Equifax Market Pulse: Consumer Trends and Continued Shift to Electric Vehicles in 2023

March 03, 2023

In the January 2023 Market Pulse webinar, “Hidden Risk & Hidden Opportunities,” the panelists included Jonathan Smoke, Chief Economist at Cox Automotive; Dr. Robert Wescott, former Special Assistant to the President for Economic Policy and President of Keybridge, LLC; and Tom O'Neill, Risk Advisor at Equifax. They discussed how lenders are using insights to reach the right new customers with confidence and what we can expect within the automotive industry including a large milestone slated for 2023.


Are there consumer trends we should be keeping in mind in 2023?

Dr. Wescott confirmed we are in the beginning stages of consumer spending and the current labor market softening. This is due to U.S. consumer spending being sustained by stimulus checks and pent-up demand, which both now have been “spent out” along with the pace of job growth slowing down. 

Additionally, Tom O’Neill, Risk Advisor at Equifax, shared an overview of the latest consumer credit trends from Equifax. 

First Mortgage originations through September 2022 have come off the year-to-date (YTD) boom in 2021, falling to 2019 levels. Auto YTD originations continued to rise, and subprime borrower share has decreased substantially from 2018-2020 levels. September 2022 YTD Bankcard dollar limit originations continue to grow year-over-year. “We are actually at a point where card originations, both in terms of dollar originations and unit originations, were higher than they were at the end of 2019,” said O’Neill. Lastly, the home equity market has experienced substantial growth during 2022 with a year-to-date origination growth of over double digits in comparison to 2021. 


Are there any shifts to anticipate in the automotive market? 

It comes as no surprise that supply within the automotive industry has been an ongoing hot topic for the last three years. With the Average Transaction Price (ATP) exceeding MSRP for the past 18-months, and reaching an all-time high in December 2022, there are beginning signs of supply starting to grow again within the used and new markets. There is also a continued shift to electric vehicles (EV).

“We’ve got this enormous change in electrification in the industry, and we’re going to hit a critical milestone in 2023 of selling one million pure electric battery vehicles in the U.S. for the first time,” said Jonathan Smoke, Chief Economist at Cox Automotive. “That’s a quarter of all new vehicle sales in the U.S. will be electrified. As EVs gain share in new sales, they eventually gain share in the car park and then in the wholesale and in the retail used market.”

Smoke continues about what this means when assessing a vehicle's lifespan and its loan performance.

“We have 100 years of knowing what mileage does to a gas powered engine. Guess what? Mileage isn’t as important on an electric vehicle - it’s battery health, that’s important,” said Smoke.

“The future of auto valuations is tied to measuring and understanding battery health, which is going to be a brave new world and a big focus for us in the automotive business.”

For more information on Equifax consumer credit trends and to register for future Market Pulse events, click here