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© 2010 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 may be 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 Information Solutions, Inc.
State of the Automotive Finance MarketThird Quarter 2010
Melinda Zabritski, Director of Automotive Credit
© 2010 Experian Information Solutions, Inc. All rights reserved. 2
Data Overview
Third quarter 2010 Automotive Finance Market Overview
► All open automotive loans by risk tier► Automotive loan delinquencies► Source: Experian-Oliver Wyman
Market Intelligence Reports► Visit www.marketintelligencereports.com
Automotive Financing in third quarter 2010► New versus Used vehicles► Top Lender report► Loan characteristics, now including Loan-to-Value ► Source: Experian Automotive National Vehicle Database sourced from DMV title
registrations and NADA Used Car Guides. Visit: www.autocount.com
Risk TiersCategory Scorex
PLUSSMVantageScore
Super Prime 740+ 801 – 990
Prime 680 – 739 701 – 800
Nonprime 620 – 679 641 – 700
Subprime 550 – 619 601 – 640
Deep Subprime <550 501 - 600
© 2010 Experian Information Solutions, Inc. All rights reserved. 3
Session overview
Questions and answers
How new and used financing is changing
Automotive market overview with a look at consumer delinquency
4
Automotive market overview with a look at consumer delinquency
© 2010 Experian Information Solutions, Inc. All rights reserved.Experian Public. 4
© 2010 Experian Information Solutions, Inc. All rights reserved. 5
Automotive Finance Market
38.2%
24.6%
15.5%
8.8%
12.9%
Risk Distribution of Open Automotive Loans
Super Prime Prime Nonprime Subprime Deep Subprime
3.12% 3.05%
1.67%
0.02%
-14.27%-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
Change in Risk Distribution from Q3 2009
How has the market been changing?
Source: Experian-Oliver Wyman Market Intelligence Reports
Super Prime
Prime Nonprime Subprime DeepSubprime
© 2010 Experian Information Solutions, Inc. All rights reserved. 6
Total Automotive Balance
$225 $240
$190 $203
$144 $150
$73 $77
$-
$100
$200
$300
$400
$500
$600
$700
$800
Q3 2010Q3 2009
Bill
ions
Total Outstanding Automotive Balance
Bank Captive Auto Credit Union Finance/Other $(15)
$(13)
$(6)
$(4)
$(16)
$(14)
$(12)
$(10)
$(8)
$(6)
$(4)
$(2)
$-
Bill
ions
Change in Balance from 3Q2009
Who holds the open loans?
Source: Experian-Oliver Wyman Market Intelligence ReportsYOY Change
Bank Captive CreditUnion
Finance/Other
-$38B
© 2010 Experian Information Solutions, Inc. All rights reserved. 7
Average Age of Automotive Loans
27.00
28.66
25.25
27.03 27.0427.41
29.05
26.44
30.82
28.06
12
18
24
30
36
All Banks Captive Auto Credit Union Finance/Other TOTAL
Average Loan Age by Lender Type(Months)
Q3 2009 Q3 2010
26.8725.58 26.08
28.2530.05
26.63 26.4927.86
30.74
33.71
12
18
24
30
36
Super Prime Prime Nonprime Subprime Deep Subprime
Average Loan Age by Risk Segment(Months)
Q3 2009 Q3 2010
Are consumers holding onto loans longer?
Source: Experian-Oliver Wyman Market Intelligence ReportsYOY Change
-0.23 0.921.78
2.49
3.66
1.02
3.79
1.19
0.390.41
© 2010 Experian Information Solutions, Inc. All rights reserved. 8
Recent Automotive Delinquency: 30 Day Delinquency
3.04%3.42%
1.68%
6.49%
3.27%
2.59%
3.16%
1.64%
6.21%
2.99%
0%
1%
2%
3%
4%
5%
6%
7%
Banks Captive Auto Credit Union Finance/Other TOTAL
30 Day Delinquency
Q3 2009 Q3 2010
$4,935 $7,114
$5,266
$6,788 $2,233
$2,438 $4,649
$5,272
$-
$5,000
$10,000
$15,000
$20,000
$25,000
Q3 2010Q3 2009
Mill
ions
Total Balance of 30 Day Delinquent Loans
Bank Captive Auto Credit Union Finance/Other
How are automotive loans performing?
Source: Experian-Oliver Wyman Market Intelligence ReportsYOY Change
-14.84%-7.68%
-2.24%
-4.33%
-8.43%
-$4.5 billion
© 2010 Experian Information Solutions, Inc. All rights reserved. 9
Recent Automotive Delinquency: 60 Day Delinquency
0.87%0.74%
0.48%
2.30%
0.93%
0.67%0.59%
0.40%
2.02%
0.77%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
Bank Captive Auto Credit Union Finance/Other TOTAL
60 Day Delinquency
Q3 2009 Q3 2010
$1,199 $2,032
$965
$1,504 $509
$678 $1,402
$1,790
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Q3 2010Q3 2009
Mill
ions
Total Balance of 60 Day Delinquent Loans
Bank Captive Auto Credit Union Finance/Other
How are automotive loans performing?
Source: Experian-Oliver Wyman Market Intelligence ReportsYOY Change
-22.74%-19.99%
-16.31%
-12.20%
-17.39%
-$1.9 billion
© 2010 Experian Information Solutions, Inc. All rights reserved. 10
Outside of Prime: 60 Day Delinquency Rate Which states lead in 60 day delinquency?
Source: Experian-Oliver Wyman Market Intelligence Reports
AK = 0.80%HI = 1.76%
© 2010 Experian Information Solutions, Inc. All rights reserved. 11
Recent Automotive Repossessions
0.48%0.61%
0.18%
2.44%
0.70%
0.36%0.54%
0.19%
2.57%
0.67%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
Bank Captive Auto Credit Union Finance/Other TOTAL
Reposession Rates
Q3 2009 Q3 2010
$9,228 $8,802
$8,202
$10,982
$9,892
$7,731 $7,554$7,740 $7,619 $7,640
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
Bank Captive Auto Credit Union Finance/Other TOTAL
Average Charge-Off Amount
Q3 2009 Q3 2010
How have repossessions changed?
YOY ChangeSource: Experian-Oliver Wyman Market Intelligence Reports
-24.9% -11.1%
1.9%
5.6%
-5.0%
-$1,497-$1,248
-$463 -$3,363 -$2,252
12
Automotive financing in the third quarter 2010
© 2010 Experian Information Solutions, Inc. All rights reserved.Experian Public. 12
© 2010 Experian Information Solutions, Inc. All rights reserved. 13
-1
Market Snapshot on Vehicle FinancingHow has financing on vehicles changed?
Source: Experian Automotive
New39.05%
Used60.95%
Financing by Vehicle Type
-4.1%
YOY Change
-8.7%
6.5%
66.01% 63.58% 59.28% 62.76% 63.29%
33.99% 36.42% 40.72% 37.24% 36.71%
0%10%20%30%40%50%60%70%80%90%
100%
3Q2009 4Q2009 1Q2010 2Q2010 3Q2010
Financing by Risk Segment
Prime Subprime
8.0%
762 766 773 774 775 775 776 772 769
670 668 661677 684 680 665 679 683
600
650
700
750
800
3Q2008 4Q2008 1Q2009 2Q2009 3Q2009 4Q2009 1Q2010 2Q2010 3Q2010
Average Credit Scores
Average New Score Average Used Score
-6
© 2010 Experian Information Solutions, Inc. All rights reserved. 14
Quarterly Financing for New Vehicles
69.88% 69.86% 69.89% 68.24% 67.14%
13.21% 13.35% 13.25% 13.55% 13.80%
9.79% 9.75% 9.81% 10.57% 10.86%
5.66% 5.60% 5.68% 6.16% 6.61%
1.46% 1.44% 1.38% 1.48% 1.59%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
3Q2009 4Q2009 1Q2010 2Q2010 3Q2010
New Vehicle Financing
Super Prime Prime Nonprime Subprime Deep Subprime
8.7%
16.9%
10.9%
4.5%
-3.9%-5%
0%
5%
10%
15%
20%
Change in Risk Distribution from 3Q2009
How has credit changed for new financing?
Source: Experian Automotive
-2.6%
12.7%
YOY Change
Super Prime
PrimeNonprimeSubprimeDeepSubprime
© 2010 Experian Information Solutions, Inc. All rights reserved. 15
Quarterly Financing for Used Vehicles
39.89% 38.82% 35.12% 37.75% 38.33%
13.35% 13.27%12.21%
13.32% 13.65%
13.92% 13.86%13.19%
14.45% 14.79%
14.20% 14.66%15.29%
15.62% 15.61%
18.64% 19.40%24.19%
18.86% 17.62%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
3Q2009 4Q2009 1Q2010 2Q2010 3Q2010
Used Vehicle Financing
Super Prime Prime Nonprime Subprime Deep Subprime
-5.5%
10.0%
6.2%
2.2%
-3.9%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Change in Risk Distribution from Q3 2009
How has credit changed for used financing?
Source: Experian Automotive
2.69%
-2.36%
YOY Change
Super Prime
PrimeNonprimeSubprimeDeepSubprime
© 2010 Experian Information Solutions, Inc. All rights reserved. 16
Automotive Finance by Lender TypeWhat lenders are gaining share?
Source: Experian Automotive
33.43%
0.34%
50.50%
9.96%5.26%
0.52%
-2.8%-9.2%
16.2%
-41.4%
30.7%
-30.1%
-50%-40%-30%-20%-10%0%10%20%30%40%
0%
10%
20%
30%
40%
50%
60%
Bank BHPH Captive Credit Union Finance Other
New Financing
Market Share Change in Share
35.05%
12.91%10.95%
24.21%
10.16%6.73%
8.1%
-10.7%
6.8%
-11.7%
27.4%
-9.9%-15%-10%-5%0%5%10%15%20%25%30%
0%5%
10%15%20%25%30%35%40%
Bank BHPH Captive Credit Union Finance Other
Used Financing
Market Share Change in Share
34.41%
8.00%
26.39%
18.64%
8.24%
4.30%
3.5%
-5.4%
8.1%
-18.9%
31.1%
-6.5%
-30%
-20%
-10%
0%
10%
20%
30%
40%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Bank BHPH Captive Credit Union
Finance Other
Market Share by Lender
Market Share Change in Share
© 2010 Experian Information Solutions, Inc. All rights reserved. 17
Top 20 Lenders by Market ShareWho gained or lost share?
5.79%5.47% 5.40%
5.10%
4.20%
3.37%
2.67%
2.04% 1.92%1.66% 1.58% 1.56%
1.28% 1.25% 1.17% 1.14% 1.12% 1.08% 1.00% 0.92%-19.2% -12.6%8.7% 9.9%
26.5%
-5.9%
39.1%
-9.3%12.3%
22.1%
198.1%
15.6%4.1%
105.3%
256.3%
27.3%
176.9%
-2.0% -2.1%
12.0%
-50%
0%
50%
100%
150%
200%
250%
300%
0%
1%
2%
3%
4%
5%
6%
7%
Top 20 Lenders: Total Loan
3Q2010 Change in Share from 3Q09
Source: Experian Automotive
49.72% of All Financing
© 2010 Experian Information Solutions, Inc. All rights reserved. 18
Top 20 New Lenders by Market ShareWho gained or lost share on New Vehicle Financing?
10.48% 9.69% 8.92% 8.47% 7.39% 4.38% 4.14% 3.03% 2.97% 2.60% 2.39% 2.08% 1.88% 1.66% 1.63% 1.60% 1.32% 1.26% 1.09% 0.98%
15.4%
-12.8%
30.2%
-23.5%
4.2%
30.7%
233.9%
-18.5%-23.5%
17.2%26.8%
6.2%24.8%
9.4%29.0%
13.8%-15.4%
118.0%
1.0%
-50%
0%
50%
100%
150%
200%
250%
0%
2%
4%
6%
8%
10%
12%
Top 20 New Lenders by Market Share
3Q2010 Share Change in Share from 3Q09
Source: Experian Automotive
78% of New Financing
© 2010 Experian Information Solutions, Inc. All rights reserved. 19
Top 20 Used Lenders by Market ShareWho gained or lost share on Used Vehicle Financing?
6.84% 4.20% 2.98% 2.84% 1.92% 1.54% 1.49% 1.45% 1.40% 1.26% 1.26% 1.23% 1.15% 1.12% 1.07% 1.04% 0.99% 0.82% 0.81% 0.80%
19.6%
-6.5% 2.1%
53.5%
20.0%
42.6%
204.1%
16.9%
57.3%
215.0%
8.6% 13.9% 19.8%
80.6%
0.9% 4.0%-15.4%
18.8%5.2%
37.9%
-50%
0%
50%
100%
150%
200%
250%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Top 20 Used Auto Lenders by Market Share
3Q2010 Share Change in Share from 3Q09
Source: Experian Automotive
35.6% of Used Financing
© 2010 Experian Information Solutions, Inc. All rights reserved. 20
Vehicle FinancingHow has financing changed?
$22,743
$15,729
$25,273
$16,706
$
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
New Used
Average Amount Financed
Q3 2009 Q3 2010
Source: Experian AutomotiveYOY Change
$977
$2,530
$20,342$21,576
$22,963 $23,722$22,655$21,866
$23,981$25,793 $26,579
$25,107
$10,000$12,000$14,000$16,000$18,000$20,000$22,000$24,000$26,000$28,000
Deep Subprime Subprime Nonprime Prime Super Prime
Average Amount Financed: New Vehicles
Q3 2009 Q3 2010
$11,797
$13,652$14,867
$16,238$16,999
$12,876
$14,784$15,968
$17,369 $18,044
$5,000
$7,000
$9,000
$11,000
$13,000
$15,000
$17,000
$19,000
Deep Subprime Subprime Nonprime Prime Super Prime
Average Amount Financed: Used Vehicles
Q3 2009 Q3 2010
© 2010 Experian Information Solutions, Inc. All rights reserved. 21
Vehicle Values and Loan-to-ValueHow do the lenders and risk segments compare?
Source: Experian Automotive and NADA Used Car Guides
120.47%122.49% 122.04%
117.64%
103.05%
149.90%
139.51%135.28%
131.62%
120.62%
80%
90%
100%
110%
120%
130%
140%
150%
160%
Deep Subprime
Subprime Nonprime Prime Super Prime
Average LTV by Risk Segment
Average New LTV Average Used LTV
108.70% 109.49%105.00%
110.42%
120.08%
110.46%
129.49%
124.44%
130.92%
124.19%
144.30%146.51%
80%
90%
100%
110%
120%
130%
140%
150%
Market Totals
Bank Credit Union
Captive Finance Buy Here/Pay
Here
Average LTV by Lender Type
Average New LTV Average Used LTV
© 2010 Experian Information Solutions, Inc. All rights reserved. 22
Vehicle PaymentsHow have monthly payments changed?
$422
$331
$452
$343
$250
$300
$350
$400
$450
$500
New Used
Average Monthly Payment
Q3 2009 Q3 2010
Source: Experian AutomotiveYOY Change
$12
$30
$431 $428 $424 $424 $421
$451 $457 $455 $456 $452
$400
$420
$440
$460
$480
$500
Deep Subprime Subprime Nonprime Prime Super Prime
Average Monthly Payment: New Vehicles
Q3 2009 Q3 2010
$343$334
$320 $325$334
$357 $352
$334 $335$343
$300
$320
$340
$360
$380
$400
Deep Subprime Subprime Nonprime Prime Super Prime
Average Monthly Payment Used Vehicles
Q3 2009 Q3 2010
© 2010 Experian Information Solutions, Inc. All rights reserved. 23
Vehicle Loan TermsHow have terms changed?
62
57
63
58
36
48
60
72
New Used
Average Term
Q3 2009 Q3 2010
Source: Experian AutomotiveYOY Change
1
1
67.35 67.76 66.92 65.6960.91
68.68 68.66 67.61 66.2961.52
36
48
60
72
Deep Subprime Subprime Nonprime Prime Super Prime
Average Term: New Vehicles
Q3 2009 Q3 2010
46.95
55.5258.48 60.10 59.09
50.39
57.45 59.46 60.80 59.56
36
48
60
72
Deep Subprime Subprime Nonprime Prime Super Prime
Average Term: Used Vehicles
Q3 2009 Q3 2010
© 2010 Experian Information Solutions, Inc. All rights reserved. 24
Vehicle Loan RateHow have rates changed?
5.77%
9.17%
4.98%
8.83%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
New Used
Average Rate
Q3 2009 Q3 2010
Source: Experian AutomotiveYOY Change
-79 bps
-34 bps 14.02%11.44%
8.17%6.24%
4.80%
13.54%
10.45%
6.94%5.20%
3.94%
0%2%4%6%8%
10%12%14%16%
Deep Subprime Subprime Nonprime Prime Super Prime
Average Rate: New Vehicles
Q3 2009 Q3 2010
16.25%14.26%
10.66%8.33%
6.54%
17.81%14.71%
10.18%7.44%
5.49%
0%
5%
10%
15%
20%
Deep Subprime Subprime Nonprime Prime Super Prime
Average Rate: Used Vehicles
Q3 2009 Q3 2010
© 2010 Experian Information Solutions, Inc. All rights reserved. 25
Average Rates by LTVHow do rates and scores vary by LTV?
Source: Experian Automotive and NADA Used Car Guides
5.02%
4.45% 4.33% 4.35% 4.41% 4.61%4.83% 4.91% 5.01% 5.14% 5.28% 5.34% 5.46% 5.60% 5.66% 5.62% 5.63% 5.62% 5.54% 5.45%
6.93%6.46% 6.48% 6.62% 6.75%
7.06%7.32%
7.64%7.95%
8.24%8.62%
9.01%9.42%
9.68% 9.85% 9.79% 9.80% 9.80% 9.71%10.08%
2.5%
3.5%
4.5%
5.5%
6.5%
7.5%
8.5%
9.5%
10.5%
Average Rate by LTV
Average New Rate Average Used Rate
© 2010 Experian Information Solutions, Inc. All rights reserved. 26
In Summary
Overall loan portfolios are strong with highest risk segments decreasing and improved delinquenciesOriginations showing signs of loosening as subprime experiences first increase since 2007
► Used financing still decreasing year-over-year in highest risk tier► New financing increased across all segments except super prime
Finance companies experienced greatest growth trend with captives gaining market share
► Finance companies carry highest LTVs Consumer loans grew by $1,401 overall with payments and terms also increasingRates continue to adjust in the higher risk used loans
© 2010 Experian Information Solutions, Inc. All rights reserved. 27
Mark your calendars
Q4 2010 Automotive Credit
Trends Briefing
February 24, 2011
28© 1010 Experian Information Solutions, Inc. All rights reserved.Experian Public.