Buying An EV Is Getting Tougher For Millennials, Gen-Z With Low Credit Scores

Benzinga · 05/11/2023 03:36

The new-vehicle market is dominated by more credit-worthy households as per global analytics firm S&P Global Mobility.

What Happened: Those with lower credit scores and younger buyers are being pushed out of the market, said S&P Global Mobility.

“The market in general has moved in the direction of households with greater financial resources,” said associate director of loyalty solutions and industry analysis Tom Libby. “With rising interest rates, we’re seeing a decline in the participation of the lower credit tier in the new vehicle market.”

In February, the average credit score of a purchaser went up to 744.8 from 727.9 in Feb 2017. Only 4.7% of loans involved a credit score of less than 600 during the month. Meanwhile, the market share of buyers aged 18 to 34 fell to a five-year low of 10%.

Why It Matters: The new data point to a market opportunity for a lower-priced vehicle, said the analytics firm. However. the trend’s sustenance or reversal also depends on Fed’s interest rate hikes, it added.

Last month, Warren Buffett-backed BYD Co Ltd (OTCPK: BYDDF) (OTCPK: BYDDY) announced the final price of Seagull- 73,800 yuan or $10,638. A four-seater with five doors, Seagull is the smallest vehicle in BYD’s Ocean series.

Tesla Inc (NASDAQ:TSLA) CEO Elon Musk had previously said that it’s eyeing a $30,000 vehicle. However, Tesla has not provided a timeline for the car.

Musk recently took to Twitter and pegged the ongoing banking crisis in the U.S. for falling car sales. He said that U.S. residents are finding it harder to get car loans despite good credit.

Check out more of Benzinga’s Future Of Mobility coverage by following this link.

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