Experian State of the Automotive Finance Market

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Experian Public.

Automotive Market Update

Melinda Zabritski Senior Director | Experian Automotive

2 © 2014 Experian Information Solutions, Inc. All rights reserved.

Experian Public.

Discussion points

What’s on the road

Market share and registrations

Finance and delinquency

Originations and payment trends


Experian Public.

Vehicles in Operation

What’s on the road today?


Experian Public.

What’s on the road today?

Vehicles in

operation

2013

246.1 million

Vehicles in

operation

2012

247 million

Scrapped

vehicles

16.2 million

Carryover

New vehicle sales

15.3 million

Used vehicle sales

39.1 million

VIO additions/deletions: 31.5 million (12.8%) (scrapped + new sales)

VIO total changes: 70.6 million (28.7%) (used sales + scrappage + new sales)

Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)


Experian Public.

VIO by model year

0

2

4

6

8

10

12

14

16

201

5

201

3

201

1

200

9

20

07

200

5

200

3

200

1

199

9

199

7

199

5

19

93

199

1

198

9

198

7

198

5

198

3

198

1

19

79

197

7

197

5

197

3

197

1

196

9

196

7

Mil

lio

ns



Experian Public.

VIO by model year

0

2

4

6

8

10

12

14

16

201

5

201

3

201

1

200

9

20

07

200

5

200

3

200

1

199

9

199

7

199

5

19

93

199

1

198

9

198

7

198

5

198

3

198

1

19

79

197

7

197

5

197

3

197

1

196

9

196

7

Mil

lio

ns

98 million vehicles

within “sweet spot”

(MY2002 – 2008)



Experian Public.

VIO by model year

0

2

4

6

8

10

12

14

16

201

5

201

3

201

1

200

9

20

07

200

5

200

3

200

1

199

9

199

7

199

5

19

93

199

1

198

9

198

7

198

5

198

3

198

1

19

79

197

7

197

5

197

3

197

1

196

9

196

7

Mil

lio

ns

Shrinking sweet spot in the

coming year

(-4.2 million to 93.8 million)

plus estimated 1 million scrap



Experian Public.

Average age of vehicles on the road today

9.5 9.6 9.9

10.2 10.4 10.4

6.9 7.1 7.3 7.4 7.5 7.4

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013

Average Age 15-Year Rolling Age



Experian Public.

Vehicle registration

and market share

What metal is moving?


Experian Public.

Annual vehicle registrations

0

10

20

30

40

50

60

2009 2010 2011 2012 2013

Mil

lio

ns

New Used

22% 25% 27% 24% 28%

47.4 51.5

55.1

49.5 53.6



Experian Public.

Census regions

West Region

South Region

Northeast

Region

Midwest Region


Experian Public.

Total (new and used) registrations by Census region

0

5

10

15

20

25

2009 2010 2011 2012 2013

Millio

ns

Midwest Region Northeast Region South Region West Region

4.4%



Experian Public.

New and used registrations by region (millions)

0

2

4

6

8

10

12

14

2009 2010 2011 2012 2013

Northeast region

0

5

10

15

20

25

2009 2010 2011 2012 2013

South region

0

2

4

6

8

10

12

14

2009 2010 2011 2012 2013

West region

0

2

4

6

8

10

12

14

2009 2010 2011 2012 2013

Midwest region

19.9% 21.1% 24.4% 25.1%

New Used

23.1% 27.8% 29.3% 32.6% 33.4% 30.8%

20.6% 21.8% 26.4% 28.0% 23.2% 22.1% 24.2% 27.7% 28.8% 25.6%



Experian Public.

Top new registrations by segment

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Th

ou

sa

nd

s

2012 2013

30.6% 30.0%

138,000 more Alt Power

registrations in 2013

than prior year



Experian Public.

Winners and losers by year-over-year registration change

0 100000 200000 300000

Pickup - Full Sized

CUV - Entry Level

SUV - Lower Mid Range

Alt Power

Small Car - Econ

CUV - Premium

CUV - Mid Range

Mid Range Car - Std

Upscale - Near Luxury

Upscale - Luxury

Winners

-60000 -40000 -20000 0

Losers


Sport Car – Ultra Luxury

Small Car – Budget

Upscale – Premium

Traditional Car

Van – Mini

Sport Car – Touring

Pickup – Small

Mid Range Car – Premium

SUV – Entry Level


Experian Public.

Top and bottom states for hybrid registrations (by share of state registrations)

0%

2%

4%

6%

8%

10%

CA OR DC WA HI VA NC MD VT AZ

Top-10 hybrid states

0%

1%

1%

2%

2%

3%

MIMSMOSDOKWVWYLAAKND

Bottom-10 hybrid states



Experian Public.

Import vs. domestic new registrations

0

1

2

3

4

5

2009 2010 2011 2012 2013

Midwest region

0

1

2

3

4

5

2009 2010 2011 2012 2013

Northeast region

0

1

2

3

4

5

6

7

2009 2010 2011 2012 2013

South region

0

1

2

3

4

5

2009 2010 2011 2012 2013

West region Import Domestic

60.5% 61.5% 62.7% 60.9% 62.0% 35.8% 36.2% 40.5% 38.5% 39.5%

37.1% 37.7% 39.9% 37.6% 38.4% 48.0% 48.8% 49.1% 47.6% 48.0%



Experian Public.

Who is down (bps)?

Kia -42

VW -32

Hyundai -22

Toyota -14

GM -10

Manufacturer market share (Ranking based on 2013 share)

GM 18.0%

Ford 15.2%

Toyota 14.5%

Chrysler 11.3%

Honda 9.9%

Nissan 7.9%

Hyundai 4.8%

VW 4.0%

Kia 3.9%

Others 10.5%

2012

GM 17.9%

Ford 15.6%

Toyota 14.4%

Chrysler 11.5%

Honda 9.9%

Nissan 8.1%

Hyundai 4.6%

VW 3.7%

Kia 3.5%

Others 10.8%

2013 Who is up (bps)?

Ford 42

Others 38

Chrysler 20

Nissan 18

Honda 2



Experian Public.

Top-5 new regional manufacturer market share

0%

10%

20%

30%

GM Ford Chrysler Toyota Honda

Midwest Region

0%

10%

20%

30%

Toyota GM Honda Ford Chrysler

Northeast Region

0%

10%

20%

30%

Toyota Ford GM Honda Chrysler

Western Region

0%

10%

20%

30%

GM Toyota Ford Chrysler Nissan

South Region



Experian Public.

Top-5 regional manufacturer market share gains (Basis points)

0

20

40

60

80

100

Ford Chrysler Subaru Honda Nissan

Midwest Region

0

20

40

60

80

100

Subaru Chrysler Ford GM BMW

Northeast Region

0

20

40

60

80

Subaru Ford Tesla Nissan Mazda

West Region

0

20

40

60

80

100

Ford Subaru Nissan Chrysler Hyundai

South Region



Experian Public.

Overall automotive

finance market

Balances and delinquency


Experian Public.

Total outstanding automotive loan balance

$555 $571 $555 $507 $491 $516 $562

$621

$140 $143 $148 $147 $143

$142 $157

$178

$-

$100

$200

$300

$400

$500

$600

$700

$800

$900

Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013

Bil

lio

ns

Rest of Market Credit Union Market

Source: Experian-Oliver Wyman Market Intelligence Reports


Experian Public.

Delinquency rates on automotive loans

0.74%

0.94%

0.65% 0.65%

0.71%

0.48%

0.40%

0.52%

0.32%

0.15% 0.19%

0.10%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

0.90%

1.00%

Q4 2013Q4 2012Q4 2011Q4 2010Q4 2009Q4 2008Q4 2007Q4 2006

60-DPD Repo CU 60-DPD CU Repo

Source: Experian-Oliver Wyman Market Intelligence Reports


Experian Public.

New and used

originations

Loans, leases

and characteristics


Experian Public.

Percentage of transactions with a lien holder

78.7% 75.0%

84.1%

51.2% 45.9%

52.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2006 2007 2008 2009 2010 2011 2012 2013

New Used

Source: Experian Automotive


Experian Public.

Percentage of cash payment by used model year

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

201

5

201

4

201

3

201

2

20

11

201

0

200

9

200

8

200

7

200

6

200

5

200

4

200

3

20

02

200

1

200

0

199

9

199

8

199

7

199

6

199

5

199

4

19

93

199

2

199

1

199

0

<19

90



Experian Public.

New lease market share

20.6

5%

23.6

6%

23.1

3%

24.7

9%

28.8

4%

16.8

%

19.2

%

19.0

%

20.3

%

24.2

%

0%

5%

10%

15%

20%

25%

30%

35%

Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013

Share of new financing Share of all new



Experian Public.

Market snapshot on vehicle loan financing

48.93% 48.90%

0%

20%

40%

60%

80%

100%

Q4 2012 Q4 2013

Current +5 model year

New 37.52% Used

62.48%

Loans by vehicle type

54.7%

45.3%

Used financing by dealer type

Independent Franchise



Experian Public.

Used financing by model year

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2014201320122011201020092008200720062005200420032002200120001999

Credit Union

Bank

Current +5MY is 65% of bank financing

and nearly 50% of credit union loans



Experian Public.

New loan market share by lender type

32.99%

45.84% 47.98% 46.69% 41.08%

49.60%

42.91% 36.16% 36.12% 41.26%

12.72% 9.68%

11.04% 12.54% 12.80%

4.39% 1.17% 4.68% 4.51% 4.68%

0%

20%

40%

60%

80%

100%

Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013

Bank Captive Credit Union FinanceSource: Experian Automotive


Experian Public.

Used loan market share by lender type

32.73% 31.99% 38.39% 37.84% 36.25%

14.94% 15.48% 13.97% 14.78% 13.61%

11.15% 8.67% 7.03% 6.26% 7.64%

25.25% 19.96% 21.10% 21.42% 22.37%

15.93% 23.91% 19.51% 19.70% 20.13%

0%

20%

40%

60%

80%

100%

Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013

Bank BHPH Captive Credit Union Finance



Experian Public.

Shifts in average credit scores

727 715

731

710

637

646

688 680

600

620

640

660

680

700

720

740

760

Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013

New CU New Used CU Used



Experian Public.

Average scores by lender type

718 676

720 710 651

684

563

675 680

568

0

100

200

300

400

500

600

700

800

Bank Buy here /pay here

Captive Credit union Finance

New Used



Experian Public.

Score categories

Score ranges

Category VantageScore® 3.0

Super prime 740+

Prime 680–739

Nonprime 620–679

Subprime 550–619

Deep subprime <550


Experian Public.

Quarterly financing for new vehicles

2.22% 1.35% 1.34% 1.64% 2.03% 2.96%

11.36% 8.44% 9.70% 11.13% 12.07% 10.81%

17.76% 16.34% 17.71% 18.38% 18.71% 20.32%

18.78% 18.83%

18.82% 18.47% 18.54% 21.59%

49.88% 55.04% 52.43% 50.38% 48.65% 44.32%

0%

20%

40%

60%

80%

100%

Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013

Deep subprime Subprime Nonprime Prime Super prime



Experian Public.

Quarterly financing for used vehicles

17.96% 15.99% 13.62% 13.89% 14.60% 17.63%

25.01% 22.31% 24.21% 26.57% 27.11% 21.94%

19.87% 20.08% 21.62%

22.16% 22.11% 23.23%

14.53% 15.56% 15.64%

14.69% 14.46% 17.71%

22.64% 26.05% 24.92% 22.69% 21.72% 19.49%

0%

20%

40%

60%

80%

100%

Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013

Deep subprime Subprime Nonprime Prime Super prime



Experian Public.

Risk comparisons by lender type on new loans

2.02% 2.87% 1.82%

15.23% 9.52% 10.36% 10.04%

29.14%

20.49% 19.01% 24.77%

18.78%

23.22% 19.94%

24.70%

13.09%

44.74% 47.82% 38.66%

23.77%

0%

20%

40%

60%

80%

100%

Bank Captive Credit union Finance

Deep Subprime Subprime Nonprime Prime Super Prime



Experian Public.

Risk comparisons by lender type on new loans

4.99%

51.75%

7.14% 4.95%

39.76% 16.59%

25.06%

19.89% 16.01%

40.18%

26.73%

12.09%

26.53% 30.03%

13.97%

23.67%

5.82%

20.31% 24.43%

3.93%

28.02%

5.27%

26.13% 24.58%

2.17%

0%

20%

40%

60%

80%

100%

Bank Buy here /pay here

Captive Credit Union Finance

Deep Subprime Subprime Nonprime Prime Super Prime



Experian Public.

Rising prices and loan amounts on new vehicles

$2

4,4

37

$2

4,6

55

$2

5,0

67

$2

5,5

03

$2

4,5

02

$2

4,8

60

$2

5,2

85

$2

6,1

35

$2

5,7

89

$2

6,4

19

$2

6,6

91

$2

7,4

30

$2

7,1

50

$2

7,2

70

$2

7,8

83

$2

9,6

09

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Q4 2010 Q4 2011 Q4 2012 Q4 2013

Avg MSRP Avg CU MSRP Amount Financed CU Amount Financed

108% / 113% 110% / 112% 110% / 113% 110% / 116%



Experian Public.

Rising prices and loan amounts used vehicles

$13,9

68

$1

4,3

41

$1

4,3

39

$14,6

04

$1

2,6

76

$1

3,0

36

$1

3,2

45

$1

3,6

55

$1

6,9

92

$1

7,3

90

$1

7,6

29

$1

7,9

74

$1

5,8

37

$1

6,2

12

$1

6,7

16

$1

7,3

47

$

$4,000

$8,000

$12,000

$16,000

$20,000

Q4 2010 Q4 2011 Q4 2012 Q4 2013

Avg Trade-In Avg CU MSRP Amount Financed CU Amount Financed

130% / 132% 130% / 132% 133% / 134% 134% / 136%



Experian Public.

Average payments

$4

64

$468

$4

60

$4

71

$466

$4

57

$4

57

$4

73

$3

47

$3

49

$3

48

$3

52

$3

10

$3

10

$3

12

$3

16

$

$100

$200

$300

$400

$500

Q4 2010 Q4 2011 Q4 2012 Q4 2013

New payment CU new payment Used payment CU used payment



Experian Public.

Average terms

63 63

65 65 66 66

67

69

58

60 60 61

58 59 59

61

52

54

56

58

60

62

64

66

68

70

Q4 2010 Q4 2011 Q4 2012 Q4 2013

New term CU new term Used term CU used term



Experian Public.

Distribution of loan term

4.7% 4.4%

28.5% 20.4%

41.2%

34.5%

20.1% 35.8%

0%

20%

40%

60%

80%

100%

New loans CU new loans

New financing by term

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

12.7% 13.1%

26.5% 30.1%

39.0% 32.2%

12.5% 13.8%

0%

20%

40%

60%

80%

100%

Used loans CU used loans

Used financing by term

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



Experian Public.

Average rates

4.84% 4.52% 4.36% 4.37% 5.10%

4.17% 3.86% 3.79%

8.71% 8.67% 8.48% 8.71%

6.75% 6.23%

5.84% 5.68%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

Q4 2010 Q4 2011 Q4 2012 Q4 2013

New rate CU new rate Used rate CU used rate



Experian Public.

Overall automotive market decreased slightly (0.4%) with near-term shrinking of “sweet spot” older model year vehicles

Total registrations have increased nearly 3% YOY with new vehicles gaining an increase share of total registrations

Overall, open portfolios continuing to experience growth

Steady delinquency behavior

Financing for consumers continues to expand as consumers rely upon the lending market for vehicle purchase with strong growth in leasing

Loan amounts and payments inching up with slight increases in rates

In summary


Experian Public.