State of the Automotive Finance Market - Experian · Q3 2015 Q3 2016 Used % of lease market 47.98% 47.12% 52.02% 52.88% Q3 2015 Q3 2016 Finance Market: new v used units New Used 86.6%

1©2016 Experian Information Solutions, Inc. All rights reserved.

Experian Public.

© 2016 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company

names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian.

Experian Public.

www.experian.com/automotive

State of the Automotive Finance Market A look at loans and leases in Q3 2016

Presented by: Melinda Zabritski | Sr. Director, Financial Solutions

© 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 2

Market Overview

Outstanding balances

Total risk distributions

Delinquency

Originations

New and Used financing

Lender and transaction types

Loan & lease characteristics

Session overview

© 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 3© 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 3

A look balances and delinquencies on all open automotive loans & leases

Overall Automotive Finance Market


Loan balances break record highs while Credit Unions experience largest YOY growth (loans regardless of origination period)

Source: Experian-Oliver Wyman Market Intelligence Reports


18.58%

8.09%

9.83%

8.07%8.80%

Deepsubprime

Subprime Nonprime Prime Super prime

Year-over-year balance change

Majority of loan balances remain prime or higher with modest growth in high risk segments (loans regardless of origination period)


4.15% 3.95% 4.28%

18.12% 18.39% 18.45%

21.45% 21.77% 21.48%

29.50% 28.64% 28.44%

26.77% 27.26% 27.36%

2014 Q3 2015 Q3 2016 Q3

Risk distribution of open loan balances

Deep Subprime Subprime Nonprime Prime Super Prime


30 day delinquency is flat with slight increase in at-risk dollars (loans and leases regardless of origination period)



30-day delinquency balances by state(loans regardless of origination period)


HI = 1.78%

1.75%


60 day delinquency growth across all lender types(loans and leases regardless of origination period)



60-day delinquency balances by state(loans and leases regardless of origination period)


HI = 0.50%

0.35%

© 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 10© 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 10

Trends in automotive loans and leases

Originations in Q3 2016


Automotive financing: snapshot of how and what consumers are financing

3.34% 3.71%

Q3 2015 Q3 2016

Used % of lease market

47.98% 47.12%

52.02% 52.88%

Q3 2015 Q3 2016

Finance Market: new v used units

New Used

86.6% 86.1%

55.3% 54.2%

Q3 2015 Q3 2016

Percentage of vehicles with financing

New Used

26.93% 29.49%

Q3 2015 Q3 2016

% of all new vehicles that are leased

Source: Experian Automotive


Credit Unions pick up market share across the board (loan and lease units combined)

34

.8%

6.2

%

29

.3%

17

.6%

12

.1%

35

.1%

6.2

%

28

.3%

19

.6%

10

.7%

Bank BHPH Captive CreditUnion

FinanceCo

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

Q3 2015 Q3 2016

33

.1%

0.1

%

51

.9%

9.9

%

4.9

%

31

.8%

0.1

%

51

.2%

12

.0%

4.8

%

Bank BHPH Captive Credit Union Finance Co

Market Share of New Financing

Q3 2015 Q3 2016

36

.3%

12

.0%

7.8

%

24

.9%

18

.9%

38

.1%

11.5

%

8.0

%

26

.4%

16

.0%

Bank BHPH Captive Credit Union Finance Co

Market Share of Used Financing

Q3 2015 Q3 2016



725

717

714712

714

723

716

713

710712

732

719718

715

718

Q3 2012 Q3 2013 Q3 2014 Q3 2015 Q3 2016

Average new credit scores

All New New Loan New Lease

Credit scores increase across all transaction types

652648 650 650

655

676672 674 674

678

607603 605

609615

Q3 2012 Q3 2013 Q3 2014 Q3 2015 Q3 2016

Average used credit scores

All Used Franchise Used

Independent Used



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.


Total finance market (loan & lease) becomes increasingly more prime across all, new and used financing

9.65% 9.31%17.69% 17.14%

44.86% 45.08%

27.11% 27.77%

Q3 2015 Q3 2016

New risk distribution

5.44% 5.16%26.21% 24.60%

22.33% 22.21%

34.78% 36.14%

11.25% 11.89%

Q3 2015 Q3 2016

Used risk distribution

3.13% 3.04%

18.17% 17.35%

20.08% 19.81%

39.67% 40.38%

18.95% 19.42%

Q3 2015 Q3 2016

Total (new & used units) risk distribution




7.34% 7.03%

17.66% 16.60%

48.57% 48.50%

25.97% 27.34%

Q3 2015 Q3 2016

New lease risk distribution

Deep Subprime Subprime Nonprime Prime Super Prime22.8%

30.2%

31.4%

25.1%

32.2%

34.6%

Deep &Sub

Nonprime

Prime +

% of new borrowers choosing to lease

Q3 2016

Q3 2015

Leasing remains very prime as more consumers across all risk tiers choose to lease (loans not included)



Despite more prime consumers shifting to leasing the loan market becomes more prime

10.67% 10.44%17.73% 17.42%

43.25% 43.37%

27.57% 27.98%

Q3 2015 Q3 2016

New loan risk distribution

5.40% 5.11%26.24% 24.61%

22.38% 22.28%

34.77% 36.15%

11.21% 11.85%

Q3 2015 Q3 2016

Used loan risk distribution

3.56% 3.48%

20.03% 19.26%

20.53% 20.44%

38.15% 38.88%

17.74% 17.94%

Q3 2015 Q3 2016

Total (new & used units) loan risk distribution




Prime and Super Prime borrowers choose used vehicles at an increasing rate resulting in shifts among all dealer types


18.72% 17.25%

23.73% 23.29%

41.56% 42.77%

14.02% 14.85%

Q3 2015 Q3 2016

Used Franchise loan risk distribution


91.2

0%

78.7

4%

65.5

3%

54.7

6%

37

.98%

91.4

7%

79.5

2%

67.8

1%

57.8

5%

41.0

7%

DeepSubprime

Subprime Nonprime Prime SuperPrime

Percentage of consumers by risk tier choosing used loans

Q3 2015 Q3 2016

10.95% 10.28%

39.08% 36.60%

21.03% 21.31%

23.28% 25.47%5.66% 6.34%

Q3 2015 Q3 2016

Used Independent loan risk distribution



$28,9

36

$18,8

66

$18,8

58

$16,1

90

$30,0

22

$19,2

27

$19,2

27

$16,6

47

Avg new loanamount

Avg used loanamount

Avg Franchiseused loanamount

AvgIndependent

used loanamount

Average loan amount

Q3 2015 Q3 2016

Average used loan amount reaches record high while new remains over $30k

$25,100

$14,633

$16,631

$13,679

$28,082

$16,430

$18,545

$14,635

$31,422

$19,103

$20,958

$16,604

$31,502

$20,748

$22,052

$18,579

$27,696

$20,221

$21,190

$18,534

Avg New

All Used

Franchise used

Independent used

Average loan amount by tier

Super Prime Prime Nonprime Subprime Deep Subprime



67

35

68

36

New loan New lease

Average new term

Q3 2015 Q3 2016

72.11

37.42

72.43

37.32

72.36

37.00

69.45

36.44

62.59

35.64

New loan

New lease

Avg new term by risk tier


New loan term at 68 months with higher terms on the higher risk new loans



65

58

63

66

59

63

Franchise used Independent used All used

Average used term

Q3 2015 Q3 2016

Used terms rise as more prime consumers, who have longer terms, choose used vehicles


65.89

53.99

58.12

67.25

56.78

61.73

67.88

60.55

64.90

66.95

62.75

65.45

62.50

60.19

61.62

Franchise used

Independentused

All used

Average term by risk tier



771752

699679

774756

700682

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

Average new score by loan term

Q3 2015 Q3 2016

Average scores by term riselease is not included

651

684

659 666657

685

662 670

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

Average used score by loan term

Q3 2015 Q3 2016



20.6%

43.5%

27.5%

0.71%

20.1%

40.7%

30.7%

0.98%

49 - 60 61 - 72 73 - 84 85+

Percentage of new loans by term

Q3 2015 Q3 2016

Longer term loans continue to dominate the market with 85+ reaching nearly 1% of new


23.7%

41.3%

16.2%

23.7%

41.5%

17.7%

49 - 60 61 - 72 73 - 84

Percentage of used loans by term

Q3 2015 Q3 2016


$482

$398

$495

$405

New loan New lease

Average new payment

Q3 2015 Q3 2016

Payments rise on new vehicles while leasing becomes more attractive as payments are $90 lower


$495

$462

$511

$427

$514

$411

$500

$404

$474

$399

New loan

New lease

Avg new payment by risk tier



$374

$349

$360

$375

$351

$362

Franchise used Independent used All used

Average used payment

Q3 2015 Q3 2016

Average used payments also climb


$386

$384

$380

$389

$374

$377

$380

$346

$362

$370

$334

$355

$369

$332

$355

Franchise used

Independent used

All used

Average payment by risk tier



4.6

3%

8.7

6%

7.6

2%

11.6

9%

4.6

9%

8.4

8%

7.3

3%

11.1

7%

Avg new rate Avg used rate Franchiseused rate

Independentused rate

Average rates

Q3 2015 Q3 2016

Average new rate rises while prime shift to used and overall higher scores results in lower rates in the used market

13.53%

18.98%

17.59%

20.02%

10.65%

15.72%

14.23%

17.58%

6.39%

9.47%

8.72%

11.26%

3.59%

5.12%

4.90%

5.81%

2.60%

3.40%

3.36%

3.45%

Avg New

All Used

Franchise used

Independentused

Average rates by tier




Portfolio balances reach record levels as loan amounts grow toall-time highs

Increases in both 30 & 60-day delinquency rates rise as the percentage of loans in the subprime portion of open portfolios grow

Leasing drops below 30% of all new consumer vehicle sales as consumers across all risk tiers increasingly choose to lease

Originations across all finance types become increasingly more prime and credit scores improve

Prime consumers also increasing choosing used vehicles resulting in score increases, greater percentages of used financing in the prime risk tier and lower average used rates

Loan amounts and payments climb while terms continue to extend

Summary

28©2016 Experian Information Solutions, Inc. All rights reserved.

Experian Public.

© 2016 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company

names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian.

Experian Public.

www.experian.com/automotive

Insights about the market, the vehicles

and the people who buy them

http://experianautomotive.com/

http://experianautomotive.com/

Documents

State of the Automotive Finance Market - Experian · Q3 2015 Q3 2016 Used % of lease market 47.98% 47.12% 52.02% 52.88% Q3 2015 Q3 2016 Finance Market: new v used units New Used 86.6%