compared with 367,886 in the previous year.
Click below to see a chart showing Jan 2023 Marketing Mail rates compared to the upcoming July 9 rate change.
Below to review a chart of First-Class mail rates from Jan 2023 compared to the July 9th rate request.
The USPS has recently filed for a second postal rate increase to take place on July 9th. Click below to see a proposed rate chart.
TransUnion forecasts serious credit card delinquencies to rise to 2.60% at the end of 2023 from 2.10% at the conclusion of 2022. Unsecured personal loan delinquency rates are expected to increase from 4.10% to 4.30% in the same timeframe. Serious auto loan delinquency rates are expected to modestly decline to 1.90% in 2023 from 1.95% in 2022.
TransUnion’s forecasts are based on various economic assumptions, such as expected consumer spending, disposable personal income, home prices, inflation, interest rates, real GDP growth rates and unemployment rates, among other metrics. The forecasts could change if there are unanticipated shocks to the economy, such as if COVID-19 disrupts recovery efforts, home prices unexpectedly fall or inflation continues to remain elevated through the next year. Better-than-expected improvements in the economy, such as potential increases in GDP and disposable income, could also impact these forecasts.
After two years of credit card and personal loan growth, despite serious delinquency rates that remained near pre-COVID levels, TransUnion predicts the consumer credit market will experience pronounced changes in 2023. TransUnion’s 2023 Consumer Credit Forecast projects delinquency rates for credit card and personal loans to rise to levels not seen since 2010. At the same time, demand for most lending products will remain high relative to pre-pandemic levels with the number of consumers securing auto and home equity loans increasing on an annual basis.
Despite a challenging macroeconomic environment, TransUnion’s new Consumer Pulse study found that more than half (52%) of Americans are optimistic about their financial future during the next 12 months. The youngest generations – Millennials (64%) and Gen Z (61%) – are most optimistic. The optimism levels are occurring against a backdrop wherein 82% of consumers believe the U.S. is currently in or will be in a recession before the end of 2023.
Rapidly increasing interest rates and stubbornly high inflation combined with recession fears represent the latest in a series of significant challenges consumers have faced in recent years. It’s not surprising then to see pronounced increases in delinquency rates for credit card and personal loans, two of the more popular credit products. Yet, many consumers – from a credit perspective – are in a better position than they were just a few years ago, equipped with credit they can use in case of more macroeconomic challenges. We expect demand for credit to continue to be high with lenders positioned well to meet it. While unemployment is likely to rise next year, it should remain relatively low, a key element for a healthy consumer credit market.