State of the Auto Finance Market - Experian2017 Q3 2018 Q3 2019 Q3 s Total open automotive loan balance Loan balances reach another record high Source: Experian-Oliver Wyman Market

1 © Experian

State of the AutomotiveFinance Market

Presented by: Melinda ZabritskiQ3 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 Q3 2019

3 © Experian

A review of all open automotive loans & leases

Overall Automotive Finance Market


4 © Experian

$1,121

$1,174

$1,220

$1,060

$1,080

$1,100

$1,120

$1,140

$1,160

$1,180

$1,200

$1,220

$1,240

2017 Q3 2018 Q3 2019 Q3

Bill

ion

s

Total open automotive loan balance

Loan balances reach another record high

Source: Experian-Oliver Wyman Market Intelligence Reports

$370.2 $368.8 $378.9

$255.6 $262.6 $264.2

$305.1 $342.0 $358.6

$190.3$200.0 $218.7

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2017 Q3 2018 Q3 2019 Q3

Bill

ion

s

Total open automotive loan balance

Banks Captive Credit Union Finance


6.3%

4.7%

4.0%

5 © Experian

3.87% 3.60% 3.73%

16.06% 15.70% 15.60%

18.72% 18.50% 18.29%

41.71% 42.17% 42.27%

19.63% 20.03% 20.11%

2017 Q3 2018 Q3 2019 Q3

Loan balance risk distribution

Deep Subprime Subprime Nonprime Prime Super Prime

Loan balance distribution stable: percentage of all subprime balances remains under 19%

7.79%

3.30% 2.82%

4.26% 4.41%

Deepsubprime

Subprime Nonprime Prime Super prime

Year-over-year balance change


6 © Experian

1.95% 2.26%

1.22%

3.95%

2.23%1.92% 2.17%1.20%

4.18%

2.25%

Bank Captive Credit Union Finance Total

% of loans & leases 30 dpd2018 Q3 2019 Q3

30 day delinquency rates decrease for most lenders


1.80%2.74%

1.04%

4.57%

2.26%1.76%

2.58%

1.03%

4.69%

2.25%


% of loan balances 30 dpd2018 Q3 2019 Q3


7 © Experian

Percentage of loan balances 30 dpd


AK = 1.50%

HI = 1.94%

8 © Experian

0.69% 0.57%0.31%

1.54%

0.73%0.71%0.56%

0.29%

1.66%

0.75%

Banks Captive Credit Union Finance Total

% of loans & leases 60 dpd2018 Q3 2019 Q3

60 day delinquency tics up slightly for some lenders


0.65% 0.67%

0.24%

1.76%

0.72%0.66% 0.65%

0.23%

1.85%

0.75%


% of loan balances 60 dpd2018 Q3 2019 Q3


9 © Experian

Percentage of loan balances 60 dpd


AK = 0.30%

HI = 0.50%

10 © Experian

Trends in automotive loan and lease originations

Originations in Q3 2019


11 © Experian

85.2% 85.4%

52.8% 54.7%

Q3 2018 Q3 2019

Percentage of vehicles with financing

New Used

Automotive financing1: snapshot of how and what consumers are financing

28.90% 28.76%

Q3 2018 Q3 2019

% of all2 new vehicles that are leased

46.14% 44.85%

53.86% 55.15%

Q3 2018 Q3 2019

Finance Market: new v used units

New Used

3.88% 4.07%

Q3 2018 Q3 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

31

.0%

5.8

%

30

.1%

22

.6%

10

.5%

35

.9%

1.3

%

34

.8%

19.5

%

8.5

%

Bank BHPH Captive CreditUnion

Finance Co

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

Q3 2018

Q3 2019

Banks and captives show increases in share(loan and lease units combined)

26

.7%

0.1

% 53

.7%

14.5

%

5.0

%

29

.4%

0.1

% 53

.8%

11.7

%

5.0

%

Bank BHPH Captive Credit Union Finance Co

Market Share of New Financing

34

.8%

10

.9%

8.9

%

29.9

%

15

.5%

43

.7%

2.6

% 12

.1%

28

.8%

12

.7%

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

New scores continue to rise while franchise used experiences a slight decrease

650655 659 661 662

674 678 682 683 681

609615

620 623630

Q3 2015 Q3 2016 Q3 2017 Q3 2018 Q3 2019

Average used credit scores

Franchise used

All used

Independent used


710712

713714

715712714

716717

718

715

718

722724

725

Q3 2015 Q3 2016 Q3 2017 Q3 2018 Q3 2019

Average new credit scores

New lease

All new

New loan

15 © Experian

Total market remains stable with modest YOY change

8.91% 8.73%16.31% 16.11%

44.63% 44.66%

29.47% 29.83%

Q3 2018 Q3 2019

New (loan/lease) risk distribution

4.35% 4.39%22.84% 22.70%

21.92% 21.61%

37.85% 37.83%

13.05% 13.47%

Q3 2018 Q3 2019

Used (loan/lease) risk distribution


2.64% 2.73%

16.33% 16.44%

19.30% 19.15%

41.02% 40.89%

20.72% 20.80%

Q3 2018 Q3 2019

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


Deep subprime

= 0.67%

(down 2.1%)

16 © Experian

3.02% 3.07%

18.17% 18.09%

20.02% 19.87%

39.67% 39.77%

19.12% 19.20%

Q3 2018 Q3 2019

Total (new & used units) loan risk distribution


Used prime+ reaches highest point since recession peak in 2009

10.26% 9.84%16.74% 16.66%

42.75% 43.26%

29.45% 29.49%

Q3 2018 Q3 2019

New loan risk distribution

4.33% 4.37%22.86% 22.72%

21.97% 21.67%

37.85% 37.82%

12.99% 13.42%

Q3 2018 Q3 2019

Used loan risk distribution


Deep subprime

= 0.76%

(down 6.4%)

17 © Experian

89.9

5%

78

.97

%

68

.87

%

59

.87

%

42

.63

%

91

.08

%

80

.44

%

69

.84

%

60

.88

%

44

.75

%Deep

SubprimeSubprime Nonprime Prime Super

Prime

Percentage of consumers by risk tier choosing used loans

Q3 2018 Q3 2019

Q3 record high of prime+ consumers choosing used vehicles while Independent stores see prime increase

15.87% 16.79%

22.57% 22.59%

43.94% 42.84%

15.98% 15.91%

Q3 2018 Q3 2019

Used Franchise loan risk distribution


8.79% 8.31%

34.72% 32.59%

21.62% 21.18%

27.59% 29.47%

7.28% 8.45%

Q3 2018 Q3 2019

Used Independent loan risk distribution



Deep subprime

= 1.87%

(up 13%)

18 © Experian

6.15% 6.29%

15.43% 14.89%

48.47% 47.74%

29.52% 30.60%

Q3 2018 Q3 2019

New lease risk distribution


Leasing remains very prime with some growth in subprime prime while YOY fewer consumers choose to lease

23.1%

31.8%

36.1%

23.5%

30.7%

34.8%

Deep &Sub

Nonprime

Prime +

% of new borrowers choosing to lease

Q2 2019

Q2 2018


Deep subprime

= 0.48%

(up 11%)

19 © Experian

$418 $478 $485 $465

$652 $600 $484 $483

$659

$415

$303 $363 $379 $326$451 $478

$370 $351$457

$302

CIVIC CR-V RAV4 EQUINOX 1500 GRANDCHEROKEE

ACCORD ROGUE F150 COROLLA

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

Lease payment

CUVs comprise the majority of the top leased models with average lease difference of $101

3.9%3.4% 3.1%

2.5% 2.5% 2.4% 2.4%1.8% 1.8% 1.7%

CIVIC CR-V RAV4 EQUINOX 1500 GRANDCHEROKEE

ACCORD ROGUE F150 COROLLA

Top 10 new leased models by market share


20 © Experian

$469 $459$443

$427 $420 $430

$483 $474 $462 $450 $444 $452

Deep Subprime Subprime Nonprime Prime Super Prime Total

Average new lease paymentQ3 2018 Q3 2019

Leasing payments also rise while terms remain at 36 months


37.21 36.99 36.81 36.29

35.50 36.18

36.97 37.15 37.1636.71

35.8636.54


Average new lease term

21 © Experian

Loan amounts set yet another record high

$1,478

$1,919 $1,928$1,602

$880

$1,503

$746 $712 $652 $552 $441 $585$130 $115 $139 $248 $244 $152

$912$1,144

$1,489 $1,519$1,197

$1,452


Year-over-year change in balance

$2

7,5

35

$3

0,6

33

$34,2

45

$3

4,2

32

$2

9,5

16

$3

2,4

80

$1

6,2

96

$1

7,7

59

$2

0,1

72

$2

1,8

45

$2

1,2

16

$2

0,4

46

$1

7,4

86

$1

9,2

27

$2

1,4

98

$2

2,8

47

$2

1,8

92

$2

1,7

11

$15,6

02

$1

6,4

96

$1

8,5

85

$2

0,6

19

$2

0,4

85

$1

8,8

34


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


22 © Experian

Terms rise to reach record highs for all but Franchise used

72.52 73.05 73.31 70.5363.58

69.2860.89 63.26 65.78 66.24 62.42 64.8964.89 66.62 67.70 67.31 63.08 66.60

58.36 60.20 63.23 64.70 61.60 62.59


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

0.22 0.43 0.610.88 1.01 0.81

1.220.89

0.53 0.42 0.41 0.53

-1.03-0.67

-0.35

0.150.40

-0.08

1.93 2.11 1.95

1.31

0.60

1.73


Year-over-year change in used loan term


23 © Experian

20.8%

40.2%30.0%

1.1%

20.1%

41.0%30.9%

1.3%

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

Percentage of new loans by term

Q3 2018 Q3 2019

Longer term loans continue to dominate the market

9.9%

23.5%

42.2%

18.1%9.2%

22.9%

42.9%

19.0%

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

Percentage of used loans by term

Q3 2018 Q3 2019

758

701 682 700

761

703 685 703

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

Average new score by loan term

Q3 2018 Q3 2019

664691

665 675665693

664 675

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

Average used score by loan term

Q3 2018 Q3 2019


24 © Experian

$556 $574 $578 $557 $515 $550$419 $414 $395 $383 $382 $393$424 $424 $410 $396 $391 $404$421 $411 $385 $371 $372 $387


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

Payments remain high

$20

$25$28

$22

$11

$20

$16 $16$13

$10 $9$12$13

$11$9

$6 $5$8

$16$18 $19 $21 $21

$19


Year-over-year change in payments


25 © Experian

Rates continue to increase across all risk segments1

4.3

0%

11

.71

% 7.7

7%

4.9

6%

4.0

1%

5.9

6%

19

.72

%

16

.89

% 11

.01

%

6.3

6%

4.6

6% 9.5

7%

19

.06

%

15

.98

% 10

.59

%

6.2

8%

4.6

5%

8.8

3%

20

.39

%

18

.10

% 12

.17

%

6.6

8%

4.6

3% 1

1.3

3%


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

-11 -18

2540 33 23

74 75 6738 32

54

134119

96

5137

8367 54

3919 26

7


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


26 © Experian

• Record highs continue with loan balances over $1.2 trillion

• Delinquency trends remain stable

• Banks increase market share in Q3

• Leasing remains high with nearly 29% of new leased

• Credit scores increase for new financing and growth seen across prime and super prime segments

• Used Independent dealers saw increases in prime and loan attributes as more prime consumers buy used and purchase from Independent stores

• Q3 record highs seen in finance characteristics

• New loan terms reach record highs

Summary


Documents

State of the Auto Finance Market - Experian2017 Q3 2018 Q3 2019 Q3 s Total open automotive loan balance Loan balances reach another record high Source: Experian-Oliver Wyman Market