State of the Automotive Finance Market Second … 85.8% 2% 49.4% 7% 50% 52.9% 8% 55.5% 0% 10% 20% 30% 40% 60% 70% 80% 90% 100% Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015 Percentage

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State of the Automotive Finance Market Second Quarter 2015 Melinda Zabritski Sr. Director | Financial Solutions


Experian Public.

Market overview

Outstanding loan balances

Portfolio risk distributions

Delinquency rates

Originations

New and Used financing

Lender and transaction types

Loan/lease characteristics & scores

Session overview


Experian Public.

Score ranges

Category VantageScore® 3.0

Super prime 781 – 850

Prime 661 – 780

Nonprime 601 – 660

Subprime 501 – 600

Deep subprime 300 – 500

VantageScore 3.0 ranges


Experian Public.

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Originations

New and used lending


Experian Public.

80.2

%

81.1

%

82.6

%

84.5

%

85.0

%

85.8

%

47.2

%

49.4

%

52.7

%

52.9

%

53.8

%

55.5

%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015

Percentage of vehicles with financing

New Used

Growing reliance upon financing

Source: Experian Automotive


Experian Public.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015

2014

2013

2012

20

11

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

19

99

1998

1997

1996

1995

1994

1993

1992

1991

<=

1990

Percentage of used model year vehicles without loans


63.2% of all vehicles financed

in Q2 2015 were used


Experian Public.

10.49% 10.66% 11.36% 12.96%

14.46% 14.82%

23.79% 23.62% 24.40%

27.64%

30.16% 31.38%

19.0% 19.1% 20.1%

23.4% 25.63%

26.92%

0%

5%

10%

15%

20%

25%

30%

35%

Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015

Lease % of total

Lease % of new financing

Lease % of all new

Consumer leasing



Experian Public.

Leasing and consumer credit

717 716

608 623

300

400

500

600

700

800

Q2 2014 Q2 2015

Average lease scores

New

Used6.88% 7.24%

17.19% 17.50%

48.83% 48.48%

26.74% 26.36%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2 2014 Q2 2015

New leasing by risk segment

Deep subprime Subprime Nonprime

Prime Super prime

New 96.7% Used

3.3%

Lease by vehicle type



Experian Public.

3.5%

2.9%

2.8%

2.6%

2.3%

2.2%

2.1%

2.1%

2.0%

1.8%

3.9%

3.2%

2.9%

3.1%

2.5%

2.5%

2.4%

1.8%

1.4%

2.2%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%

CIVIC

ACCORD

CAMRY

CR-V

ESCAPE

COROLLA

FUSION

RAV4

EQUINOX

ALTIMA

Q2 2015

Q2 2014

Top 10 new models based on share of the new lease market



Experian Public.

69

0

71

8

711

74

3

72

6

68

3

70

2

72

6

71

2

68

0

70

1 71

2

70

6

72

7

71

6

68

9 7

01

71

4

72

1

70

7

640

650

660

670

680

690

700

710

720

730

740

750

CIVIC ACCORD CAMRY CR-V ESCAPE COROLLA FUSION RAV4 EQUINOX ALTIMA

Loan score Lease score

Average score comparison on top new leased models



Experian Public.

$407

$394

$375

$385

$395

$405

$415

$425

$435

$445

Q2 2014 Q2 2015

Average monthly payment

9.72%

67.36%

22.28%

0.56% 0%

10%

20%

30%

40%

50%

60%

70%

80%

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

Term distribution

Average new lease characteristics


Average term

= 36 months


Experian Public.

$3

62

$4

31

$4

27

$4

21

$4

12

$3

57

$4

08

$4

36

$4

24

$4

24

$2

51

$3

18

$3

03

$3

25

$3

16

$2

63

$3

00

$3

28

$2

93

$2

98

$

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

CIVIC ACCORD CAMRY CR-V ESCAPE COROLLA FUSION RAV4 EQUINOX ALTIMA

Loan payment Lease payment

Average payment comparison on top new leased models



Experian Public.

Bank 34.72%

BHPH 7.15% Captive

26.80%

Credit Union 16.83%

Finance 14.46%

Q2 2015 total loan market share

Automotive finance by lender type


-0.5%

-5.6%

-1.5%

0.8%

6.5%

-10% -5% 0% 5% 10%

YOY change in market share

Captive

BHPH

Bank

Credit Union

Finance


Experian Public.

34.70% 34.74%

0.18% 13.02%

49.85%

7.39%

10.26%

22.35%

5.01%

22.50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

New loan Used loan

Q2 2015 market share by lender type

Bank BHPH Captive

Credit Union Finance

Automotive finance by lender type


1.6%

-3.0%

-1.3%

1.9%

-1.4%

-2.3%

-6.9%

5.4%

-0.3%

7.0%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

YOY Change in market share

New

Used

Captive BHPH Bank Credit

Union

Finance


Experian Public.

5.9

2%

5.4

5%

4.1

8%

4.0

6%

3.9

1%

3.4

3%

2.8

2%

2.7

7%

2.1

4%

1.8

3%

1.7

1%

1.4

7%

1.2

0%

1.1

9%

1.1

5%

0.9

9%

0.9

9%

0.9

9%

0.9

7%

0.9

3%

0%

1%

2%

3%

4%

5%

6%

7%

Top 20 lenders in the retail loan market


Top 20 represent 48.1% of

all retail loans


Experian Public.

7.9

9%

7.7

1%

7.5

5%

6.8

6%

6.4

2%

4.9

9%

4.3

0%

3.4

7%

3.3

9%

2.3

9%

2.1

5%

1.9

0%

1.8

7%

1.5

3%

1.4

2%

1.3

6%

1.3

6%

1.3

3%

1.2

3%

1.1

4%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Top 20 lenders in the NEW retail loan market



all new retail loans


Experian Public.

6.6

0%

4.8

8%

4.1

1%

3.6

8%

2.4

2%

1.8

6%

1.8

1%

1.7

9%

1.5

1%

1.2

0%

1.0

6%

1.0

2%

1.0

1%

0.9

1%

0.8

8%

0.8

7%

0.8

4%

0.8

0%

0.7

8%

0.7

5%

0%

1%

2%

3%

4%

5%

6%

7%

Top 20 lenders in the USED retail loan market



all used retail loans


Experian Public.

717

734 722

711 709

646 658

647 644 645

580

600

620

640

660

680

700

720

740

760

Q2 2008 Q2 2010 Q2 2012 Q2 2014 Q2 2015

New Used

Average loan credit scores by vehicle type



Experian Public.

0.64% 0.79% 10.49% 11.17%

17.69% 18.02%

43.82% 43.04%

27.36% 26.98%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2 2014 Q2 2015

New loans

Automotive loans by risk segment


6.18% 5.93%

28.30% 28.17%

21.72% 22.08%

33.36% 33.27%

10.44% 10.54%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2 2014 Q2 2015

Used loans

Super prime Prime Nonprime Subprime Deep subprime


Experian Public.

0.8%

20.5%

1.1% 0.8% 10.8% 12.7%

49.9%

13.3% 11.7%

55.5%

21.4%

14.2%

19.3% 23.2%

20.3%

45.0%

12.3%

40.7% 47.0%

10.5% 20.1%

3.1%

25.7% 17.3%

2.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Bank BHPH Captive CreditUnion

Finance

Risk distribution of market share

Deep subprime Subprime Nonprime

Prime Super prime

0.2%

-1.8%

10.1%

-5.6%

-1.4%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%


Finance

YOY change in highest risk (<600) segment

Risk distribution by lender type



Experian Public.

9.5%

26.2%

12.2%

7.4%

41.6%

16.2%

70.7%

21.1%

14.5%

70.6%

0% 20% 40% 60% 80%

Bank

BHPH

Captive

Credit Union

Finance

Percentage of financing in highest risk segments (<600)

Used New

7.92%

-18.29%

9.84%

-3.30%

5.62%

-2.79% -1.81%

6.14%

-6.11%

-2.43%

-20%

-15%

-10%

-5%

0%

5%

10%

15%


Finance

YOY change in highest risk segments

New Used

Risk distribution by lender type



Experian Public.

Average financing by risk segment on new and used vehicle loans

$27,4

29

$18,2

58

$28,5

24

$18,6

71

$

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

New Used

Average amount financed

Q2 2014 Q2 2015


$24,182

$26,391

$28,890

$28,692

$24,911

$24,627

$27,330

$30,142

$29,874

$25,860

$ $10,000 $20,000 $30,000 $40,000

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average new amount financed

Q2 2015

Q2 2014

$13,724

$15,634

$18,225

$19,834

$19,287

$14,371

$16,102

$18,745

$20,248

$19,680

$ $10,000 $20,000 $30,000

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average used amount financed

Q2 2015

Q2 2014

$1,095

$413


Experian Public.

Average payments by risk segment on new and used vehicle loans

$467

$355

$483

$361

$

$100

$200

$300

$400

$500

$600

New Used

Average monthly payment

Q2 2014 Q2 2015


$484

$491

$484

$470

$445

$509

$512

$504

$484

$456

$400 $420 $440 $460 $480 $500 $520

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average new payment

Q1 2015

Q1 2014

$373

$372

$355

$347

$347

$381

$378

$363

$351

$351

$330 $340 $350 $360 $370 $380 $390

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average used payment

Q1 2015

Q1 2014

$16

$6


Experian Public.

$112 $103 $101

$106 $112

$122

$

$20

$40

$60

$80

$100

$120

$140

Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015

Average payment difference between new & used car loans

Payment gap grows between new and used loans



Experian Public.

Average term by risk segment on new and used vehicle loans

66

61

67

62

58

59

60

61

62

63

64

65

66

67

68

New Used

Average term

Q2 2014 Q2 2015


71.35

71.35

70.63

67.47

60.34

72.08

71.97

71.59

68.49

61.22

48 60 72 84

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average new term

Q2 2015

Q2 2014

54.69

59.16

62.91

63.80

60.13

57.69

60.93

64.11

64.62

60.80

48 60 72 84

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average used term

Q2 2015

Q2 2014

1 mo

1 mo


Experian Public.

3.2% 4.8%

21.2%

40.9%

28.8%

5.9% 11.6%

23.6%

41.0%

16.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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

Vehicle financing by term

New Used

Distribution of loan term


-0.6%

19.7%

4.27%

14.8%


Experian Public.

Average rate by risk segment on new and used vehicle loans

4.5

9%

8.8

2%

4.8

1%

9.1

3%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

New Used

Average rate

Q2 2014 Q2 2015


13.16%

10.57%

6.26%

3.59%

2.61%

14.51%

10.91%

6.46%

3.63%

2.66%

0.00% 5.00% 10.00% 15.00% 20.00%

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average new rate

Q2 2015

Q2 2014

19.37%

16.05%

9.51%

5.12%

3.32%

19.78%

16.35%

9.79%

5.19%

3.36%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00%

Deep subprime

Subprime

Nonprime

Prime

Super prime

Average used rate

Q2 2015

Q2 2014

22 bps

31 bps


Experian Public.

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Overall

Automotive

Finance Market

Market overview and

delinquency


Experian Public.

A look at automotive loan balances

Source: Experian-Oliver Wyman Market Intelligence Reports


Experian Public.

Open loan overview


Super prime Prime Nonprime

Subprime Deep subprime


Experian Public.

Recent automotive delinquency: 30 day delinquency



Experian Public.

30-day delinquency balances by state


HI = 1.55%

1.26


Experian Public.

Recent automotive delinquency: 60 day delinquency



Experian Public.

60-day delinquency balances by state


HI = 0.31%

0.33%


Experian Public.

Balances at risk



Experian Public.

Leasing reaches all-time highs and lease payments drop

Modest high risk growth for new financing; used down YOY

Loan amounts continue to grow; used payments reach all-time highs with gap between new and used payments rising

Terms continue to lengthen while rates creep for new and used financing

Open balances reach all-time highs with majority of loans/balances in prime+

Fewer loans becoming delinquent (30 dpd) yet increases in balances tied to delinquent loans

In summary


Experian Public.


Experian Public.

Documents

State of the Automotive Finance Market Second … 85.8% 2% 49.4% 7% 50% 52.9% 8% 55.5% 0% 10% 20% 30% 40% 60% 70% 80% 90% 100% Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015 Percentage