COVID-19 & the Emerging Path for Indirect Auto Lending

Auto showroom. (Source: Shutterstock)

The pandemic has been life altering for the transportation industry in many ways, from the new work-from-home generation to a diminished ride-sharing industry, and now to the beginnings of a more digitally focused auto industry. In fact, what was at first a body blow for the car sales and auto finance businesses in the early days of the pandemic has instead become an opportunity for a resurgence.

Despite massive supply chain issues, auto dealership profits are hitting record highs. Consumers value vehicle ownership more than ever, which makes them willing to pay the historically high prices dictated by a shrinking pool of vehicle choices. At the same time, dealers are enjoying greater efficiencies from the increased digitization of the sales process forced on them by the pandemic, as well as lower carrying and operational costs from no longer needing to bear the overhead of keeping hundreds of vehicles in inventory. Interestingly, these inventory shortages are leading auto dealers down a path of pre-sales and even build-to-order sales, models that align well with the auto industry’s increasing shift to digital retailing.