Credit-reporting agency Experian reported that the financing arms of auto manufacturers such as Ford, Honda and Toyota made half of all new car loans in the first quarter of 2014, up from 37 percent in the previous year.
They now have the largest market share in four years.
They also wrote most of the leases, about 26 percent. It is up from 23 percent in 2013 and 20 percent in 2012.
Auto financing programs from auto manufacturers are made possible through subsidies. They often come with low monthly payments and long loan terms which make payback easier for buyers.
Meanwhile, the largest banks in the country have turned to the high-risk portion of the market to sell auto loans.
Reuters cited US Bancorp and Wells Fargo & Co., the largest used-car lender in the U.S., as some of those banks that have opened their doors to less creditworthy car buyers and used-car financing.
Industry analysts and consultants, however, question the sustainability of the aggressive strategy being pulled off by automakers.
Incentives can be too costly when interest rates rise and the financing arms can experience losses with leased and repossessed vehicles when used-car prices decline.
Toyota Financial Services Vice President for Sales Pete Carey told Reuters that incentives play a major role because automakers want to stand out in the crowded market.
The automakers’ efforts are rewarding so far.
U.S. car sales are strong at 16.8 million vehicles, up from 15.6 million in 2013 and 10.4 million back in 2009 when the recession suppressed automotive demand.
Outstanding new car loans in the U.S. increased by 11.6 percent from last year to $811 billion in the first three months of 2014, Experian data showed.