The US automotive retail industry continues to see turbulence after years of change. This is not surprising, given inventory fluctuations linked to the COVID-19 pandemic, supply chain disruptions and, more recently, a decrease in affordability.

Since 2022, we’ve seen increases in inventory as the industry recovered from these disruptions. Today, inventory remains high as consumers are hesitant to purchase. Although inventory growth shows signs of slowing, 2024 models are still lingering on lots as 2025 models roll in.

This buyer’s market may bring challenges for automotive retail lenders, but it also provides opportunities to gain business.

How We Got Here

For the first time since S&P Global Mobility established its dataset in 2022, advertised vehicle inventory in the US soared to 3.056 million units in September 2024, a 4.7% increase from August.

The new model year helps to explain these results. The 2025 model year roll-out continues to accelerate and was up 45.6% in September compared to the end of August. Meanwhile, 2024 and 2023 model year inventories have decreased by 10.1% and 19.0%, respectively, over that same time period.

Moreover, prices are going up. By the end of September, the average manufacturer’s suggested retail price (MSRP) was $52,066, up 3.3% from March. The average dealer list price also rose, to $48,460, a 2% increase from March.

The average length of time that inventory was sitting on lots decreased slightly to 79 days in September but is up from 56 days in September 2023. All these trends point to consumers who remain hesitant to purchase vehicles. Prices are high, so consumers aren’t buying. Although there are signs that overall inventory growth is slowing, inventory remains high.

Challenges and Opportunities for Lenders

There’s no question that lenders face challenges when consumers are hesitant to buy. This hesitancy, paired with high inventory, creates a buyer’s market. Consumers have more negotiating power when lenders, dealers and OEMs feel increased pressure to move vehicles. Additionally, dealers and OEMs need to move 2024 models while 2025 models are making their debuts.

While automotive lenders — including captive finance companies, banks and credit unions — are in a tricky position navigating between dealerships and OEMs, these challenging times offer lenders an opportunity to stand out to consumers and build their customer base and loyalty.

Transparency and Flexibility are Key

Lenders that focus on a strategy to sell 2024 models can carve out a space for themselves. The best way to win customers over is through transparency and flexibility. Lenders that provide a wide range of purchasing and leasing options with accurate payments from the get-go for all vehicles will have a leg up on the competition.

Most consumers start the car buying journey online. Offering the same deals throughout the entire purchasing process, from browsing to closing the deal, builds customer trust and satisfaction. This trust can help to sell old inventory that may have extra incentives tacked on.

Once lenders have attracted customers by posting accurate prices in online advertisements and price calculators, they can offer terms that meet customers’ needs. For some customers, this may look like custom or odd-term lease and finance options. For others, this may involve making small exceptions to in-house rules for loyal customers or those with excellent credit. By working to find a deal that fits customers’ budgets and lifestyles, lenders can build strong relationships that will lead customers to recommend them to friends and family.

Understand Your Competitive Positioning to Make the Best Deals

Creating custom deals can seem scary. How can lenders ensure they are making wise business decisions if all their customers are getting deals? This is where data-based software that helps lenders understand their competitive positioning comes into play.

This software enables lenders to see whether their offerings are aligned with those of other lenders — down to the trim and ZIP code levels — and adjust accordingly. With this information, lenders can understand immediately whether personalized packages they build for their customers match their overall business goals.

The software also allows lenders to simulate what-if scenarios — allowing them to understand how their market positions would change if they adjusted their offerings — without having to experiment in the market.

Visibility is Power

Central to all these strategies is visibility. To make informed decisions about offerings, whether general or customized, lenders must understand what the competition is offering and provide clear, accurate deals based on this data.

Market Scan’s lender tools provide the data necessary, down to the ZIP code and trim levels, to help lenders analyze their market positions and adjust accordingly.

When lenders can make decisions based on accurate, actionable data, they can tailor their offerings to move 2024 models, filling a niche in the marketplace while helping their dealer and OEM partners sell old inventory.

More information about Market Scan’s lender tools is available here.