State of the Auto Finance Market...Automotive financing1: snapshot of how and what consumers are financing 28.76% 29.92% Q4 2018 Q4 2019 % of all2 new vehicles that are leased 46.44%

1 © Experian

State of the AutomotiveFinance Market

Presented by: Melinda ZabritskiQ4 2019

2 © Experian

Market Overview

• Outstanding balances

• Total risk distributions

• Delinquency

Originations

• New and Used financing

• Lender and transaction types

• Loan & lease characteristics

Session overview

Experian Public State of the Automotive Finance Market Q4 2019

3 © Experian

A review of all open automotive loans & leases

Overall Automotive Finance Market


4 © Experian

$1,129

$1,178

$1,229

$1,060

$1,080

$1,100

$1,120

$1,140

$1,160

$1,180

$1,200

$1,220

$1,240

2017 Q4 2018 Q4 2019 Q4

Bill

ion

s

Total open automotive loan balance

Loan balances reach another record high

Source: Experian-Oliver Wyman Market Intelligence Reports

$368.3 $368.2 $381.5

$258.5 $262.1 $264.7

$313.0 $346.3 $362.3

$189.3$201.7 $220.6

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2017 Q4 2018 Q4 2019 Q4

Bill

ion

s

Total open automotive loan balance

Banks Captive Credit Union Finance


5.3%

4.4%

4.3%

5 © Experian

3.77% 3.83% 3.90%

16.11% 15.86% 15.95%

18.96% 18.50% 18.36%

42.00% 42.19% 42.13%

19.17% 19.62% 19.66%

2017 Q4 2018 Q4 2019 Q4

Loan balance risk distribution

Deep Subprime Subprime Nonprime Prime Super Prime

Loan balance distribution stable: percentage of all subprime balances remains under 20%

6.36%

4.90%

3.47%4.15%

4.54%

Deepsubprime

Subprime Nonprime Prime Super prime

Year-over-year balance change


6 © Experian

2.00% 2.38%

1.28%

4.06%

2.32%1.94% 2.26%1.28%

4.25%

2.31%

Bank Captive Credit Union Finance Total

% of loans & leases 30 dpd2018 Q4 2019 Q4

30 day delinquency rates decrease for most lenders


1.85%2.89%

1.10%

4.63%

2.34%1.79%

2.68%

1.10%

4.73%

2.31%


% of loan balances 30 dpd2018 Q4 2019 Q4


7 © Experian

Percentage of loan balances 30 dpd


AK = 1.27%

HI = 2.13%

8 © Experian

0.75% 0.62%0.33%

1.65%

0.78%0.72% 0.60%0.32%

1.74%

0.79%

Banks Captive Credit Union Finance Total

% of loans & leases 60 dpd2018 Q4 2019 Q4

60 day delinquency improves for most and remains flat overall


0.70% 0.73%

0.26%

1.87%

0.78%0.67% 0.71%

0.25%

1.90%

0.78%


% of loan balances 60 dpd2018 Q4 2019 Q4


9 © Experian

Percentage of loan balances 60 dpd


AK = 0.36%

HI = 0.56%

10 © Experian

Trends in automotive loan and lease originations

Originations in Q4 2019


11 © Experian

85.1% 84.6%

53.6% 54.6%

Q4 2018 Q4 2019

Percentage of vehicles with financing

New Used

Automotive financing1: snapshot of how and what consumers are financing

28.76% 29.92%

Q4 2018 Q4 2019

% of all2 new vehicles that are leased

46.44% 44.55%

53.56% 55.45%

Q4 2018 Q4 2019

Finance Market: new v used units

New Used

4.35% 4.09%

Q4 2018 Q4 2019

Used % of lease market


1 Financing = either a loan or lease is present on the title; 2 All = loan, lease or cash

12 © Experian

30

.72

%

6.1

1%

30

.61

%

21

.34

%

11.2

2%

32

.74

%

5.7

1%

29

.77

%

19

.92

%

11

.86

%

Bank BHPH Captive CreditUnion

Finance Co

Market Share of Total Financing(new/used units & loan/lease)

Q4 2018

Q4 2019

Banks continue their market share growth(loan and lease units combined)

26

.24

%

0.1

1%

54

.65

%

13

.65

%

5.3

5%

28

.67

%

0.1

4%

54

.09

%

11.7

9%

5.3

0%

Bank BHPH Captive Credit Union Finance Co

Market Share of New Financing

34

.80

%

11.5

8%

8.6

9%

28

.36

%

16

.57

%

36

.15

%

10

.38

%

9.3

8%

26

.74

%

17

.36

%

Bank BHPH Captive Credit Union Finance Co

Market Share of Used Financing


13 © Experian

Score range refresh

Note: ranges above are those used by Experian Automotive for automotive finance market analysis and trending purposes. Other industries and lenders may use other ranges based on unique scores, portfolio and industry trends.


14 © Experian

Credit scores continue to increase year-over-year

649654 656 659 661

673 677 681 681 684

607614 617 619

625

Q4 2015 Q4 2016 Q4 2017 Q4 2018 Q4 2019

Average used credit scores

Franchise used

All used

Independent used


711 711713

715716712

714716

718719

715

720722

724725

Q4 2015 Q4 2016 Q4 2017 Q4 2018 Q4 2019

Average new credit scores

New lease

All new

New loan

15 © Experian

Total market remains stable with increases in prime segments, used prime+ reaches Q4 high

8.85% 8.72%16.25% 15.81%

44.61% 44.60%

29.60% 30.15%

Q4 2018 Q4 2019

New (loan/lease) risk distribution

4.82% 4.56%23.66% 23.02%

21.78% 21.59%

37.13% 37.47%

12.61% 13.36%

Q4 2018 Q4 2019

Used (loan/lease) risk distribution


2.89% 2.86%

16.75% 16.69%

19.20% 19.03%

40.63% 40.63%

20.54% 20.79%

Q4 2018 Q4 2019

Total (loan & lease/new & used units) risk distribution


Deep subprime

= 0.72%

(up 5%)

16 © Experian

3.30% 3.24%

18.58% 18.45%

19.92% 19.80%

39.31% 39.47%

18.88% 19.03%

Q4 2018 Q4 2019

Total (new & used units) loan risk distribution


Used prime lending surpasses 50%, a Q4 high since 2009

10.05% 9.87%16.70% 16.37%

42.97% 43.22%

29.49% 29.71%

Q4 2018 Q4 2019

New loan risk distribution

4.79% 4.54%23.67% 23.06%

21.85% 21.65%

37.13% 37.46%

12.55% 13.29%

Q4 2018 Q4 2019

Used loan risk distribution


Deep subprime

= 0.82%

(up 3.1%)

17 © Experian

90

.94

%

79

.79

%

68

.68

%

59

.16

%

41

.64

%

91

.11

%

81

.29

%

71

.10

%

61

.71

%

45

.40

%Deep

SubprimeSubprime Nonprime Prime Super

Prime

Percentage of consumers by risk tier choosing used loans

Q4 2018 Q4 2019

Consumers continue to finance used while subprime decreases across Franchise and Independent Dealers

16.48% 16.05%

22.73% 22.13%

43.52% 43.53%

15.48% 16.54%

Q4 2018 Q4 2019

Used Franchise loan risk distribution


9.78% 8.78%

35.94% 34.10%

21.10% 21.67%

26.33% 27.89%

6.84% 7.56%

Q4 2018 Q4 2019

Used Independent loan risk distribution



Deep subprime

= 1.76%

(down 1.7%)

18 © Experian

6.37% 6.35%

15.32% 14.67%

48.03% 47.43%

29.82% 31.04%

Q4 2018 Q4 2019

New lease risk distribution


Leasing remains very prime while YOY more consumers choose to lease

23.2%

30.6%

34.1%

23.8%

30.4%

34.4%

Deep &Sub

Nonprime

Prime +

% of new borrowers choosing to lease

Q4 2019

Q4 2018


Deep subprime

= 0.51%

(up 14%)

19 © Experian

$419 $471 $466 $493

$662 $613$479

$645 $624

$416

$307 $357 $331 $385$471 $478

$361$454 $440

$298

CIVIC CR-V EQUINOX RAV4 1500 GRANDCHEROKEE

ACCORD F150 SILVERADO1500

COROLLA

Loan vs. lease monthly payment comparison on top leased models Loan payment

Lease payment

Mix of car, truck and CUV make up the top 10 most commonly leased vehicles with average payment difference of $93

3.3% 3.2%2.8% 2.7% 2.5% 2.4% 2.2%

1.8% 1.8% 1.8%

CIVIC CR-V EQUINOX RAV4 1500 GRANDCHEROKEE

ACCORD F150 SILVERADO1500

COROLLA

Top 10 new leased models by market share


20 © Experian

$471 $471$456

$447 $442 $448

$481 $476$467 $460 $456 $461

Deep Subprime Subprime Nonprime Prime Super Prime Total

Average new lease paymentQ4 2018 Q4 2019

Leasing payments also rise while terms remain at 36 months


36.85 36.89 36.8336.29

35.32

36.12

37.25 37.31 37.3436.82

36.0036.67


Average new lease term

21 © Experian

Loan amounts set yet another record high

$1,425 $1,431 $1,362$1,042

$843$1,075

$654$508 $457 $503 $460 $477$542 $465 $408 $398 $323 $399

$673 $544 $564 $585 $625 $589


Year-over-year change in balance

$2

7,8

45

$3

0,8

36

$3

4,4

92

$3

4,5

60

$2

9,9

62

$3

2,7

97

$1

6,2

59

$1

7,7

14

$2

0,2

49

$2

2,0

62

$2

1,5

11

$2

0,5

54

$1

8,1

28

$19,8

07

$2

2,1

16

$2

3,3

31

$2

2,3

52

$2

2,2

67

$1

5,2

96

$1

5,9

69

$1

7,7

99

$1

9,8

92

$2

0,0

02

$1

8,0

58


Average loan amount by tierAvg New All Used Franchise used Independent used


22 © Experian

Average loan term reaches a Q4 record high

72.44 73.19 73.49 70.4863.51

69.2661.00 63.18 65.86 66.40 62.56 64.9666.70 67.88 68.61 67.72 63.21 67.21

58.08 59.30 62.15 64.19 61.61 61.77


Average loan term by tier New All Used Franchise used Independent used

0.020.34 0.46 0.59 0.70

0.53

1.53

0.81

0.42 0.41 0.37 0.480.66 0.56

0.36 0.33 0.31 0.33

2.20

1.40

0.85 0.68

0.52

0.99


Year-over-year change in used loan term


23 © Experian

20.6%

40.3%30.3%

1.0%

20.5%

40.5%30.5%

1.4%

49 - 60 61 - 72 73 - 84 85 - 96

Percentage of new loans by term

Q4 2018 Q4 2019

Longer term loans continue to dominate the market

9.7%

23.2%

42.3%

18.4%9.1%

22.9%

42.5%

19.5%

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

Percentage of used loans by term

Q4 2018 Q4 2019

759

702 683 700

761

703 685 703

49 - 60 61 - 72 73 - 84 85 - 96

Average new score by loan term

Q4 2018 Q4 2019

663690

664 675663692

662 674

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

Average used score by loan term

Q4 2018 Q4 2019


24 © Experian

$562 $574 $578 $561 $522 $554$419 $412 $394 $384 $384 $393$428 $426 $412 $399 $396 $406$418 $405 $377 $360 $361 $380


Average monthly payment by risk tier New All used Franchise used Independent used

Payments remain high and increase year-over-year

$18$15 $14

$9

$5

$9$12

$9$6

$5 $5 $6

$11

$5$3 $2 $2 $3

$10 $9 $7$6

$7 $7


Year-over-year change in payments


25 © Experian

Rate reductions helped payment increase remain moderate1

4.2

5%

11

.51

% 7.5

5%

4.7

5%

3.8

2%

5.7

6%

19

.81

%

16

.88

% 10

.85

%

6.1

5%

4.4

3% 9.4

9%

18

.64

%

15.3

9% 9.9

7%

5.9

2%

4.4

0%

8.3

0%

20

.69

%

18

.47

% 12

.61

%

6.7

7%

4.4

8%

11

.96

%


Average loan rates by tier Avg New All Used Franchise used Independent used

-64 -65

-36 -26-37 -37

209

-6-23 -26

-10

9

-23 -31 -31 -30 -33

13 14

0-22 -26

-10


Year-over-year change (bps) in loan rate


26 © Experian

• Record highs continue with loan balances over $1.2 trillion and all lenders seeing increases

• Delinquency trends remain stable

• Banks continue to increase market share

• Leasing up year-over-year as consumers increasingly choose to lease

• Credit scores rise while subprime distributions reach Q4 record lows

• Q4 highs seen in several loan attributes and while payments rose, the decrease in interest rates helped moderate the increase

• Longer term loans continue to dominate

Summary


Documents

State of the Auto Finance Market...Automotive financing1: snapshot of how and what consumers are financing 28.76% 29.92% Q4 2018 Q4 2019 % of all2 new vehicles that are leased 46.44%