Adapting to Change: Subprime Borrowers Re-entered the Market in Q4 2025

Alternative fuel vehicles continued to gain momentum in the fourth quarter of 2025, driven by expiring electric vehicle (EV) tax credits and a growing preference for options that bridge the gap between full electric and traditional gasoline vehicles. According to Experian’s Automotive Consumer Trends Report: Q4 2025, alternative fuel vehicles accounted for 38.6% of new retail car registrations in the last 12 months, with 11% battery electric (BEV) and 27.6% hybrids and plug-in hybrids (PHEVs). This signals that the narrative about growth in consumer interest for alternative fuel is increasingly towards hybrids, not just full EVs. Taking a deeper dive, the Toyota Camry Hybrid led all alternative fuel car models, coming in 31.7% in Q4 2025. Rounding out the top five were Tesla Model 3 (19%), Honda Civic Hybrid (10.1%), Honda Accord Hybrid (9%), and Toyota Prius (5.3%). Interestingly, the Toyota Camry also stood out as the top model in both new and used car markets in Q4 2025, holding 12.2% of new car market share and 6.3% of used car market share. The Honda Civic ranked second in new car market share, coming in at 10.5% this quarter, while the Honda Accord secured the second spot in the used car market at 5.8%. The prominence of these vehicles leading both new and used car markets reflects a combination of strong new-vehicle sales and sustained demand in the secondary market. Data in the report also revealed strong loyalty within Toyota and Honda, with significant inflow between the two brands. For instance, 38.4% of Toyota Camry buyers replaced their vehicle with another Camry in Q4 2025, and 39.7% of Honda Civic buyers replaced it with another Civic. These trends reinforce the value of dealers monitoring evolving consumer preferences and aligning inventory with vehicles that offer fuel efficiency and flexible powertrain options as the market continues to shift. To learn more about car insights, view the full Automotive Consumer Trends Report: Q4 2025 presentation.

In an ever-evolving automotive landscape, where shifting consumer behavior meets fluctuating market dynamics, Experian’s State of the Automotive Finance Market Report: Q2 2025 delivers key insights into how both consumers and professionals are adapting to the changes. This quarter’s report revealed a sharp increase in vehicle refinancing—up nearly 70% from Q2 2024—as consumers capitalized on the more stable rate environment. In fact, after refinancing, the average interest rate went from 10.45% to 8.45%. That shift resulted in their monthly payment dropping by an average of $71. Interestingly, credit unions played a significant role in the refinance surge, increasing their market share from 63.22% last year to 68.33% this quarter, and borrowers who refinanced through credit unions saw their monthly payments decrease by $87 on average. Banks saw a slight dip in their share of the refinancing market year-over-year, going from 22.71% to 21.45%, and borrowers who refinanced through them saved an average of $46 a month. New leaders emerge as the lender market share continues to evolve Taking a deeper dive into the automotive finance market share, banks reclaimed their leading position for total vehicle financing, rising to 27.50% in Q2 2025, from 24.50% in Q2 2024. Meanwhile, captives declined from 30.17% to 26.63% year-over-year, and credit unions slightly increased from 20.35% to 21.04% during the same period. For new vehicles, captives continued to lead at 52.39% this quarter, though it was a drop from 60.74% last year. On the other hand, banks grew from 21.12% to 25.91% and credit unions went from 9.99% to 12.24% in the same time frame. On the used side, banks edged ahead, increasing their share to 28.59% in Q2 2025, from 26.80% last year. Credit unions saw slight growth from 27.59% to 27.63%, while captives declined from 7.83% to 6.40% year-over-year. As affordability remains a key priority, consumers seem to be exploring financing options that offer more favorable terms. While Experian Automotive’s report continues to illustrate the evolving dynamics, these data-driven insights can empower both consumers and industry professionals to make smarter financial decisions. To learn more about automotive finance trends, view the full State of the Automotive Finance Market Report: Q2 2025 presentation on demand.

Amid interest rates leveling out and some lenders reassessing go-to-market strategies, the automotive finance landscape is experiencing notable shifts in market share. According to Experian’s State of the Automotive Finance Market Report: Q1 2025, banks recouped some of their total finance market share for the first time in several years, reaching 26.6% during the quarter, up from 24.8% a year ago. On the other hand, captives’ total market share declined from 31.3% to 29.8% year-over-year and credit unions experienced a modest increase from 20.2% to 20.6%. Despite the overall market share shifts, captives continue to lead in new vehicle financing at 57.1% in Q1 2025, although down from 62.1% the year prior. Meanwhile, banks increased to 24.1% this quarter, from 20.4% in Q1 2024 and credit unions went from 9.6% to 10.9% during the same period. On the used side, banks and credit unions were grouped much closer together. Banks led the way with 28.4% of the used finance market in Q1 2025, up from 27.9% last year, while credit unions went from 27.7% to 28.2% year-over-year and captives declined from 8.5% to 7.4%. As market share movement continues to be a valuable indicator of shifting strategies and consumer behavior, it’s important for automotive professionals to keep a close eye on these shifts to uncover new opportunities while looking for ways to stay ahead of the rapidly evolving industry. Breaking down the latest finance trends Data in the first quarter of 2025 shows the automotive finance market continues to stabilize as automotive professionals gain clearer visibility into lender behavior and consumer demand. For example, the average loan amount for a new vehicle increased $1,110 year-over-year to $41,720 in Q1 2025. However, the average interest rate dropped from 6.9% to 6.7%, and the average monthly payment went from $737 last year to $745 this quarter. For used vehicles, the average loan amount saw a slight uptick of $90 year-over-year, reaching $26,144 this quarter. Meanwhile, the average interest rate declined from 12.4% last year to 11.9% this quarter and the average monthly payment trended lower at $521, from $524 in Q1 2024. Monitoring and leveraging market share shifts and financing trends can support strategic planning while empowering automotive professionals to anticipate consumer purchasing patterns and tailor conversations more effectively to meet buyers where they are during their car buying journey. To learn more about automotive finance trends, view the full State of the Automotive Finance Market: Q1 2025 presentation on demand.