Captive finance companies' share of the new-vehicle loan market continues to rise, thanks to subvented loans and cash incentives from their automaker parents.
Captives financed 52 percent of all new-vehicle loan originations in the third quarter, up from 50 percent a year earlier, Experian Automotive data show. That also marked a sharp jump from 37 percent in the third quarter of 2011.
For new-vehicle loans and leases combined, captives' share reached 65 percent of originations during the third quarter of this year, J.D. Power data show. That's up 11 percentage points from the third quarter of 2011.
Captive finance companies' share of the new-vehicle market suffered a "drop-off caused by declining new sales and lender-type shifts during the recession," Melinda Zabritski, Experian's senior director of automotive financial solutions, said in a statement.
But they came roaring back, especially in 2014. That year, captives' new-vehicle loan share leapt almost 7 percentage points to 50 percent.
After the captives as a group, banks held the second-largest share of new-vehicle loan originations in the third quarter with 34 percent. Add in used-vehicle financing, though, and banks had the largest total market share at 35 percent of loan originations, compared with captives' 27 percent, according to Experian.
Subvented loans and other manufacturer-based incentives make captive financing an appealing choice for new-vehicle buyers and dealers, Zabritski said.
"Captive finance companies often provide an additional source of revenue as well as a strong pipeline to credit for their dealer networks," she said in the statement.