State of the Automotive Finance Market
First Quarter 2012
Melinda Zabritski, Director of Automotive Credit
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Today’s presentation
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Melinda Zabritski
Director of Automotive Credit
© 2012 Experian Information Solutions, Inc. All rights reserved.
2
Session overview
Market
overview
First quarter
originations
 Overall automotive
finance market
 Credit distributions
 Loan Balances
 Consumer delinquency
 VantageScore®
 Changes in new
and used financing
 Originations by lender
type and risk
segmentation
 Loan and lease
penetration
 Loan characteristics
 NADA values and LTV
 Scorex PLUSSM
Source:
Experian-Oliver Wyman
Market Intelligence Report
Visit:
marketintelligencereports.com
Score
ranges
Scorex
Category PLUSSM
Vantage
Score®
Super
prime
801–990
Prime
740+
680–739 701–800
Nonprime 620–679 641–700
Subprime 550–619 601–640
Deep
subprime
<550
501–600
Source: Experian Automotive North
American Vehicle Database sourced
from DMV title registrations and
NADA Used Car Guides
Visit: autocount.com
© 2012 Experian Information Solutions, Inc. All rights reserved.
3
Overall Automotive Finance
Market
Automotive market overview with a look at
consumer delinquency
© 2012 Experian Information Solutions, Inc. All rights reserved.
4
Automotive finance market
How has the market been changing?
Risk distribution of open loans
100%
YOY change in risk distribution
4%
90%
80%
39.4%
39.7%
1.97%
2%
1.22% 0.95%
70%
0%
60%
50%
25.1%
25.4%
15.6%
15.7%
-4%
8.7%
11.1%
8.5%
10.7%
-6%
Q1 2011
Q1 2012
40%
30%
20%
10%
0%
Deep Subprime Nonprime
subprime
-0.94%
-2%
Prime
Super
prime
-8%
Deep subprime
Subprime
Prime
Super prime
Nonprime
-8.70%
-10%
Source: Experian-Oliver Wyman Market Intelligence Reports
© 2012 Experian Information Solutions, Inc. All rights reserved.
5
Total automotive balance
Who holds the open loans?
Total outstanding loan balance
YOY change in balance
$700
$600
$500
$77
$142
$81
$144
$14
$13
$12
$10
$8
$400
$300
Billions
Billions
$26.8B
$193
$200
$7
$6
$4
$200
$100
$4
$225
$2
$238
$2
$-
Bank
Q1 2011
Q1 2012
Captive Credit Union Finance
$-
YOY Change
Bank
Captive
Credit
Union
Finance
Source: Experian-Oliver Wyman Market Intelligence Reports
© 2012 Experian Information Solutions, Inc. All rights reserved.
6
Recent automotive delinquency: 30 day delinquency
How are delinquency rates changing?
6%
5%
4.33%
Overall 19 bps
improvement
4%
4.83%
4.62%
6.42%
7.58%
9.80%
3%
2.25%
2.67% 2.50%
2.03%
2%
2.52%
13.03%
1.42%
2.33%
1.24%
1%
0%
Bank
Captive
Credit Union
Q1 2011
Finance
Total
Q1 2012
YOY Change
Source: Experian-Oliver Wyman Market Intelligence Reports
© 2012 Experian Information Solutions, Inc. All rights reserved.
7
Recent automotive delinquency: 30 day delinquency
What’s at risk?
$16,000
$1.2B
$14,000
$12,000
Captive
Credit
Union Finance
$3,465
$(146)
$(200)
$1,773
$(204)
$1,463
$8,000
$(300)
$4,156
$(311)
$3,951
$4,000
$2,000
$-
Bank
$(100)
$3,612
$10,000
$6,000
YOY change in 30-day balance
Millions
Millions
Balance of 30-day delinquent loans
$(400)
$3,960
$3,331
$(500)
Q1 2011
Q1 2012
$(600)
$-
Bank
Captive
Credit Union
YOY Change
Finance
$(700)
$(629)
Source: Experian-Oliver Wyman Market Intelligence Reports
© 2012 Experian Information Solutions, Inc. All rights reserved.
8
Recent automotive delinquency: 60 day delinquency
How are delinquency rates changing?
7.94%
1.8%
1.6%
1.58%
Overall 8 bps
improvement
1.46%
1.4%
1.2%
1.0%
12.17%
11.73%
20.27%
0.8%
0.6%
0.60%
0.65%
14.33%
0.53%
0.50%
0.4%
0.40%
0.57%
0.35% 0.30%
0.2%
0.0%
Bank
Captive
Credit Union
Q1 2011
Finance
Total
Q1 2012
YOY Change
Source: Experian-Oliver Wyman Market Intelligence Reports
© 2012 Experian Information Solutions, Inc. All rights reserved.
9
Recent automotive delinquency: 60 day delinquency
What’s at risk?
$3,500
$476M
$3,000
$2,500
$2,000
YOY change in 60-day balance
Millions
Millions
Balance of 60-day delinquent loans
$-
Bank
Captive
Credit
Union
Finance
$(20)
$1,047
$(40)
$972
$396
$1,500
$734
$1,000
$(60)
$314
$(80)
$556
$(100)
$(82)
$(75)
$(120)
$500
$934
$793
$-
$(160)
Q1 2011
Bank
$(140)
Captive
Q1 2012
Credit Union
YOY Change
$(180)
Finance
$(141)
$(178)
$(200)
Source: Experian-Oliver Wyman Market Intelligence Reports
© 2012 Experian Information Solutions, Inc. All rights reserved.
10
Recent automotive delinquency: quarterly repossession
How are repo rates changing?
3.0%
2.5%
Overall 25 bps
improvement
2.57%
54.5%
2.0%
1.5%
1.0%
0.5%
37.1%
1.17%
20.1%
14.0%
11.1%
0.35% 0.30%
0.52%
0.68%
0.43%
0.41%
0.20% 0.18%
0.0%
Bank
Captive
Credit Union
Q1 2011
Finance
Total
Q1 2012
YOY Change
Source: Experian-Oliver Wyman Market Intelligence Reports
© 2012 Experian Information Solutions, Inc. All rights reserved.
11
Average charge-off amount
How have charge-offs changed?
$206
$7,400
$7,232
$7,223
$7,200
$7,082
$7,017
$7,000
$6,800
$6,600
$6,400
$6,200
$184
$649
$320
$7,059
$6,898
$6,739
$6,729
$6,583
$527
$6,202
$6,000
$5,800
$5,600
Bank
Captive
Credit Union
Q1 2011
Finance
Total
Q1 2012
YOY Change
Source: Experian-Oliver Wyman Market Intelligence Reports
© 2012 Experian Information Solutions, Inc. All rights reserved.
12
New & Used Originations
Automotive financing in the
first quarter 2012
© 2012 Experian Information Solutions, Inc. All rights reserved.
13
Automotive market by transaction type
How are consumers purchasing vehicles?
No lender on title
51.2%
60%
40%
Overall financing
49.1%
23.6%
23.0%
20%
0%
New
Q1 2011
100%
80%
60%
40%
20%
0%
Used
Q1 2012
3.49%
3.78%
30%
25%
96.51%
10.56%
88.94%
89.44%
Q1 2011
Q1 2012
Total Loan
Leasing by type
100%
80%
60%
40%
20%
0%
11.06%
96.22%
20%
Total Lease
New lease share of new financing
26.74%
24.05% 25.20% 24.44%
19.56%
15%
10%
Q1 2011
Q1 2012
5%
0%
New lease
Used lease
Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
14
Top new lease providers
Who’s dominating in leasing?
18%
90%
16.5%
76.21%
16%
80%
14%
70%
11.4%
12%
10%
11.4%
43.03%
8%
10.8%
46.19%
56.92%
52.95% 52.41%
50%
9.0%
7.5%
31.05% 31.23%
7.3%
40%
6.0%
6%
60%
5.6%
30%
21.61%
4%
3.0%
20%
2%
11.54%
10%
0%
AMERICAN
HONDA
FINANCE
TOYOTA
FINANCIAL
SERVICES
FORD
MOTOR
CREDIT
NISSAN
INFINITI
FINANCIAL
SERVICES
ALLY
Share of new lease market
HYUNDAI
CAPITAL
AMERICA
VW CREDIT MERCEDES BMW BANK
INC
BENZ
OF NORTH
FINANCIAL AMERICA
CHASE
AUTO
FINANCE
0%
% of new financing as lease
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
15
Market snapshot on vehicle loan financing
What and where are consumers financing?
Loans by vehicle type
Current + 5 model years
60%
New
35.12%
55.23%
50%
Used
64.88%
-17.2%
45.74%
40%
30%
Used financing by dealer type
20%
Independent
Franchise
10%
49.1%
50.9%
0%
Q1 2011
Q1 2012
YOY Change
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
16
Market snapshot on vehicle financing
How has financing on vehicles changed?
Average loan scores by
vehicle type
800
780
760
773
776
766
753
Risk distribution of auto loans
100%
-6
760
70%
53.78%
57.63%
59.28%
58.11%
55.62%
60%
720
700
660
-4.3%
80%
740
680
90%
-4
661
653
665
663
659
50%
40%
5.9%
30%
640
20%
620
600
10%
580
0%
Q1
2008
Q1
2009
New
Q1
2010
Q1
2011
Q1
2012
46.22%
42.37%
40.72%
41.89%
44.38%
Q1
2008
Q1
2009
Q1
2010
Q1
2011
Q1
2012
Used
Subprime
Prime
YOY Change
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
17
Quarterly financing for new vehicles
How has credit changed for new financing?
Risk distribution of new loans
YOY change in new financing
100%
14%
90%
10%
65.55%
62.59%
-3.0%
60%
8%
50%
6%
4.3%
40%
30%
20%
10%
0%
YOY Change
11.5%
10.2%
80%
70%
11.5%
12%
4%
13.66%
14.25%
11.26%
12.56%
7.53%
2.00%
8.40%
2.20%
Q1 2011
Q1 2012
Deep subprime
Nonprime
Super prime
2%
Subprime
Prime
11.4%
0%
-2%
Deep
Subprime Nonprime
subprime
Prime
Super
prime
-4%
-6%
-4.5%
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
18
Quarterly financing for used vehicles
How has credit changed for used financing?
Risk distribution of used loans
YOY change in used financing
100%
15%
90%
80%
32.97%
30.45%
-4.85%
11.0%
10%
70%
60%
12.47%
12.78%
50%
14.35%
15.92%
8.1%
5%
2.5%
40%
30%
17.41%
18.82%
0%
20%
10%
22.81%
22.03%
0%
-5%
Q1 2011
YOY Change
4.04%
Deep subprime
Nonprime
Super prime
Deep
Subprime Nonprime
subprime
Prime
Super
prime
-3.4%
Q1 2012
Subprime
Prime
-7.6%
-10%
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
19
Automotive finance by lender type
What lenders are gaining share?
New loan market share
Automotive loan market share
45%
15%
40.21%
10.5%
40%
35%
10%
7.5%
30%
5%
60%
50%
40%
30%
20%
10%
0%
30.4%
47.85%
Bank
25%
16.68%16.89%
14.78%
-5%
11.44%
-3.8%
15%
10%
-12.7%
5%
-11.5%
-10%
-15%
Bank
BHPH Captive Credit Finance
Union
Market share
YOY change in share
-8.7%
BHPH
Captive
11.54%
Credit
Union
-29.9%
4.47%
Finance
YOY change in share
Used loan market share
40%
36.07%
30%
8.5%
5.0%
17.56%
20%
0%
-68.7%
0.13%
Market share
0%
20%
36.01%
6.6%
40%
20%
0%
-20%
-40%
-60%
-80%
10%
-12.8%
6.21%
BHPH
-16.4%
Captive
0%
Bank
Market share
19.79%
20.37%
0.2%
Credit
Union
Finance
10%
5%
0%
-5%
-10%
-15%
-20%
YOY change in share
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
20
Risk distribution by lender type
How have the lenders shifted?
Risk distribution of market share
100%
5.74%
3.39%
11.45%
6.14%
3.89%
7.70%
90%
80%
70%
52.09% 16.69%
58.65%
35.28%
0%
14.27%
15%
18.30%
15.55%
65.59% 14.96%
30%
10%
21.22%
20%
50%
20%
25%
47.76%
60%
40%
YOY change in subprime
financing
18.35% 44.13%
14.84%
9.28% 11.29%
2.27% 4.30%
15.59%
12.77%
4.00%
Bank
BHPH
Captive
Deep subprime
Subprime
Prime
Super prime
Credit
Union
10%
6.76%
5%
3.52%
2.09%
Finance
Nonprime
0%
© 2012 Experian Information Solutions, Inc. All rights reserved.
Bank
BHPH
Captive
Credit Finance
Union
21
Top 20 lenders by market share
Who gained or lost share?
261%
7% 6.39%
5.71%
6%
100%
48.43% of All
Financing
4.85%
5%
80%
4.27% 4.09%
46.0%
4%
60%
3.41%
40%
2.92%
3%
4.1%
1.98%
1.78%
-0.7%
-6.4%
-18.4%
-26.5%
17.7%
14.0%
13.1%
2%
1%
120%
101.5%
17.4%
15.0%
6.0%
1.67% 1.64%
-22.9%
1.43% 1.27%
-8.6% -8.2%
1.21% 1.09% 1.06%
-6.5%
2.9%
0.96% 0.94% 0.88% 0.87%
-21.8%
0%
20%
0%
-20%
-40%
Q1 2012 Share
YOY change in share
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
22
Top 20 new lenders by market share
Who gained or lost new loan share?
499%
75.25% of New
Financing
12%
10.52%
10%
200%
149.9%
141.1%
150%
8.17% 8.09%
7.36% 7.06%
8%
86.2%
100%
6%
4.44%
21.7%
4%
-0.6%
2%
-18.8%
50%
2.60% 2.35%
-8.0%
-13.6%
-39.7%
45.9%
4.06% 4.00%
31.2%
2.15% 2.13% 2.10%
-2.0%
-32.1%
Q1 2012 Share
6.4%
1.61% 1.56% 1.55% 1.41% 1.38% -17.5%
1.37% 1.31%
-3.4%
-12.3%
0%
31.1%
-18.5%
-50%
YOY change in share
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
0%
23
Top 20 used lenders by market share
Who gained or lost used loan share?
160%
7%
37.78% of Used
Financing
6.63%
28.7%
6%
4.16%
4%
3%
8.3%
3.91%
5.5%
11.6%
20%
6.7%
16.6%
5.1%
10%
3.50%
-8.1%
2%
30%
19.1%
25.4%
5%
40%
0%
-0.2%
2.33% 2.17%
-25.3%
-6.4%
-4.2%
1.67% 1.64%
-13.0%
1.36% 1.31% 1.29% 1.15%
1.12%
1%
-11.9%
-12.1%
-25.2%
0.89% 0.89% 0.86% 0.82% 0.74% 0.68%
-10%
-20%
0.65%
-35.9%
0%
-30%
-40%
Q1 2012 Share
YOY change in share
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
24
Vehicle financing
How has financing changed?
Average new amount financed
Average amount financed
$589
$30,000
$25,000
$30,000
$20,000
$25,406 $25,995
$21,861
$24,120
$27,399
$26,801
$25,143
$23,118
$26,140
$26,845
$25,721
$25,217
$15,000
$25,000
$411
$10,000
$5,000
$
$20,000
Deep
subprime
$16,639 $17,050
Subprime
Nonprime
Q1 2011
$15,000
Prime
Super
prime
Q1 2012
Average used amount financed
$10,000
$20,000
$15,000
$5,000
$10,000
$13,177
$12,829
$14,824
$18,128
$16,793
$15,331
$16,136
$17,529
$18,878
$18,296
$5,000
$
New
Q1 2011
Used
Q1 2012
$
Deep
subprime
Subprime
Nonprime
Q1 2011
Prime
Super
prime
Q1 2012
YOY Change
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
25
Loan-to-Value by lender type
How do the lenders compare?
Average LTV by lender
160%
600
147.92%
140%
122.50% 121.17%
129.40%
120%
100%
YOY change in LTV (bps)
128.41%
108.49% 111.97%
467
400
120.70%
108.20%
500
109.26%
300
208
80%
200
60%
100
40%
1
-
20%
Bank
(13)
(100)
0%
Bank
Captive
Average LTV new
Credit
Union
Finance
Market
Totals
Average LTV used
(200)
(300)
Captive
(36)
(78)
Credit
Union
Finance
(1)
Market
Totals
(16)
(171)
(239)
Source: Experian Automotive and NADA Used Car Guides
© 2012 Experian Information Solutions, Inc. All rights reserved.
26
Loan-to-Value by risk segment
How do the risk segments compare?
Average LTV by risk segment
160%
400
145.52%
137.18%
140%
120%
122.34%
YOY change in LTV (bps)
133.18%
124.08% 122.99%
128.73%
344
300
249
116.76%
117.85%
200
100%
148
101.96%
80%
126
123
100
60%
6
-
40%
20%
Deep
Subprime Nonprime
subprime
(90)
0%
Average LTV new
Super
prime
Average LTV used
Super
prime
(55)
(100)
Deep Subprime Nonprime Prime
subprime
Prime
(152)
(200)
(223)
(300)
© 2012 Experian Information Solutions, Inc. All rights reserved.
27
Average loan payments
How have payments changed?
Average new payment
Average monthly payment
$1
$500
$460
$461
$3
$450
$400
$343
$350
$346
$475
$470
$465
$460
$455
$450
$445
$440
$435
$471
$467
$464
$459
Subprime
Nonprime
$461
$460
$461
$450
Deep
subprime
$300
$458
$462
Q1 2011
$250
$200
Prime
Super
prime
Q1 2012
Average used payment
$150
$100
$50
$
New
Q1 2011
Used
Q1 2012
$360
$355
$350
$345
$340
$335
$330
$325
$320
$356
$351
$357
$333
Deep
subprime
Subprime
$345
$339
$350
Nonprime
Q1 2011
$336 $345
$335
Prime
Super
prime
Q1 2012
YOY Change
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
28
Average loan terms
How have terms changed?
Average new term
Average loan term
72
72
69.89
69.29
64
60
69.01
68.61
67.90
67.19
66.44
60
1 mo
63
69.60
1 mo
60.80
48
Deep
subprime
Subprime
Nonprime
Q1 2011
59
58
61.41
Prime
Super prime
Q1 2012
Average used term
72
60
New
Q1 2011
Used
Q1 2012
61.03
59.83
52.06 57.90
51.23
48
61.88
60.82
58.61
60.42
59.56
48
Deep
subprime
Subprime
Nonprime
Q1 2011
Prime
Super prime
Q1 2012
YOY Change
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
29
Distribution of loan term
How have loan terms changed?
New financing by term
42.59%
45%
Used financing by term
20%
40%
15%
35%
15.4%
40%
35.03%
35%
10%
29.56%
30%
29.89%
30%
0.2%
15.12%
0%
25-36 37-48 49-60 61-72 73-84
14.77%
-0.1%
15%
10%
8.21%
-10%
5%
-3.4%
-15%
0%
-9.5%
4.77%
5%
0%
-5%
6.60%
10%
20%
-4.0%
15%
15%
5.3%
5%
20%
5%
20%
25%
2.6%
25%
10%
21.9% 25%
0%
-8.8%
9.13% -5%
-10%
-15%
25-36 37-48 49-60 61-72 73-84
% of new financing by term
% of new financing by term
YOY change in term
YOY change in term
© 2012 Experian Information Solutions, Inc. All rights reserved.
30
Average loan rate
How have rates changed?
Average loan rate
10%
9.08%
9.02%
9%
8%
7%
Average new rate
6 bps
27 bps
16%
14%
12%
10%
8%
6%
4%
2%
0%
4.83%
4.56%
9.90%
13.57%
6.46%
10.38%
4.52%
6.76%
Deep
subprime
6%
5%
12.89%
Subprime
4.95%
Nonprime
Q1 2011
Prime
3.21%
3.64%
Super prime
Q1 2012
4%
Average used rate
3%
20%
2%
15%
1%
17.90%
9.53%
14.64%
10%
0%
14.42%
17.85%
5%
New
Q1 2011
Used
Q1 2012
6.44%
9.88%
7.04%
4.40%
5.06%
0%
Deep
subprime
Subprime
Nonprime
Q1 2011
Prime
Super prime
Q1 2012
YOY Change
Source: Experian Automotive
© 2012 Experian Information Solutions, Inc. All rights reserved.
31
In summary
 Overall, open portfolios continue to be strong with increasing total
balances (up nearly $27 billion)
 Historic lows for delinquencies
 Credit continues to loosen on originations
► Subprime share financing has increased (11% on New;
4% on Used)
► Average scores continue to decrease
 Finance amounts increased for both new and used
► Terms increasing among all risk segments
● Long term loans growing
► Rates decreasing for both new and used
 However, despite loosening credit and extended terms, LTVs are
down from previous year
© 2012 Experian Information Solutions, Inc. All rights reserved.
32
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© 2012 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
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