State of the Automotive Finance Market Third …...Q3 2015 total loan market share Automotive...

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State of the Automotive Finance Market Third Quarter 2015 Melinda Zabritski Sr. Director | Financial Solutions


Experian Public.

Market overview

Outstanding balances

Total risk distributions

Delinquency

Originations

New and Used financing

Lender and transaction types

Loan characteristics

Session overview


Experian Public.

Score ranges

Category VantageScore® 3.0

Super prime 781 – 850

Prime 661 – 780

Nonprime 601 – 660

Subprime 501 – 600

Deep subprime 300 – 500

VantageScore 3.0 ranges


Experian Public.

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Originations

New and used lending


Experian Public.

79.9

%

81.4

%

83.1

%

84.8

%

84.8

%

86.6

%

47.0

%

49.9

%

52.3

%

52.6

%

54.1

%

55.3

%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015

Percentage of vehicles with financing

New Used

Growing reliance upon financing

Source: Experian Automotive


Experian Public.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

15

2014

2013

2012

2011

2010

2009

20

08

2007

2006

2005

2004

2003

2002

20

01

2000

1999

1998

1997

1996

1995

19

94

1993

1992

1991

<=

1990

Percentage of used model year vehicles without loans


60.9% of all vehicles financed

in Q3 2015 were used


Experian Public.

10.23% 10.30% 11.69%

13.26% 14.48%

15.43%

22.75% 22.69% 24.40%

27.22% 29.14%

31.09%

18.09% 18.46% 20.28%

23.07% 24.71%

26.93%

0%

5%

10%

15%

20%

25%

30%

35%

Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015

Lease % of total

Lease % of new financing

Lease % of all new

Consumer leasing



Experian Public.

Leasing and consumer credit

718 715

626 637

300

400

500

600

700

800

Q3 2014 Q3 2015

Average lease scores

New

Used6.72% 7.34%

17.16% 17.66%

48.93% 48.57%

26.79% 25.97%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q3 2014 Q3 2015

New leasing by risk segment

Deep subprime Subprime Nonprime

Prime Super prime

New 96.7%

Used 3.3%

Lease by vehicle type



Experian Public.

3.7

%

3.7

%

2.8

%

3.1

%

2.5

%

2.6

%

2.3

%

2.0

%

2.1

%

1.4

%

3.6

%

3.1

%

2.8

%

2.4

%

2.3

%

2.2

%

2.1

%

2.0

%

1.9

%

1.7

%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Q3 2014

Q3 2015

Top 10 new models based on share of the new lease market



Experian Public.

69

6

71

5

71

0

74

5

68

6

73

0

72

8

69

7

67

9

73

0

70

1

70

9

70

8

72

7

69

1

71

5

71

9

69

7

69

8

70

3

640

660

680

700

720

740

760

CIVIC ACCORD CAMRY CR-V COROLLA RAV4 ESCAPE FUSION ALTIMA F150

Loan score Lease score

Average score comparison on top new leased models



Experian Public.

$397 $398

$375

$385

$395

$405

$415

$425

$435

$445

Q3 2014 Q3 2015

Average monthly payment

10.20%

70.28%

18.97%

0.48% 0%

10%

20%

30%

40%

50%

60%

70%

80%

13 - 24 25 - 36 37 - 48 49 - 60

Term distribution

Average new lease characteristics


Average term

= 35 months


Experian Public.

$3

57

$4

12

$4

18

$4

21

$3

54

$4

31

$4

07

$4

08

$4

25

$5

81

$2

45

$3

05

$2

99

$3

22

$2

60

$3

25

$3

18

$3

03

$2

99

$4

59

$

$100

$200

$300

$400

$500

$600

$700

CIVIC ACCORD CAMRY CR-V COROLLA RAV4 ESCAPE FUSION ALTIMA F150

Loan payment Lease payment

Average payment comparison on top new leased models



Experian Public.

Bank 34.66%

BHPH 6.18% Captive

28.68%

Credit Union 17.14%

Finance 13.34%

Q3 2015 total loan market share

Automotive finance by lender type


-2.0%

-5.4%

2.3%

-2.3%

6.4%

-10% -5% 0% 5% 10%

YOY change in market share

Captive

BHPH

Bank

Credit Union

Finance


Experian Public.

33.65% 35.60%

0.15%

11.74%

51.62%

7.53%

9.82%

23.89%

4.77%

21.25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

New loan Used loan

Q3 2015 market share by lender type

Bank BHPH Captive

Credit Union Finance

Automotive finance by lender type


-2.4%

-13.5%

2.9%

-7.8%

5.0%

-1.7%

-5.4%

-0.3%

-0.1%

6.7%

-15%

-10%

-5%

0%

5%

10%

YOY Change in market share

New

Used

Captive

BHPH Bank Credit

Union Finance


Experian Public.

6.0

0%

5.5

7%

4.2

3%

4.1

5%

4.1

5%

4.0

8%

2.8

9%

2.5

2%

2.4

4%

1.7

8%

1.7

2%

1.6

1%

1.1

7%

1.1

2%

1.1

1%

1.1

0%

1.0

9%

1.0

7%

0.9

3%

0.8

3%

0%

1%

2%

3%

4%

5%

6%

7%

Top 20 lenders in the retail loan market


Top 20 represent 49.7% of

all retail loans


Experian Public.

10

.04

%

8.1

7%

8.0

1%

6.9

5%

6.6

3%

5.6

7%

4.2

3%

3.9

8%

3.6

8%

2.2

8%

2.2

2%

2.0

4%

2.0

3%

1.9

1%

1.7

0%

1.5

5%

1.4

1%

1.2

7%

1.0

5%

1.0

4%

0%

2%

4%

6%

8%

10%

12%

Top 20 lenders in the NEW retail loan market



all new retail loans


Experian Public.

6.7

1%

4.8

7%

4.1

1%

3.3

6%

2.5

8%

1.9

4%

1.9

0%

1.7

8%

1.4

7%

1.2

5%

1.1

7%

1.1

4%

1.0

9%

0.9

4%

0.8

9%

0.8

9%

0.8

3%

0.7

9%

0.7

6%

0.7

6%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Top 20 lenders in the USED retail loan market



all used retail loans


Experian Public.

710 722

736 733 728 723 716 713 710

642 647 661 661 657 652 648 650 650

580

600

620

640

660

680

700

720

740

760

Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015

New Used

Average loan credit scores by vehicle type



Experian Public.

0.67% 0.78% 9.90% 10.67%

17.45% 17.73%

44.00% 43.25%

27.98% 27.57%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q3 2014 Q3 2015

New loans

Automotive loans by risk segment


5.53% 5.40%

26.52% 26.24%

22.00% 22.38%

34.80% 34.77%

11.15% 11.21%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q3 2014 Q3 2015

Used loans

Super prime Prime Nonprime Subprime Deep subprime


Experian Public.

0.8%

19.5%

1.0% 0.8% 10.9% 12.4%

47.9%

11.8% 11.1%

54.0%

21.2%

15.1%

18.8% 23.0%

20.7%

45.1%

13.8%

41.8% 47.3%

11.1% 20.5%

3.8%

26.6% 17.8%

3.3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Bank BHPH Captive CreditUnion

Finance

Risk distribution of market share

Deep subprime Subprime Nonprime

Prime Super prime

1.7%

-2.8%

8.5%

-6.1%

-0.8%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%


Finance

YOY change in highest risk (<600) segment

Risk distribution by lender type



Experian Public.

9.6%

27.1%

11.0%

7.2%

40.6%

15.6%

67.7%

19.5%

13.7%

69.4%

0% 20% 40% 60% 80%

Bank

BHPH

Captive

Credit Union

Finance

Percentage of financing in highest risk segments (<600)

Used

New

9.06%

-1.48%

12.07%

-4.66%

4.31%

-1.71% -2.84%

2.49%

-7.27%

-1.97%

-10%

-5%

0%

5%

10%

15%


Finance

YOY change in highest risk segments

New

Used

Risk distribution by lender type



Experian Public.

Average financing by risk segment on new and used vehicle loans

$27,7

99

$18,5

76

$28,9

36

$18,8

66

$

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

New Used

Average amount financed

Q3 2014 Q3 2015


$25,097

$27,711

$30,517

$30,254

$26,414

$25,032

$27,047

$29,399

$28,957

$25,302

$ $10,000 $20,000 $30,000 $40,000

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average new amount financed

Q3 2014

Q3 2015

$14,535

$16,319

$18,850

$20,336

$19,825

$14,298

$16,130

$18,571

$19,957

$19,423

$ $10,000 $20,000 $30,000

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average used amount financed

Q3 2014

Q3 2015

$1,137

$290


Experian Public.

Average payments by risk segment on new and used vehicle loans

$470

$358

$482

$361

$

$100

$200

$300

$400

$500

$600

New Used

Average monthly payment

Q3 2014 Q3 2015


$508

$510

$503

$485

$457

$495

$498

$490

$472

$445

$400 $420 $440 $460 $480 $500 $520

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average new payment

Q3 2014

Q3 2015

$381

$378

$362

$352

$352

$382

$378

$359

$349

$349

$330 $340 $350 $360 $370 $380 $390

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average used payment

Q3 2014

Q3 2015

$12

$3


Experian Public.

$109 $108

$102

$108

$112

$121

$90

$95

$100

$105

$110

$115

$120

$125

Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015

Average payment difference between new & used car loans

Payment gap grows between new and used loans



Experian Public.

Average term by risk segment on new and used vehicle loans

66

62

67

63

59

60

61

62

63

64

65

66

67

68

New Used

Average term

Q3 2014 Q3 2015


72.02

72.04

71.64

68.68

62.11

71.53

71.38

70.66

67.61

61.13

48 60 72 84

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average new term

Q3 2014

Q3 2015

57.79

61.22

64.25

64.73

61.04

55.44

59.83

63.26

63.94

60.33

48 60 72 84

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average used term

Q3 2014

Q3 2015

1 mo

1 mo


Experian Public.

3.0% 4.3%

20.6%

43.5%

27.5%

5.8% 11.3%

23.7%

41.3%

16.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

25-36 37-48 49-60 61-72 73-84

Vehicle financing by term

New Used

Distribution of loan term


3.2%

17.1%

3.5%

12%


Experian Public.

Average rate by risk segment on new and used vehicle loans

4.4

7%

8.5

4%

4.6

3%

8.7

6%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

New Used

Average rate

Q3 2014 Q3 2015


13.99%

10.57%

6.25%

3.50%

2.58%

12.72%

10.16%

6.08%

3.54%

2.63%

0.00% 5.00% 10.00% 15.00% 20.00%

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average new rate

Q3 2014

Q3 2015

19.46%

15.98%

9.59%

5.12%

3.35%

19.00%

15.72%

9.29%

5.07%

3.33%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00%

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average used rate

Q3 2014

Q3 2015

16 bps

22 bps


Experian Public.

INSERT

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Overall

Automotive

Finance Market

Market overview and

delinquency


Experian Public.

A look at automotive loan balances

Source: Experian-Oliver Wyman Market Intelligence Reports


Experian Public.

Open loan overview


Super prime Prime Nonprime

Subprime Deep subprime


Experian Public.

Recent automotive delinquency: 30 day delinquency



Experian Public.

30-day delinquency balances by state


HI = 1.91%

1.43


Experian Public.

Recent automotive delinquency: 60 day delinquency



Experian Public.

60-day delinquency balances by state


HI = 0.48%

0.39%


Experian Public.

Balances at risk



Experian Public.

Modest high risk growth for new financing; used down YOY

Captives reaching pre-recession share for new financing driven in part by growth in high risk, yet still below pre-recession levels

Loan amounts continue to grow; with gap between new and used payments rising despite increase in terms

Rates on new financing have increased in conjunction with growth in high risk originations

Open balances reach all-time highs with majority of loans/balances in prime+

Fewer loans becoming delinquent (30 dpd) yet increases in balances tied to delinquent loans

In summary


Experian Public.


Experian Public.

State of the Automotive Finance Market Third …...Q3 2015 total loan market share Automotive...

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