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1 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public. © 2015 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
State of the Automotive Finance Market Fourth Quarter 2015 Melinda Zabritski Sr. Director | Financial Solutions
2 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Market overview
Outstanding balances
Total risk distributions
Delinquency
Originations
New and Used financing
Lender and transaction types
Loan characteristics
Session overview
3 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Category Score Range
Super prime 781 – 850
Prime 661 – 780
Nonprime 601 – 660
Subprime 501 – 600
Deep subprime 300 – 500
Credit score ranges
Vantage Score 3.0
4 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
INSERT
PICTURE
HERE
Originations
New and used lending
5 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
81.4
%
82.2
%
82.1
%
83.7
%
84
.0%
85.9
%
50.9
%
53.3
%
52.8
%
53.5
%
55.2
%
54.7
%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015
Percentage of vehicles with financing
New Used
Growing reliance upon financing
Source: Experian Automotive
6 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015
2014
2013
2012
2011
2010
2009
2008
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
62.8% of all vehicles financed
in Q4 2015 were used
7 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
10.37% 10.45% 11.53%
13.58% 14.13% 16.36%
23.66% 23.13% 24.79%
28.84% 29.89%
33.61%
19.17% 19.02% 20.34%
24.16% 25.11%
28.87%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015
Lease % of total
Lease % of new financing
Lease % of all new
Consumer leasing
Source: Experian Automotive
8 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Leasing and consumer credit
717 715
624 635
300
400
500
600
700
800
Q4 2014 Q4 2015
Average lease scores
New
Used6.93% 7.78%
17.15% 17.69%
48.75% 47.84%
26.75% 26.15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q4 2014 Q4 2015
New leasing by risk segment
Deep subprime Subprime Nonprime
Prime Super prime
New 96.2%
Used 3.8%
Lease by vehicle type
Source: Experian Automotive
9 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
3.2
%
3.1
%
2.2
%
2.4
%
2.1
%
3.0
%
1.7
% 2.1
%
1.4
%
2.2
%
3.2
%
2.6
%
2.5
%
2.4
%
2.2
%
2.2
%
2.1
%
2.1
%
1.9
%
1.9
%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%Q4 2014
Q4 2015
Top 10 new models based on share of the new lease market
Source: Experian Automotive
* Silverado 1500
10 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
69
4
71
4
70
6
72
7
72
7 7
44
69
6
68
1
72
2
67
6
69
7
70
6
70
4
71
3
71
8
72
5
69
8
68
8
70
7
68
9
640
660
680
700
720
740
760 Loan score Lease score
Average score comparison on top new leased models
Source: Experian Automotive
11 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
$426 $420
$408 $412
$375
$385
$395
$405
$415
$425
$435
$445
Q42012
Q42013
Q42014
Q42015
Average monthly payment
8.77%
64.07%
26.64%
0.49% 0%
10%
20%
30%
40%
50%
60%
70%
13 - 24 25 - 36 37 - 48 49 - 60
Term distribution
Average new lease characteristics
Source: Experian Automotive
Average term
= 36 months
12 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
$3
53
$4
26
$4
21
$4
31
$4
15
$4
23
$4
10
$3
59
$5
44
$4
31
$2
48
$3
22
$2
97
$3
22
$3
25
$3
28
$3
00
$2
59
$3
84
$3
18
$
$100
$200
$300
$400
$500
$600
Loan payment Lease payment
Average payment comparison on top new leased models
Source: Experian Automotive
13 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Bank 35.8%
BHPH 6.2% Captive
27.4%
Credit Union 17.6%
Finance 13.34%
Q4 2015 total loan market share
Automotive finance by lender type
Source: Experian Automotive
2.0%
-9.7%
2.7%
-1.2%
-3.9%
-15% -10% -5% 0% 5%
YOY change in market share
Captive
BHPH
Bank
Credit Union
Finance
14 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
35.1% 35.8%
0.2% 11.5%
49.8%
7.3%
10.1%
24.0%
4.9%
21.4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
New loan Used loan
Q4 2015 market share by lender type
Bank BHPH Captive
Credit Union Finance
Automotive finance by lender type
Source: Experian Automotive
1.8%
0.6%
-8.7%
1.1% 0.6%
-8.1%
-5.7%
2.1%
3.6%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
YOY Change in market share
New Used
Captive BHPH Bank Credit
Union
Finance
15 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
5.7
5%
5.6
6%
4.9
7%
4.1
7%
3.9
3%
3.6
4%
2.6
7%
2.0
8%
1.9
8%
1.8
4%
1.7
2%
1.7
0%
1.3
2%
1.1
9%
1.0
8%
1.0
8%
1.0
7%
1.0
4%
0.8
3%
0.8
2%
0%
1%
2%
3%
4%
5%
6%
7%
Top 20 lenders in the retail loan market
Source: Experian Automotive
Top 20 represent 48.5% of
all retail loans
16 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
10
.41
%
9.7
1%
9.1
3%
8.9
3%
7.2
8%
5.4
8%
5.2
0%
4.8
4%
4.4
9%
3.0
3%
2.9
2%
2.5
9%
2.3
9%
2.2
9%
1.9
6%
1.8
0%
1.5
5%
1.3
7%
1.2
6%
1.2
3%
0%
2%
4%
6%
8%
10%
12%
Top 20 lenders in the NEW retail loan market
Source: Experian Automotive
Top 20 represent 87.9% of
all new retail loans
17 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
6.6
8%
4.7
5%
4.1
3%
3.2
2%
2.7
1%
2.1
0%
1.9
5%
1.8
8%
1.4
7%
1.3
0%
1.1
9%
1.1
3%
1.0
0%
0.9
8%
0.8
0%
0.7
9%
0.7
7%
0.7
7%
0.7
4%
0.7
0%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Top 20 lenders in the USED retail loan market
Source: Experian Automotive
Top 20 represent 39.1% of
all used retail loans
18 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
711 726
736 732 727 723 715 712 711
640 647
657 659 653 650 646 648 649
580
600
620
640
660
680
700
720
740
760
Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015
New Used
Average loan credit scores by vehicle type
Source: Experian Automotive
19 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
0.68% 0.78% 10.08% 10.70%
17.41% 17.69%
43.80% 43.15%
28.03% 27.68%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q4 2014 Q4 2015
New loans
Automotive loans by risk segment
Source: Experian Automotive
5.82% 5.63%
27.15% 26.61%
21.93% 22.28%
34.24% 34.41%
10.86% 11.07%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q4 2014 Q4 2015
Used loans
Super prime Prime Nonprime Subprime Deep subprime
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Experian Public.
0.8%
20.1%
1.0% 0.9% 11.3% 12.8%
48.0%
12.4% 11.3%
54.2%
21.3%
14.7%
19.1% 22.9%
20.1%
44.7%
13.5%
41.1% 47.2%
11.0% 20.3%
3.7%
26.3% 17.7%
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
1.5%
-3.1%
7.3%
-4.2%
-1.0%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Bank BHPH Captive CreditUnion
Finance
YOY change in highest risk (<600) segment
Risk distribution by lender type
Source: Experian Automotive
21 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
9.5%
11.6%
6.9%
39.2%
16.4%
68.4%
19.3%
14.1%
70.0%
0% 20% 40% 60% 80%
Bank
BHPH
Captive
Credit Union
Finance
Percentage of financing in highest risk segments (<600)
Used
New
48
162
(48)
32
7
(222)
(74) (66)
(117)
-250
-200
-150
-100
-50
0
50
100
150
200
Bank BHPH Captive CreditUnion
Finance
YOY change (bps) in highest risk segments
New
Used
Risk distribution by lender type
Source: Experian Automotive
22 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Average financing by risk segment on new and used vehicle loans
$28,3
81
$18,4
11
$29,5
51
$18,8
50
$
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
New Used
Average amount financed
Q4 2014 Q4 2015
Source: Experian Automotive
$1,170
$439
$25,411
$28,231
$31,147
$31,008
$26,858
$24,907
$27,399
$30,105
$29,680
$25,711
$ $10,000 $20,000 $30,000 $40,000
Deep subprime
Subprime
Nonprime
Prime
Super Prime
Average new amount financed
Q4 2014
Q4 2015
$14,203
$16,071
$18,832
$20,486
$20,051
$14,022
$15,854
$18,389
$19,872
$19,433
$ $10,000 $20,000 $30,000
Deep subprime
Subprime
Nonprime
Prime
Super Prime
Average used amount financed
Q4 2014
Q4 2015
23 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Average payments by risk segment on new and used vehicle loans
$482
$355
$493
$359
$
$100
$200
$300
$400
$500
$600
New Used
Average monthly payment
Q4 2014 Q4 2015
Source: Experian Automotive
$11
$4
$505
$516
$513
$497
$466
$497
$508
$503
$485
$456
$420 $440 $460 $480 $500 $520 $540
Deep subprime
Subprime
Nonprime
Prime
Super Prime
Average new monthly payment
Q4 2014
Q4 2015
$374
$372
$360
$353
$355
$373
$371
$355
$347
$349
$330 $340 $350 $360 $370 $380
Deep subprime
Subprime
Nonprime
Prime
Super Prime
Average used monthly payment
Q4 2014
Q4 2015
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Experian Public.
$117 $119
$112
$119
$127
$134
$100
$105
$110
$115
$120
$125
$130
$135
$140
Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015
Average payment difference between new & used car loans
Payment gap grows between new and used loans
Source: Experian Automotive
25 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
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
Q4 2014 Q4 2015
Source: Experian Automotive
1 mo
1 mo 71.96
72.19
71.91
68.89
62.18
71.69
71.60
71.00
67.77
60.94
48.00 60.00 72.00
Deep subprime
Subprime
Nonprime
Prime
Super Prime
Average new loan term
Q4 2014
Q4 2015
57.15
60.92
64.31
64.92
61.23
55.82
60.03
63.51
64.12
60.42
48.00 60.00 72.00
Deep subprime
Subprime
Nonprime
Prime
Super Prime
Average used loan term
Q4 2014
Q4 2015
26 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
3.1% 3.8%
20.8%
42.0%
29.0%
5.8% 11.3%
23.6%
41.1%
16.4%
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
5%
12%
2.6%
10.8%
27 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Average rate by risk segment on new and used vehicle loans
4.5
6%
8.6
5%
4.6
3%
8.7
8%
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
Q4 2014 Q4 2015
Source: Experian Automotive
7 bps
13 bps
13.31%
10.36%
6.24%
3.55%
2.70%
13.29%
10.49%
6.22%
3.59%
2.69%
0.00% 5.00% 10.00% 15.00% 20.00%
Deep subprime
Subprime
Nonprime
Prime
Super Prime
Average new loan rate
Q4 2014
Q4 2015
19.27%
15.90%
9.51%
5.08%
3.35%
18.95%
15.79%
9.40%
5.09%
3.34%
0.00% 5.00% 10.00% 15.00% 20.00%
Deep subprime
Subprime
Nonprime
Prime
Super Prime
Average used loan rate
Q4 2014
Q4 2015
28 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
INSERT
PICTURE
HERE
Overall
Automotive
Finance Market
Market overview and
delinquency
29 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
A look at automotive loan balances
Source: Experian-Oliver Wyman Market Intelligence Reports
30 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Open loan overview
Source: Experian-Oliver Wyman Market Intelligence Reports
Super prime Prime Nonprime
Subprime Deep subprime
31 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Recent automotive delinquency: 30 day delinquency
Source: Experian-Oliver Wyman Market Intelligence Reports
32 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
30-day delinquency balances by state
Source: Experian-Oliver Wyman Market Intelligence Reports
HI = 1.90%
1.23
33 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Recent automotive delinquency: 60 day delinquency
Source: Experian-Oliver Wyman Market Intelligence Reports
34 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
60-day delinquency balances by state
Source: Experian-Oliver Wyman Market Intelligence Reports
HI = 0.50%
0.26%
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Experian Public.
Balances at risk
Source: Experian-Oliver Wyman Market Intelligence Reports
36 © 2016 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Modest high risk growth for new financing; used down YOY
Leasing reaching all-time highs at 28.9% of all new consumer transactions
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+
30 day down, yet 60 day delinquency creeping up with both percentage of units and dollars on the rise
In summary
37 © 2012 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
37 © 2012 Experian Information Solutions, Inc. All rights reserved.
Experian Public.