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© 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 Q1 2017
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
Experian Public State of the Automotive Finance Market
3 © Experian
Overall Automotive Finance Market
A review of all open automotive loans & leases
4 © Experian
$905
$1,005
$1,082
$800
$850
$900
$950
$1,000
$1,050
$1,100
Q1 2015 Q1 2016 Q1 2017
Bill
ion
s
Total open automotive loan balance
Loan balances reach another record high yet experience slowing growth; Credit Unions see highest growth
Source: Experian-Oliver Wyman Market Intelligence Reports
$318 $343 $363
$230 $244 $252
$215$249
$286$143
$170$180
$0
$200
$400
$600
$800
$1,000
$1,200
Q1 2015 Q1 2016 Q1 2017
Bill
ion
s
Total open automotive loan balance
All Banks Captive Auto Credit Union Finance
Experian Public State of the Automotive Finance Market
5 © Experian
3.16% 3.45% 3.76%
15.38% 15.70% 15.94%
18.97% 19.10% 18.86%
42.50% 42.09% 41.70%
20.00% 19.66% 19.74%
Q1 2015 Q1 2016 Q1 2017
Loan balance risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Majority of loan balances remain prime or higher with high risk segments remaining below 20%
17.52%
9.53%
6.45% 6.83%8.27%
Deepsubprime
Subprime Nonprime Prime Super prime
Year-over-year balance change
Experian Public State of the Automotive Finance Market
6 © Experian
1.84% 1.96%1.16%
3.94%
2.10%1.71% 1.67%
1.21%
3.77%
1.96%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Bank Captive Credit Union Finance Total
% of loans & leases 30 dpd
Q1 2016 Q1 2017
30 day delinquency rates are improving
Source: Experian-Oliver Wyman Market Intelligence Reports
1.61%2.26%
1.03%
4.25%
2.07%1.55% 1.90%
1.07%
4.14%
1.93%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Bank Captive Credit Union Finance Total
% of loan balances 30 dpd
Q1 2016 Q1 2017
Experian Public State of the Automotive Finance Market
7 © Experian
Percentage of loan balances 30 dpd
AK = 1.45%
HI = 1.43%
Experian Public State of the Automotive Finance Market
8 © Experian
0.55%0.42% 0.30%
1.42%
0.61%0.58% 0.51%0.31%
1.55%
0.67%
0.0%
0.5%
1.0%
1.5%
2.0%
Bank Captive Credit Union Finance Total
% of loans & leases 60 dpd
Q1 2016 Q1 2017
60 day delinquency rates continue to deteriorate
Source: Experian-Oliver Wyman Market Intelligence Reports
0.47% 0.47%0.24%
1.44%
0.58%0.52% 0.58%0.25%
1.72%
0.66%
0.0%
0.5%
1.0%
1.5%
2.0%
Bank Captive Credit Union Finance Total
% of loan balances 60 dpd
Q1 2016 Q1 2017
Experian Public State of the Automotive Finance Market
9 © Experian
Percentage of loan balances 60 dpd
AK = 0.51%
HI = 0.42%
Experian Public State of the Automotive Finance Market
10 © Experian
Originations in Q1 2017
Trends in automotive loan and lease originations
11 © Experian
86.3% 85.5%
55.3% 53.3%
Q1 2016 Q1 2017
Percentage of vehicles with financing
New Used
Automotive financing: snapshot of how and what consumers are financing
31.11% 31.06%
Q1 2016 Q1 2017
% of all new vehicles that are leased
44.01% 44.77%
55.99% 55.23%
Q1 2016 Q1 2017
Finance Market: new v used units
New Used
3.98% 3.71%
Q1 2016 Q1 2017
Used % of lease market
Experian Public State of the Automotive Finance Market
12 © Experian
34
.8%
7.7
%
26
.2%
18
.0%
13
.4%
32
.5%
6.9
%
29
.3%
20
.0%
11
.3%
Bank BHPH Captive CreditUnion
Finance Co
Market Share of Total Financing(new/used units & loan/lease)
Q1 2016 Q1 2017
Captives and Credit Unions gain market share across the board (loan and lease units combined)
34
.2%
0.2
%
49
.4%
10
.7%
5.4
%
28
.7%
0.1
%
53
.9%
12
.4%
4.8
%
Bank BHPH Captive Credit Union Finance Co
Market Share of New Financing
Q1 2016 Q1 2017
35
.2%
13
.8%
7.2
% 23
.9%
19
.9%
35
.6%
12
.7%
8.3
% 26
.4%
16
.8%
Bank BHPH Captive Credit Union Finance Co
Market Share of Used Financing
Q1 2016 Q1 2017
Experian Public State of the Automotive Finance Market
13 © Experian
724
716715
712
717
730
721
718716
722
721
714713
710
714
Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017
Average new credit scores
Credit scores increase across all transaction types
644 641 642 645652
672 671 671 673 679
595 593 596 601610
Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017
Average used credit scores
Experian Public State of the Automotive Finance Market
Franchise used
All used
Independent used
New lease
All new
New loan
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.
Experian Public State of the Automotive Finance Market
15 © Experian
3.83% 3.54%
19.83% 17.93%
19.85% 19.14%
38.52% 39.67%
17.97% 19.72%
Q1 2016 Q1 2017
Total (new & used units) risk distribution
Total finance market (loan & lease) becomes increasingly prime across all, new and used financing
9.52% 8.79%17.60% 16.53%
45.04% 44.88%
27.18% 29.15%
Q1 2016 Q1 2017
New risk distribution
6.34% 5.91%28.01% 25.39%
21.64% 21.27%
33.35% 35.41%
10.66% 12.02%
Q1 2016 Q1 2017
Used risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Experian Public State of the Automotive Finance Market
16 © Experian
7.43% 6.44%
17.18% 15.76%
48.15% 48.18%
26.76% 29.21%
Q1 2016 Q1 2017
New lease risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Leasing remains very prime as more consumers across all risk tiers choose to lease (loans not included)
27.2%
34.2%
36.3%
25.9%
34.1%
37.4%
Deep &Sub
Nonprime
Prime +
% of new borrowers choosing to lease
Q1 2017
Q1 2016
Experian Public State of the Automotive Finance Market
17 © Experian
4.40% 4.10%
22.08% 20.11%
20.37% 19.82%
36.78% 38.06%
16.37% 17.91%
Q1 2016 Q1 2017
Total (new & used units) loan risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Subprime reaches 10-year low for the loan market
10.64% 10.10%17.83% 16.96%
43.36% 43.04%
27.40% 29.12%
Q1 2016 Q1 2017
New loan risk distribution
6.29% 5.86%
28.02% 25.41%
21.70% 21.33%
33.36% 35.42%
10.63% 11.98%
Q1 2016 Q1 2017
Used loan risk distribution
Experian Public State of the Automotive Finance Market
18 © Experian
93
.99
%
83.5
1%
70
.06
%
59
.67
%
42
.73
%
93
.43
%
82
.63
%
70
.40
%
60
.88
%
43
.75
%Deep
SubprimeSubprime Nonprime Prime Super
Prime
Percentage of consumers by risk tier choosing used loans
Q1 2016 Q1 2017
Prime and Super Prime borrowers choose used vehicles at an increasing rate resulting in shifts among all dealer types
19.16% 17.42%
23.48% 22.65%
41.37% 42.67%
13.92% 15.33%
Q1 2016 Q1 2016
Used Franchise loan risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
12.49% 11.94%
41.35% 37.96%
19.66% 19.90%
21.38% 23.98%5.12% 6.22%
Q1 2016 Q1 2017
Used Independent loan risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Experian Public State of the Automotive Finance Market
19 © Experian
Average loan amounts reach record highs
Experian Public State of the Automotive Finance Market
-$183
$209
$492$616 $623
$513$469$272
$122 $88 $94$288$336
$107 $144 $204 $181 $252
$654$484
$353$202 $205
$533
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change in balance
$2
4,9
20
$2
8,0
99
$3
1,8
40
$3
2,1
53
$2
8,2
86
$3
0,5
34
$1
4,3
85
$1
6,0
26
$1
8,9
13
$2
0,7
78
$2
0,4
61
$1
9,1
26
$1
6,1
51
$17,9
45
$2
0,7
11
$2
2,1
25
$2
1,4
27
$2
0,9
04
$1
3,7
07
$1
4,5
50
$1
6,5
55
$18,6
05
$1
8,8
78
$1
6,6
12
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average loan amount by tier Avg New All Used Franchise used Independent used
20 © Experian
72.14 72.55 72.64 69.74 62.72 68.53
37.29 37.00 36.92 36.35 35.44 36.21
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average new term by risk tierNew loan New lease
New loan term creeping toward 69 months with longer terms on the higher risk new loans
Experian Public State of the Automotive Finance Market
0.210.34
0.48 0.540.65
0.400.53
0.03 0.060.18
0.290.14
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change in term
21 © Experian
Used loan terms increase
Experian Public State of the Automotive Finance Market
58.28 61.60 64.93 65.49 61.69 63.8465.93 67.03 67.86 66.98 62.51 66.5054.85 57.19 60.83 62.85 60.32 59.97
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average used loan term by tier All Used Franchise used Independent used
1.13
0.78
0.410.22 0.31
0.500.78
0.35 0.33 0.28 0.37 0.26
1.691.39
0.98
0.38 0.40
1.16
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change in used loan term
22 © Experian
20.5%
40.2%31.3%
0.9%
17.6%
38.6% 34.9%
1.3%
49 - 60 61 - 72 73 - 84 85 - 96
Percentage of new loans by term
Q1 2016 Q1 2017
Longer term loans continue to dominate the market
Experian Public State of the Automotive Finance Market
11.0%23.2%
41.1%
17.2%10.0%
23.4%
40.2%
19.5%
37 - 48 49 - 60 61 - 72 73 - 84
Percentage of used loans by term
Q1 2016 Q1 2017
754699 681 696
759707
684 701
49 - 60 61 - 72 73 - 84 85 - 96
Average new score by loan term
Q1 2016 Q1 2017
644680
657 667656686
663 667
37 - 48 49 - 60 61 - 72 73 - 84
Average used score by loan term
Q1 2016 Q1 2017
23 © Experian
$500 $519 $525 $513 $488 $509$436 $426 $416 $409 $403 $410
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average new payment by risk tierNew loan New lease
New payments reach record highs while leasing offers lower payments
Experian Public State of the Automotive Finance Market
-$3
$2$4
$7 $6 $5
$18
$11$6 $4 $3 $4
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change in new payment
24 © Experian
$380 $376$363 $357 $362 $364
$381 $385 $380 $373 $375 $377$385
$376
$348$335 $339
$354
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average used payment by risk tierAll used Franchise used Independent used
Average used payments also climb
Experian Public State of the Automotive Finance Market
$8
$3
$ $1 $1 $1
$5
$1 $1$3 $2 $2
$12
$8
$3 $2$4 $3
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change in used payment
25 © Experian
Average new rate rises while prime shift to used and overall higher scores results in lower rates in the used market
Experian Public State of the Automotive Finance Market
13
.98
%
11
.05
% 6.6
0%
3.7
7%
2.8
4%
4.8
7%
19
.62
%
16
.48
% 9.8
8%
5.2
9%
3.5
6% 8.8
8%
18
.37
%
15.0
4% 9.1
9%
5.1
1%
3.5
3%
7.7
0%
20
.55
%
18
.22
% 11
.56
%
5.9
4%
3.6
2%
11
.67
%
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average loan rates by tier Avg New All Used Franchise used Independent used
42 20
4 9 18
6
(10) (9) (9)
4 15
(35)
(9)
3 7 9 16
(14)
2
(9)
(29)
(5)
16
(62)
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change (bps) in loan rate
26 © Experian
• Portfolio balances reach record levels as loan amounts grow to all-time highs
• Increases 60-day delinquency rates while 30-day shows improvements
• Leasing continues over 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
Summary
Experian Public State of the Automotive Finance Market