State of the Automotive Finance Market Fourth Quarter 2013...Source: Experian-Oliver Wyman Market Intelligence Reports YOY Change 1.72% 2.27% 1.16% 5.21% 2.22% 1.59% 2.44% 1.26% 5.07%

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Experian Public.

State of the Automotive Finance Market Fourth Quarter 2013

Melinda Zabritski | Sr. Director, Experian Automotive


Experian Public.

Score ranges

Category Vantage Score®

Super prime 740+

Prime 680–739

Nonprime 620–679

Subprime 550–619

Deep subprime <550

Market overview

Outstanding balances

Delinquency

Repo and charge-off

Originations

New and Used financing

Lender and transaction types

Loan characteristics

Session overview


Experian Public.

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PICTURE

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Overall Automotive

Finance Market

Market overview and delinquency


Experian Public.

Risk distribution of overall automotive portfolio

2.81%

0.69% 1.19% 1.51%

-2.42% -3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

YOY change in risk distribution

How has the market been changing?

Deep subprime

Subprime Nonprime Prime Super prime

Source: Experian-Oliver Wyman Market Intelligence Reports

11.3% 11.6%

8.6% 8.6%

15.8% 16.0%

25.3% 25.7%

39.1% 38.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q4 2012 Q4 2013

Risk distribution of open loans

Deep Subprime Subprime Nonprime

Prime Super Prime


Experian Public.

Total automotive balance

$256 $283

$210 $221

$157 $178

$96

$116

$-

$100

$200

$300

$400

$500

$600

$700

$800

$900

Q4 2012 Q4 2013

Billi

on

s

Total outstanding loan balance

Bank Captive Credit Union Finance

Who holds the open loans?

$79b


YOY Change

$27

$11

$21 $20

$-

$5

$10

$15

$20

$25

$30

Billi

on

s

YOY change loan balance

Bank Captive Credit Union

Finance/ Other


Experian Public.

YOY change in loan balances



Experian Public.

Recent automotive delinquency: 30 day delinquency

How are delinquency rates changing?

2.35%

2.78%

1.43%

5.61%

2.72%

2.11%

2.70%

1.50%

5.40%

2.63%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Bank Captive Credit Union Finance Total

Q4 2012 Q4 2013

Overall 9 bps

decrease

-3.1%

5.0%


YOY Change

-10.2%

-3.8%

-3.5%


Experian Public.

30-day delinquency (unit) rate by state

AK = 1.47%

HI = 2.27%



Experian Public.

YOY change in 30-day delinquency loan rates



Experian Public.


$4.4 $4.5

$4.8 $5.4

$1.8 $2.2

$5.0

$5.9

$-

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

Q4 2012 Q4 2013

Billi

on

s

Balance of 30-day delinquent loans


What’s at risk?


YOY Change

1.72% 2.27%

1.16%

5.21%

2.22%

1.59%

2.44%

1.26%

5.07%

2.26%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Bank Captive CreditUnion

Finance Total

Percentage of balances 30-days delinquent

Q4 2012 Q4 2013

Overall 4 bps

increase

$2b


Experian Public.


How are delinquency rates changing?

0.66% 0.52%

0.34%

1.96%

0.74% 0.59%

0.50% 0.40%

1.98%

0.74%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%


Q4 2012 Q4 2013

Overall flat


YOY Change

-9.8%

16.8% -4.9%

0.8%


Experian Public.

60-day delinquency by state

AK = 0.41%

HI = 0.62%



Experian Public.

YOY change in 60-day delinquency rates



Experian Public.


$1,166 $1,207

$776 $875

$407 $546

$1,583

$1,979

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

Q4 2012 Q4 2013

Mil

lio

ns

Balance of 60-day delinquent loans


What’s at risk?

$674m


YOY Change

0.45%

0.37% 0.26%

1.66%

0.55% 0.43%

0.40% 0.31%

1.71%

0.58%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%


Finance Total

Percentage of balances 60-days delinquent

Q4 2012 Q4 2013

3 bps increase


Experian Public.

Recent delinquency: quarterly repossession

How are repo rates changing?

0.24% 0.36%

0.16%

1.61%

0.46%

0.23% 0.34%

0.15%

2.84%

0.65%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%


Q4 2012 Q4 2013

Overall 19 bps

increase

-4.9% -5.9%

-7.0%

76.3%

42.8%


YOY Change


Experian Public.

Repossession rates by lender type

How have the lenders rates changed?

0.23%

0.51%

0.32% 0.34%

0.60%

0.52%

0.15% 0.18%

0.10%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

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

Bank Captive Credit Union



Experian Public.

Repossession rates for finance companies

How have finance companies changed?

2.84%

2.59%

1.42%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

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



Experian Public.

Average charge-off amount

How have charge-offs changed?

$6,832

$8,360

$6,388

$7,223 $7,277 $7,618

$9,526

$7,317

$8,772 $8,520

$5,000

$5,500

$6,000

$6,500

$7,000

$7,500

$8,000

$8,500

$9,000

$9,500

$10,000


Q4 2012 Q4 2013

$786

$1,167

$929

$1,549

$1,243


YOY Change


Experian Public.

Average charge-off versus whole sale values

How have charge-offs compared to vehicle values?

$8,520

$11,307

$16,929

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

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

Average charge-off amount KBB avg auction actual all MY

KBB Avg auction C+5MY

Source: Kelley Blue Book Automotive Insights; Experian Automotive


Experian Public.

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PICTURE

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New and Used

Originations

Automotive financing in the

fourth quarter 2013


Experian Public.

Automotive market by transaction type

17.9%

47.2%

16.3%

46.5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

New Used

No lender on title

Q4 2012 Q4 2013

88.47% 86.42%

11.53% 13.58%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q4 2012 Q4 2013

Overall financing

Total Loan Total Lease

How are consumers purchasing vehicles?

Source: Experian Automotive


Experian Public.

Share of total consumer finance units (loan and lease)

5.80%

5.16% 5.00%

4.61% 4.61% 4.59%

3.58% 3.54%

1.85% 1.72% 1.54% 1.49% 1.45% 1.36% 1.36%

1.12% 1.10% 1.06% 0.91% 0.90%

0%

1%

2%

3%

4%

5%

6%

7%


52.8% of all financing


Experian Public.

Automotive market by transaction type

96.77% 96.80%

3.23% 3.20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q4 2012 Q4 2013

Leasing by type

New lease Used lease

20.65%

23.66% 23.13% 24.79%

28.84%

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

New lease market share

Share of new financing Share of all new

How are consumers purchasing vehicles?



Experian Public.

Top 10 new lessors

Who’s dominating in leasing?

14.2%

12.5%

11.6%

9.6% 9.1%

7.3% 6.8%

5.9% 5.3%

3.8%

0%

2%

4%

6%

8%

10%

12%

14%

16%

TOYOTAFINANCIALSERVICES

AMERICANHONDA

FINANCE

FORDMOTORCREDIT

NISSANINFINITI

FINANCIALSERVICES

ALLY HYUNDAICAPITALAMERICA

VW CREDITINC

MERCEDESBENZ

FINANCIAL

BMW BANKOF NORTHAMERICA

CCAP AUTOLEASE LTD

Share of new lease market


86% of all

new leasing


Experian Public.

Average new lease credit scores

735 719

250

350

450

550

650

750

850

Q4 2012 Q4 2013

1.87% 2.54% 9.52% 8.89%

18.49% 20.47%

18.82% 23.92%

51.29% 44.18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q4 2012 Q4 2013

New lease credit distribution

Deep subprime Subprime Nonprime

Prime Super prime

How has leasing changed?



Experian Public.

709

736

715

728

712

750

702

732

716

735

703

721

714 715

708

727

712

719

692

728

660

670

680

690

700

710

720

730

740

750

760

Loan score Lease score

Average score comparison on top new leased models



Experian Public.

Average new lease characteristics

$426

$420

$375

$385

$395

$405

$415

$425

$435

$445

Q4 2012 Q4 2013

Average monthly payment

8.4%

65.9%

24.8%

0.7% 0%

10%

20%

30%

40%

50%

60%

70%

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

Term distribution

What are the characteristics of leasing?



Experian Public.

$349

$416 $414 $427 $431 $420 $413 $435

$389

$611

$247

$325 $312 $334 $329 $330

$296 $337

$287

$470

$-

$100

$200

$300

$400

$500

$600

$700

Loan payment Lease payment

Average payment comparison on top new leased models



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

What and where are consumers financing?

Independent Franchise

YOY Change



Experian Public.

Average credit scores by vehicle type

How has financing on vehicles changed?

711

727

738 732 728 724

715

630 637

649 653 647 644 646

560

580

600

620

640

660

680

700

720

740

760

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

New Used

YOY Change



Experian Public.

Quarterly financing for new vehicles

2.03% 2.96%

12.07% 10.81%

18.71% 20.32%

18.54% 21.59%

48.65% 44.32%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q4 2012 Q4 2013

Risk distribution of new loans

Deep subprime SubprimeNonprime PrimeSuper prime

45.55%

-10.49%

8.62%

16.45%

-8.88%

-20%

-10%

0%

10%

20%

30%

40%

50%

YOY change in new financing

How has credit changed for new financing?

3.9%

-1.9%

Super

prime Prime Nonprime Subprime Deep

subprime

YOY Change



Experian Public.

Quarterly financing for used vehicles

14.60% 17.63%

27.11% 21.94%

22.11% 23.23%

14.46% 17.71%

21.72% 19.49%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q4 2012 Q4 2013

Risk distribution of used loans


Prime Super prime

20.76%

-19.09%

5.07%

22.50%

-10.28%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

YOY change in used financing

How has credit changed for used financing?

Super

prime Prime Nonprime Subprime Deep

subprime

-1.60%

2.82%

YOY Change



Experian Public.

Risk distribution by lender type

3.8%

51.5%

3.9% 4.2%

36.2%

13.8%

25.0%

12.6% 14.5%

38.7%

24.2%

12.1%

20.8% 28.6%

14.7%

23.5%

5.9%

20.0%

24.5%

5.2%

34.7%

5.5%

42.8%

28.3%

5.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Bank BHPH Captive CreditUnion

Finance

Risk distribution of market share


Prime Super prime -1.37% -1.47%

6.03%

0.69%

-1.61% -2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%


Finance

YOY change in outside of prime distribution

How have the lenders shifted?



Experian Public.

Automotive finance by lender type

38.06%

8.57%

20.25% 18.78%

14.34%

-7.7% -6.7%

14.5%

4.2% 3.2%

-10%

-5%

0%

5%

10%

15%

20%

0%

5%

10%

15%

20%

25%

30%

35%

40%


Finance

Automotive loan market share

Market share YOY change in share

41.08%

0.18%

41.26%

12.80%

4.68%

-12.0%

20.8%

14.2%

2.1% 3.8%

-20%

-10%

0%

10%

20%

30%

0%5%

10%15%20%25%30%35%40%45%


Finance

New loan market share


36.25%

13.61% 7.64%

22.37% 20.13%

-4.2% -7.9%

21.9%

4.4% 2.2%

-10%

-5%

0%

5%

10%

15%

20%

25%

0%5%

10%15%20%25%30%35%40%


Finance

Used loan market share


What lender types are gaining share?



Experian Public.

Top 20 lenders by total loan (retail) market share Who gained or lost loan share?

5.78%

4.76% 4.58% 4.53%

4.10%

3.56% 3.42%

2.67%

1.67% 1.58% 1.56% 1.30% 1.28% 1.21% 1.13% 1.05% 1.04% 1.03% 1.02% 0.97%

9.5%

0.3%

-15.1%

-9.0%

10.8%

3.8%

9.1%

14.3%

-27.8%

-38.0%

-19.7%

-31.7%

-3.1% -5.8%

-10.9%

8.0%

16.4%

-14.5%

4.1%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

0%

1%

2%

3%

4%

5%

6%

7%

Q4 2013 Total Loan Share YOY change in share

48.2% of New

Financing



Experian Public.

Top 20 lenders by new loan (retail) market share Who gained or lost new loan share?

8.34% 8.18% 7.99%

6.38% 6.31% 5.85%

4.40% 4.04%

2.81% 2.52%

1.91% 1.89% 1.86% 1.84% 1.71% 1.41% 1.39% 1.36% 1.27% 1.26%

-7.6%

9.9% 13.1%

-3.4%

15.5%

-28.4%

20.0% 17.5%

-11.1% -9.6%

8.8%

-48.9%

-20.8%

34.5%

-19.9%

-10.7%

-16.3% -19.5%

-23.5%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Q4 2013 New Loan Share YOY change in share

74.8% of New

Financing



Experian Public.

Top 20 lenders by used loan (retail) market share Who gained or lost used loan share?

6.83%

3.91% 3.81% 3.79%

2.24% 2.20%

1.64% 1.53% 1.37% 1.23% 0.99% 0.98% 0.98% 0.98% 0.94% 0.93% 0.92% 0.85% 0.82% 0.78%

6.3% 5.3% 3.8%

5.2%

-9.7%

-22.4%

6.6% 3.5%

-24.1%

-19.5%

2.3%

-2.6% -0.6%

-40.9%

-5.4%

-1.5%

8.2%

-13.9% -17.2%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

0%

1%

2%

3%

4%

5%

6%

7%

8%

Q4 2013 Used Loan Market Share YOY change in share

37.7% of Used Financing



Experian Public.

Vehicle financing

$26,691

$17,629

$27,430

$17,974

$

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

New Used

Average amount financed

Q4 2012 Q4 2013

$24,874

$26,563

$27,831 $27,854 $25,936 $25,428

$27,828

$29,385 $28,802

$25,880

$22,000

$23,000

$24,000

$25,000

$26,000

$27,000

$28,000

$29,000

$30,000

Deepsubprime

Subprime Nonprime Prime Superprime

Average new amount financed

Q4 2012 Q4 2013

$14,408 $15,858

$17,712 $19,023 $19,354 $14,410

$16,368 $18,384 $19,316 $19,367

$

$5,000

$10,000

$15,000

$20,000

$25,000

Deepsubprime


Average used amount financed

Q4 2012 Q4 2013

How has financing changed?

$345

$739

YOY Change



Experian Public.

Loan-to-Value by lender type

109.2% 108.8% 115.3%

123.2%

110.4%

126.9% 128.6% 135.8%

152.4%

133.8%

0%

20%

40%

60%

80%

100%

120%

140%

160%


Finance MarketTotals

Average LTV by lender

Average LTV new Average LTV used

30 28

212

26

56

(18)

306

136 115 113

(50)

-

50

100

150

200

250

300

350

YOY change in LTV (bps)

YOY change in new LTV

YOY change in used LTV

How do the lenders compare?

Market

Totals

Finance Credit

Union

Captive Bank

Source: NADA Used Car Guides; Experian Automotive


Experian Public.

Loan-to-Value by risk segment

126.0% 125.5% 122.2%

114.3%

98.8%

149.2% 142.3%

136.8% 129.9%

116.9%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Deepsubprime


Average LTV by risk segment

Average LTV new Average LTV used

301

234

143

21

(208)

220

164

110

55

(110)

(300)

(200)

(100)

-

100

200

300

400

Deepsubprime


YOY change in LTV (bps)

YOY change in new LTV YOY change in used LTV

How do the risk segments compare?

Source: NADA Used Car Guides; Experian Automotive


Experian Public.

Average loan payments

$460

$348

$471

$352

$

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

New Used

Average monthly payment

Q4 2012 Q4 2013

$485 $480

$464 $459 $455

$496 $499 $487

$471

$456

$430

$440

$450

$460

$470

$480

$490

$500

$510

Deepsubprime


Average new payment

Q4 2012 Q4 2013

$369

$357

$337 $338

$350

$372 $366

$348 $340

$346

$310

$320

$330

$340

$350

$360

$370

$380

Deepsubprime


Average used payment

Q4 2012 Q4 2013

How have payments changed?

$11

YOY Change


$4


Experian Public.

Average loan terms

65

60

65

61

48

60

72

New Used

Average loan term

Q4 2012 Q4 2013

70.25 69.88 69.03 67.04 61.51

70.91 70.62 69.65 67.46

61.28

48

60

72

Deepsubprime


Average new term

Q4 2012 Q4 2013

55.31

59.25 62.14 62.68

60.29 56.73

60.54 62.88 63.36

60.73

48

60

72

Deepsubprime


Average used term

Q4 2012 Q4 2013

How have terms changed?

YOY Change


1 mo


Experian Public.

Distribution of loan term

4.5% 4.7%

28.5%

41.2%

20.1%

-5.5%

1.3%

-4.8% -3.9%

19.0%

-10%

-5%

0%

5%

10%

15%

20%

25%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

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

New financing by term

% of new financing by term

YOY change in term

7.2%

12.7%

26.5%

39.0%

12.5%

-5.8% -7.0%

-8.2%

3.9%

23.2%

-10%

-5%

0%

5%

10%

15%

20%

25%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

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

Used financing by term

% of used financing by term

YOY change in term

How have loan terms changed?



Experian Public.

Average loan rate

4.36%

8.48%

4.37%

8.71%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

New Used

Average loan rate

Q4 2012 Q4 2013

11.80%

8.81% 5.33% 3.72%

2.90%

12.12%

8.88%

5.32% 3.61% 2.72%

0%

2%

4%

6%

8%

10%

12%

14%

Deepsubprime


Average new rate

Q4 2012 Q4 2013

17.34%

13.56%

7.85% 5.08%

3.79%

18.14%

14.04%

8.13%

5.12%

3.52% 0%2%4%6%8%

10%12%14%16%18%20%

Deepsubprime


Average used rate

Q4 2012 Q4 2013

How have rates changed?

1 bps

23 bps

YOY Change



Experian Public.

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

Leasing continues to grow with decreasing scores and growth in lower prime market

Loan amounts and payments inching up with slight increases in rates

Loan-to-value and terms continue to expand

In summary


Experian Public.


Experian Public.

Documents

State of the Automotive Finance Market Fourth Quarter 2013...Source: Experian-Oliver Wyman Market Intelligence Reports YOY Change 1.72% 2.27% 1.16% 5.21% 2.22% 1.59% 2.44% 1.26% 5.07%