State of the Automotive Finance MarketQ4 2015 Q4 2016 Percentage of vehicles with financing New Used Automotive financing: snapshot of how and what consumers are financing 28.87% 28.94%

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Experian Public.

www.experian.com/automotive

State of the Automotive Finance Market

A look at loans and leases in Q4 2016

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

2 © Experian

Market Overview

• Outstanding balances

• Total risk distributions

• Delinquency

Originations

• New and Used financing

• Lender and transaction types

• Loan & lease characteristics

Session overview

3 © Experian

Overall Automotive Finance Market

A review of all open automotive loans & leases

4 © Experian

$886

$987

$1,072

$0

$200

$400

$600

$800

$1,000

$1,200

2014 Q4 2015 Q4 2016 Q4

Total open automotive loan balance

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

Source: Experian-Oliver Wyman Market Intelligence Reports

$313 $337 $364

$230 $244 $252

$208$241

$277$135

$166$179

$0

$200

$400

$600

$800

$1,000

$1,200

2014 Q4 2015 Q4 2016 Q4

Total open automotive loan balance

All Banks Captive Auto Credit Union Finance


Bill

ion

s

5 © Experian

3.45% 3.66% 3.91%

15.58% 15.77% 15.96%

18.06% 18.03% 17.90%

27.75% 27.23% 26.93%

35.16% 35.30% 35.30%

2014 Q4 2015 Q4 2016 Q4

Loan balance risk distribution

Deep Subprime Subprime Nonprime Prime Super Prime

Majority of loan balances remain prime or higher with modest growth in high risk segments

14.57%

8.62%

6.57% 6.15%

7.34%

Deepsubprime

Subprime Nonprime Prime Super prime

Year-over-year balance change


6 © Experian

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



7 © Experian

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


HI = 1.99%

1.42%


8 © Experian

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



9 © Experian

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


HI = 0.54%

0.43%


10 © Experian

Originations in Q4 2016

Trends in automotive loan and lease originations

11 © Experian

85.9% 85.2%

54.7% 53.5%

Q4 2015 Q4 2016

Percentage of vehicles with financing

New Used

Automotive financing: snapshot of how and what consumers are financing

28.87% 28.94%

Q4 2015 Q4 2016

% of all new vehicles that are leased

46.86% 46.38%

53.14% 53.62%

Q4 2015 Q4 2016

Finance Market: new v used units

New Used

3.76% 3.97%

Q4 2015 Q4 2016

Used % of lease market

Source: Experian Automotive

12 © Experian

35

.6%

6.3

%

27

.8%

18

.0%

12

.3%

32

.9%

6.0

%

28

.4%

19

.1%

13

.5%

Bank BHPH Captive CreditUnion

Finance Co

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

Q4 2015 Q4 2016

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

34

.6%

0.2

%

50

.0%

10

.2%

5.1

%

30

.6%

0.1

%

52

.0%

11.9

%

5.4

%

Bank BHPH Captive Credit Union Finance Co

Market Share of New Financing

Q4 2015 Q4 2016

36

.6%

11.9

%

7.6

% 25

.0%

18

.9%

35

.0%

11.1

%

8.0

% 25

.4%

20

.5%

Bank BHPH Captive Credit Union Finance Co

Market Share of Used Financing

Q4 2015 Q4 2016


13 © Experian

726

716714

712714

734

719717

715

720723

715

712711 711

Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

Average new credit scores

All New New Lease New Loan

Credit scores increase across all transaction types

650 646 648 649654

675 673 672 673 677

603 600 603 607614

Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

Average used credit scores

All Used Franchise Used Independent Used


14 © 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.


15 © Experian

3.35% 3.20%

18.70% 17.62%

20.09% 19.77%

39.20% 40.01%

18.66% 19.40%

Q4 2015 Q4 2016

Total (new & used units) risk distribution

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

9.76% 9.43%17.69% 17.12%

44.64% 44.74%

27.20% 27.98%

Q4 2015 Q4 2016

New risk distribution

5.69% 5.36%26.61% 24.79%

22.21% 22.09%

34.39% 35.86%

11.10% 11.90%

Q4 2015 Q4 2016

Used risk distribution

Deep Subprime Subprime Nonprime Prime Super PrimeSource: Experian Automotive

16 © Experian

7.78% 6.93%

17.68% 16.32%

47.82% 48.12%

26.18% 28.15%

Q4 2015 Q4 2016

New lease risk distribution


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

25.2%

31.7%

32.7%

24.2%

31.6%

34.8%

Deep &Sub

Nonprime

Prime +

% of new borrowers choosing to lease

Q4 2016

Q4 2015


17 © Experian

3.80% 3.66%

20.60% 19.56%

20.54% 20.43%

37.71% 38.54%

17.35% 17.81%

Q4 2015 Q4 2016

Total (new & used units) loan risk distribution


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

10.70% 10.67%17.69% 17.52%

43.15% 43.06%

27.68% 27.89%

Q4 2015 Q4 2016

New loan risk distribution

5.63% 5.32%26.61% 24.81%

22.28% 22.15%

34.41% 35.87%

11.07% 11.85%

Q4 2015 Q4 2016

Used loan risk distribution


18 © Experian

92

.21

%

80.3

7%

67

.46

%

56

.77

%

39

.70

%

91

.27

%

79

.75

%

68

.17

%

58

.52

%

41

.85

%Deep

SubprimeSubprime Nonprime Prime Super

Prime

Percentage of consumers by risk tier choosing used loans

Q4 2015 Q4 2016

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

18.97% 17.56%

23.81% 23.38%

41.34% 42.44%

13.88% 14.70%

Q4 2015 Q4 2016

Used Franchise loan risk distribution


11.37% 10.80%

39.49% 36.91%

20.77% 21.09%

22.85% 24.92%5.52% 6.28%

Q4 2015 Q4 2016

Used Independent loan risk distribution



19 © Experian

$29,5

51

$18,8

50

$20,6

41

$16,0

92

$30

,62

1

$19,3

29

$21,2

25

$16,7

65

Avg new loanamount

Avg used loanamount

Avg Franchiseused loanamount

Avg Independentused loanamount

Average loan amount

Q4 2015 Q4 2016

Average loan amounts reach record highs

$2

5,1

00

$2

8,0

82

$3

1,4

22

$3

1,5

02

$2

7,6

96

$1

4,6

33

$1

6,4

30

$1

9,1

03

$2

0,7

48

$2

0,2

21

$1

6,6

31

$1

8,5

45

$2

0,9

58

$2

2,0

52

$2

1,1

90

$1

3,6

79

$1

4,6

35

$1

6,6

04

$1

8,5

79

$1

8,5

34

DeepSubprime

Subprime Nonprime Prime Super Prime

Average loan amount by tier

Avg New All Used Franchise used Independent used


20 © Experian

67

36

68

36

New loan New lease

Average new term

Q4 2015 Q4 2016

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

72.0

7

72.4

7

72.5

3

69.5

9

62.7

0

37.6

0

37.4

4

37.1

6

36.5

8

35.7

6

DeepSubprime


Avg new term by risk tier

New loan New lease


21 © Experian

66

58

63

66

59

63

Franchise used Independent used All used

Average used term

Q4 2015 Q4 2016

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

66

.08

67

.34

67

.96

67

.00

62

.54

54

.29

56

.89

60

.61

62

.89

60

.45

58

.33

61

.78

64

.91

65

.42

61

.66

DeepSubprime


Average term by risk tier



22 © Experian

770754

699681

775756

700682

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

Average new score by loan term

Q4 2015 Q4 2016

Average scores by term riselease is not included

647

681658 667

656

686

661 669

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

Average used score by loan term

Q4 2015 Q4 2016


23 © Experian

20.8%

42.0%

29.0%

18.7%

40.3%

32.1%

49 - 60 61 - 72 73 - 84

Percentage of new loans by term

Q4 2015 Q4 2016

Longer term loans continue to dominate the market

23.6%

41.1%

16.4%

23.6%

41.1%

18.2%

49 - 60 61 - 72 73 - 84

Percentage of used loans by term

Q4 2015 Q4 2016


24 © Experian

$493

$412

$506

$414

New loan New lease

Average new payment

Q4 2015 Q4 2016

New payments reach record highs while leasing offers lower payments

$504

$521

$525

$511

$484

$435

$431

$419

$413

$411

DeepSubprime


Avg new payment by risk tier

New loan New lease


25 © Experian

$374

$347

$359

$380

$353

$364


Average used payment

Q4 2015 Q4 2016

Average used payments also climb

$3

87

$3

92

$3

83

$375

$3

74

$3

85

$3

75

$3

48

$3

36

$3

37$3

80

$3

78

$3

64

$3

57

$3

60

DeepSubprime


Average payment by risk tier



26 © Experian

4.6

3%

8.7

8%

7.5

7%

11

.81

%

4.7

4%

8.5

0%

7.3

7%

11

.23

%Avg new rate Avg used rate Franchise

used rateIndependent

used rate

Average rates

Q4 2015 Q4 2016

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

13

.59

%

10

.71

%

6.4

2%

3.6

0% 2.6

3%

19

.03

%

15

.70

%

9.4

9%

5.0

9%

3.3

9%

17

.62

%

14

.19

%

8.7

8%

4.8

9%

3.3

5%

20

.16

%

17

.60

%

11.2

6%

5.7

8%

3.4

5%

DeepSubprime


Average rates by tier

Avg New All Used Franchise used Independent used


27 © Experian

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

Increases in both 30 & 60-day delinquency rates

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 some payments reach record highs while terms continue to extend

Summary

Documents

State of the Automotive Finance MarketQ4 2015 Q4 2016 Percentage of vehicles with financing New Used Automotive financing: snapshot of how and what consumers are financing 28.87% 28.94%