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State of the Automotive Finance Market Third Quarter 2015 Melinda Zabritski Sr. Director | Financial Solutions
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Market overview
Outstanding balances
Total risk distributions
Delinquency
Originations
New and Used financing
Lender and transaction types
Loan characteristics
Session overview
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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
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Originations
New and used lending
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79.9
%
81.4
%
83.1
%
84.8
%
84.8
%
86.6
%
47.0
%
49.9
%
52.3
%
52.6
%
54.1
%
55.3
%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015
Percentage of vehicles with financing
New Used
Growing reliance upon financing
Source: Experian Automotive
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20
15
2014
2013
2012
2011
2010
2009
20
08
2007
2006
2005
2004
2003
2002
20
01
2000
1999
1998
1997
1996
1995
19
94
1993
1992
1991
<=
1990
Percentage of used model year vehicles without loans
Source: Experian Automotive
60.9% of all vehicles financed
in Q3 2015 were used
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10.23% 10.30% 11.69%
13.26% 14.48%
15.43%
22.75% 22.69% 24.40%
27.22% 29.14%
31.09%
18.09% 18.46% 20.28%
23.07% 24.71%
26.93%
0%
5%
10%
15%
20%
25%
30%
35%
Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015
Lease % of total
Lease % of new financing
Lease % of all new
Consumer leasing
Source: Experian Automotive
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Leasing and consumer credit
718 715
626 637
300
400
500
600
700
800
Q3 2014 Q3 2015
Average lease scores
New
Used6.72% 7.34%
17.16% 17.66%
48.93% 48.57%
26.79% 25.97%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q3 2014 Q3 2015
New leasing by risk segment
Deep subprime Subprime Nonprime
Prime Super prime
New 96.7%
Used 3.3%
Lease by vehicle type
Source: Experian Automotive
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3.7
%
3.7
%
2.8
%
3.1
%
2.5
%
2.6
%
2.3
%
2.0
%
2.1
%
1.4
%
3.6
%
3.1
%
2.8
%
2.4
%
2.3
%
2.2
%
2.1
%
2.0
%
1.9
%
1.7
%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Q3 2014
Q3 2015
Top 10 new models based on share of the new lease market
Source: Experian Automotive
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69
6
71
5
71
0
74
5
68
6
73
0
72
8
69
7
67
9
73
0
70
1
70
9
70
8
72
7
69
1
71
5
71
9
69
7
69
8
70
3
640
660
680
700
720
740
760
CIVIC ACCORD CAMRY CR-V COROLLA RAV4 ESCAPE FUSION ALTIMA F150
Loan score Lease score
Average score comparison on top new leased models
Source: Experian Automotive
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$397 $398
$375
$385
$395
$405
$415
$425
$435
$445
Q3 2014 Q3 2015
Average monthly payment
10.20%
70.28%
18.97%
0.48% 0%
10%
20%
30%
40%
50%
60%
70%
80%
13 - 24 25 - 36 37 - 48 49 - 60
Term distribution
Average new lease characteristics
Source: Experian Automotive
Average term
= 35 months
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$3
57
$4
12
$4
18
$4
21
$3
54
$4
31
$4
07
$4
08
$4
25
$5
81
$2
45
$3
05
$2
99
$3
22
$2
60
$3
25
$3
18
$3
03
$2
99
$4
59
$
$100
$200
$300
$400
$500
$600
$700
CIVIC ACCORD CAMRY CR-V COROLLA RAV4 ESCAPE FUSION ALTIMA F150
Loan payment Lease payment
Average payment comparison on top new leased models
Source: Experian Automotive
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Bank 34.66%
BHPH 6.18% Captive
28.68%
Credit Union 17.14%
Finance 13.34%
Q3 2015 total loan market share
Automotive finance by lender type
Source: Experian Automotive
-2.0%
-5.4%
2.3%
-2.3%
6.4%
-10% -5% 0% 5% 10%
YOY change in market share
Captive
BHPH
Bank
Credit Union
Finance
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33.65% 35.60%
0.15%
11.74%
51.62%
7.53%
9.82%
23.89%
4.77%
21.25%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
New loan Used loan
Q3 2015 market share by lender type
Bank BHPH Captive
Credit Union Finance
Automotive finance by lender type
Source: Experian Automotive
-2.4%
-13.5%
2.9%
-7.8%
5.0%
-1.7%
-5.4%
-0.3%
-0.1%
6.7%
-15%
-10%
-5%
0%
5%
10%
YOY Change in market share
New
Used
Captive
BHPH Bank Credit
Union Finance
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6.0
0%
5.5
7%
4.2
3%
4.1
5%
4.1
5%
4.0
8%
2.8
9%
2.5
2%
2.4
4%
1.7
8%
1.7
2%
1.6
1%
1.1
7%
1.1
2%
1.1
1%
1.1
0%
1.0
9%
1.0
7%
0.9
3%
0.8
3%
0%
1%
2%
3%
4%
5%
6%
7%
Top 20 lenders in the retail loan market
Source: Experian Automotive
Top 20 represent 49.7% of
all retail loans
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10
.04
%
8.1
7%
8.0
1%
6.9
5%
6.6
3%
5.6
7%
4.2
3%
3.9
8%
3.6
8%
2.2
8%
2.2
2%
2.0
4%
2.0
3%
1.9
1%
1.7
0%
1.5
5%
1.4
1%
1.2
7%
1.0
5%
1.0
4%
0%
2%
4%
6%
8%
10%
12%
Top 20 lenders in the NEW retail loan market
Source: Experian Automotive
Top 20 represent 75.9% of
all new retail loans
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6.7
1%
4.8
7%
4.1
1%
3.3
6%
2.5
8%
1.9
4%
1.9
0%
1.7
8%
1.4
7%
1.2
5%
1.1
7%
1.1
4%
1.0
9%
0.9
4%
0.8
9%
0.8
9%
0.8
3%
0.7
9%
0.7
6%
0.7
6%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Top 20 lenders in the USED retail loan market
Source: Experian Automotive
Top 20 represent 39.2% of
all used retail loans
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710 722
736 733 728 723 716 713 710
642 647 661 661 657 652 648 650 650
580
600
620
640
660
680
700
720
740
760
Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015
New Used
Average loan credit scores by vehicle type
Source: Experian Automotive
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0.67% 0.78% 9.90% 10.67%
17.45% 17.73%
44.00% 43.25%
27.98% 27.57%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q3 2014 Q3 2015
New loans
Automotive loans by risk segment
Source: Experian Automotive
5.53% 5.40%
26.52% 26.24%
22.00% 22.38%
34.80% 34.77%
11.15% 11.21%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q3 2014 Q3 2015
Used loans
Super prime Prime Nonprime Subprime Deep subprime
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0.8%
19.5%
1.0% 0.8% 10.9% 12.4%
47.9%
11.8% 11.1%
54.0%
21.2%
15.1%
18.8% 23.0%
20.7%
45.1%
13.8%
41.8% 47.3%
11.1% 20.5%
3.8%
26.6% 17.8%
3.3%
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
1.7%
-2.8%
8.5%
-6.1%
-0.8%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Bank BHPH Captive CreditUnion
Finance
YOY change in highest risk (<600) segment
Risk distribution by lender type
Source: Experian Automotive
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9.6%
27.1%
11.0%
7.2%
40.6%
15.6%
67.7%
19.5%
13.7%
69.4%
0% 20% 40% 60% 80%
Bank
BHPH
Captive
Credit Union
Finance
Percentage of financing in highest risk segments (<600)
Used
New
9.06%
-1.48%
12.07%
-4.66%
4.31%
-1.71% -2.84%
2.49%
-7.27%
-1.97%
-10%
-5%
0%
5%
10%
15%
Bank BHPH Captive CreditUnion
Finance
YOY change in highest risk segments
New
Used
Risk distribution by lender type
Source: Experian Automotive
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Average financing by risk segment on new and used vehicle loans
$27,7
99
$18,5
76
$28,9
36
$18,8
66
$
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
New Used
Average amount financed
Q3 2014 Q3 2015
Source: Experian Automotive
$25,097
$27,711
$30,517
$30,254
$26,414
$25,032
$27,047
$29,399
$28,957
$25,302
$ $10,000 $20,000 $30,000 $40,000
Deep subprime
Subprime
Nonprime
Prime
Super prime
Average new amount financed
Q3 2014
Q3 2015
$14,535
$16,319
$18,850
$20,336
$19,825
$14,298
$16,130
$18,571
$19,957
$19,423
$ $10,000 $20,000 $30,000
Deep subprime
Subprime
Nonprime
Prime
Super prime
Average used amount financed
Q3 2014
Q3 2015
$1,137
$290
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Average payments by risk segment on new and used vehicle loans
$470
$358
$482
$361
$
$100
$200
$300
$400
$500
$600
New Used
Average monthly payment
Q3 2014 Q3 2015
Source: Experian Automotive
$508
$510
$503
$485
$457
$495
$498
$490
$472
$445
$400 $420 $440 $460 $480 $500 $520
Deep subprime
Subprime
Nonprime
Prime
Super prime
Average new payment
Q3 2014
Q3 2015
$381
$378
$362
$352
$352
$382
$378
$359
$349
$349
$330 $340 $350 $360 $370 $380 $390
Deep subprime
Subprime
Nonprime
Prime
Super prime
Average used payment
Q3 2014
Q3 2015
$12
$3
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$109 $108
$102
$108
$112
$121
$90
$95
$100
$105
$110
$115
$120
$125
Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015
Average payment difference between new & used car loans
Payment gap grows between new and used loans
Source: Experian Automotive
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Average term by risk segment on new and used vehicle loans
66
62
67
63
59
60
61
62
63
64
65
66
67
68
New Used
Average term
Q3 2014 Q3 2015
Source: Experian Automotive
72.02
72.04
71.64
68.68
62.11
71.53
71.38
70.66
67.61
61.13
48 60 72 84
Deep subprime
Subprime
Nonprime
Prime
Super prime
Average new term
Q3 2014
Q3 2015
57.79
61.22
64.25
64.73
61.04
55.44
59.83
63.26
63.94
60.33
48 60 72 84
Deep subprime
Subprime
Nonprime
Prime
Super prime
Average used term
Q3 2014
Q3 2015
1 mo
1 mo
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3.0% 4.3%
20.6%
43.5%
27.5%
5.8% 11.3%
23.7%
41.3%
16.2%
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
Source: Experian Automotive
3.2%
17.1%
3.5%
12%
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Average rate by risk segment on new and used vehicle loans
4.4
7%
8.5
4%
4.6
3%
8.7
6%
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
Q3 2014 Q3 2015
Source: Experian Automotive
13.99%
10.57%
6.25%
3.50%
2.58%
12.72%
10.16%
6.08%
3.54%
2.63%
0.00% 5.00% 10.00% 15.00% 20.00%
Deep subprime
Subprime
Nonprime
Prime
Super prime
Average new rate
Q3 2014
Q3 2015
19.46%
15.98%
9.59%
5.12%
3.35%
19.00%
15.72%
9.29%
5.07%
3.33%
0.00% 5.00% 10.00% 15.00% 20.00% 25.00%
Deep subprime
Subprime
Nonprime
Prime
Super prime
Average used rate
Q3 2014
Q3 2015
16 bps
22 bps
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Overall
Automotive
Finance Market
Market overview and
delinquency
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A look at automotive loan balances
Source: Experian-Oliver Wyman Market Intelligence Reports
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Open loan overview
Source: Experian-Oliver Wyman Market Intelligence Reports
Super prime Prime Nonprime
Subprime Deep subprime
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Recent automotive delinquency: 30 day delinquency
Source: Experian-Oliver Wyman Market Intelligence Reports
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30-day delinquency balances by state
Source: Experian-Oliver Wyman Market Intelligence Reports
HI = 1.91%
1.43
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Recent automotive delinquency: 60 day delinquency
Source: Experian-Oliver Wyman Market Intelligence Reports
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60-day delinquency balances by state
Source: Experian-Oliver Wyman Market Intelligence Reports
HI = 0.48%
0.39%
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Balances at risk
Source: Experian-Oliver Wyman Market Intelligence Reports
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Modest high risk growth for new financing; used down YOY
Captives reaching pre-recession share for new financing driven in part by growth in high risk, yet still below pre-recession levels
Loan amounts continue to grow; with gap between new and used payments rising despite increase in terms
Rates on new financing have increased in conjunction with growth in high risk originations
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
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