State of the Automotive Finance Market - · PDF fileState of the Automotive Finance Market ... • Lender and transaction types • Loan & lease characteristics ... $286 $143 $170

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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


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


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


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%


% of loan balances 30 dpd

Q1 2016 Q1 2017


7 © Experian

Percentage of loan balances 30 dpd

AK = 1.45%

HI = 1.43%


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%


% of loans & leases 60 dpd

Q1 2016 Q1 2017

60 day delinquency rates continue to deteriorate


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%


% of loan balances 60 dpd

Q1 2016 Q1 2017


9 © Experian

Percentage of loan balances 60 dpd

AK = 0.51%

HI = 0.42%


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


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


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


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.


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



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


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


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


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


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


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



19 © Experian

Average loan amounts reach record highs


-$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


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


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


0.210.34

0.48 0.540.65

0.400.53

0.03 0.060.18

0.290.14


Year-over-year change in term

21 © Experian

Used loan terms increase


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


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


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


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


Average new payment by risk tierNew loan New lease

New payments reach record highs while leasing offers lower payments


-$3

$2$4

$7 $6 $5

$18

$11$6 $4 $3 $4


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


Average used payment by risk tierAll used Franchise used Independent used

Average used payments also climb


$8

$3

$ $1 $1 $1

$5

$1 $1$3 $2 $2

$12

$8

$3 $2$4 $3


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


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

%


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)


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


Documents

State of the Automotive Finance Market - · PDF fileState of the Automotive Finance Market ... • Lender and transaction types • Loan & lease characteristics ... $286 $143 $170