Auto Finance News: July 2016

Inside the Industry’s Turbulent New Chapter

NEWS THAT DRIVES THE INDUSTRY • JULY 2016 • VOL. 19, NO. 10

W W W. A U TO F I N A N C E N E W S . N E T

Leader or Follower: Lenders Seek Balance in Innovation

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AutoFi Gets Investment, Founder Facing Lawsuit

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President and CFO Leave Western Funding

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Is the Party Over?10

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1Q 20163

Auto Finance News is published monthly. Subscribers also receive the weekly Auto Finance News Update via e-mail. Subscription: $597 (12 print issues, 48 digital Updates). Tax ID #13-3852425Royal Media 80 Broad Street, Suite 1701 New York, NY 10004 T: (212) 564-8972 F: (646) 304-7987 E: [email protected] www.royalmedia.com www.autofinancenews.netWARNING! It is illegal to photocopy or reproduce any part of Auto Finance News or Auto Finance News Update without the written consent of Royal Media. Call (212) 564-8972 to obtain duplication rights.2016 © Royal Media

StaffExEcutivE Editor & PublishEr

JJ Hornblass [email protected]

Editor

larissa Padden [email protected]

AssociAtE Editors

brad bergan [email protected]

natalie Mattila [email protected]

columnists

MicHael benoit

toM Hudson david ruggles MicHael sMitka

GrAPhic dEsiGnEr

Manuel sy [email protected]

Production coordinAtor

MicHael Patten [email protected]

vP, Auto FinAncE

Marcie belles [email protected]

vP oPErAtions

Molly stewart [email protected]

mArkEtinG

breanna Punzone [email protected]

AdvErtisinG

rebecca darakHsHan [email protected]

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circulAtion

kelly yee [email protected]

3Auto Finance News AutoFinanceNews.netJuly 2016

Car Culture Photo Credits: Press.BMWGroup.com

BMW is sketching out “The Next 100 Years,” in part with the Mini Vision Next 100 concept car. The company, which is celebrating its centenary this year, “is focusing primarily on looking to the future and sharing its vision of personal mobility two or three decades from now,” the company said in a press release. Designed around the concept of rideshare, the futuristic vehicle’s motto is “Every MINI is my MINI.” The car will exist in a future where drivers will be able to call on a MINI tailored to their personal requirements wherever they are, 24/7. The fully automated car will adapt itself to the driver’s individual tastes, interests, and preferences. “MINI looks to offer smart and bespoke mobility in cities that engages all the senses,” Adrian van Hooydonk, senior vice president of BMW Group Design, said in the release.

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Table of ContentsLeaders 4

WatchList 6

innovation 8

Feature story 10

risk 13

compLiance insider 16

Who/What 18 industry caLendar 17

spotLight 20

marketshare monitor 23

industry monitor 22

� AutoFi receives $17 million investment

� Hyundai Digital Camp moves offices

� GM Financial to launch open-ended leases

� ‘Special terms’ coming to VW’s Gett drivers

� Floorplan financing is key, Ally CFO says

� AutoGravity’s new app focused on digital

� VW eyes rideshare and autonomous market

� Clouds may clear for marketplace lending

� Fintech companies lobby against oversight

� GM brings vehicle development to Canada

� Loan stacking is a threat to online lending

� Lenders seek balance in innovation

� Is the party over in auto finance?

� Longer loans spur higher subprime loss rates

� Let consumers decide about add-ons

� President and CFO leave Western Funding

� FordDirect names new CEO

� Exeter hires decision science statistician

� OneMain holdings promotes Hurzeler to COO

� NextGear Capital creates new VP position

� Wells Fargo picks Nixon to lead commercial unit

� Scotiabank eyes tech to speed funding process

� Which financiers are winning and losing share?

� Delinquency Rates

� Capital

� Securitizations

� Automobile Loan Rates

4 July 2016Auto Finance News AutoFinanceNews.net

Leaders

AutoFi rEcEivEs $17 million invEstmEnt

San Francisco-based startup AutoFi raised $17 million in new financing to help scale its online point-of-sale financing solution, Chief Executive and Co-Founder Kevin Singerman

told Auto Finance News. The investment was led by Crosslink Capital, and joined by Toll Brothers’ Chairman Bruce Toll, Lerer Hippeau Ventures, and other early stage investors. AutoFi’s automated platform, launched last week, allows dealers to sell cars and F&I products online, while institutional capital, like hedge funds and pension funds, provides the money for the loans.

The marketplace lending model “was a part of our confirmation of a thesis that there is a shift in consumer buying behavior to not only start — but also complete — the car-buying process online,” Singerman said. “What we realized that was missing from that process is the financing solution to make that happen.” For the next few months, AutoFi will pilot its program with five customers nationwide — a combination of online used-car marketplaces and traditional dealer groups, he said. Separately, AutoFi and the company’s President and Co-Founder Jonathan Palan are facing a lawsuit regarding company ownership, according to public court documents. The case is reportedly expected to go to trial soon.

hyundAi movEs diGitAl cAmP to nEw locAtion

Hyundai Capital America moved its Hyundai Digital Camp team on June 1 into a “more scalable” location in Burlingame, Calif., to make room for workspace and upcoming projects, according to an HCA spokesman. Hyundai Digital Camp — a joint effort between HCA and Hyundai Card — was established at the end of 2015 before moving into its “longer-term location,” according to a company press release. “The office represents HCA’s “eyes and ears in Silicon Valley,” and is tasked with “surveilling the market of emerging technologies for opportunities” and initiating relationships with potential investors, according to the release.

“The purpose of the move was to accommodate some immediate growth, while also giving us the capacity to ramp up quickly,” the spokesman said. The team needed “extra space” to work on upcoming projects. HCA declined to comment on what the projects will entail. The move is more “forward-looking” than growth-based, he said. The company’s primary focus is to “make sure they have capacity to bring in what they need.”

The previous office was small, but the new space is “still relatively small,” he said. The office workstations will increase to 10 from six, and the new location includes open workspace. The team is not currently undergoing a growth spurt, but “the new office is more scalable, so if they do grow, they can go up to 16 [workstations],” the spokesman added.

Gm FinAnciAl to dEbut oPEn-EndEd lEAsEs

PLANO, Texas — General Motors Financial Co.’s new open-ended leasing product, The Right TRAC, is slated for launch “within the next couple of months,” according to Kevin

Peters, the captive’s senior vice president of commercial vehicle lending. The program’s structure gives business customers responsibility for the vehicle’s residual value at the end of the term, Peters told AFN, which means consumers are not bound by mileage restrictions. This new lease is the final product the captive needs to complete its suite of commercial offerings, which includes traditional finance (APR), plus closed-end lease and municipal lease programs, he said.

Separately, GMF will pilot a fleet-management product with dealers “within the next month,” Peters added, which will provide fuel cards, maintenance management, and other offerings. GMF will team up for the product with a software provider, which the captive expects to announce before the pilot launch. “In the past, a lot of the dealers complained they lose that business to independent leasing companies or fleet-management companies,” and with this option, “we are able to bring those products to them,” he said. The fleet-management system is “ready to go,” according to Peters, but is still in testing mode while GMF tries to pair other products within the system, including the TRAC lease program.

‘sPEciAl tErms’ For vw’s GEtt drivErs

The partnership formed by Volkswagen AG and Gett, an on-demand mobi l i ty provider, will put the German manufacturer “in a position to give licensed Gett drivers access to vehicles from our

Group brands at special terms and conditions,” according to a joint statement sent to AFN.

“Special package offers will conveniently pool various costs such as purchase or finance as well as the necessary insurance and servicing,” VW wrote in a separate press release. Alongside brands such as Volkswagen, Škoda Auto and SEAT, a special chauffeur service featuring premium brands, such as Audi and Porsche, is also being considered, the company said.

“We will be combining two worlds of mobility — the classic and the new,” Matthias Muller, chief executive of Volkswagen AG, said in the statement. “And in [the] future, what is to stop Gett drivers from chauffeuring their customers through the world’s megacities in a Porsche Panamera or an Audi A8 with a special premium version of the app?”

5July 2016 Auto Finance News AutoFinanceNews.net

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FloorPlAn FinAncinG is kEy, Ally cFo sAys

Floorplan financing fosters deeper dealer relationships, Chris Halmy, chief financial officer at Ally Financial Inc., said during the Deutsche Bank Global Financial Services Investor Conference last month. “There has been a lot of competition in that space, and it doesn’t necessarily have the best ROA,” Halmy said. “But that business is the gateway to the relationship with your dealers, to other products, and to get an application flow.”

Despite losing subvented leasing for General Motors and Buick brand vehicles to General Motors Financial Co. last year, Ally continues to have “pretty nice” floorplan penetration with General Motors and Chrysler dealers,” Halmy said. Ally also made the decision to go further down the credit spectrum last year, Halmy said. “It was a capital deployment decision, to put on

some incremental, nonprime assets, and a lot of that was in response to our lease book rolling off,” he said. “The place to deploy that capital, that had equal profitability to some of the leases, was really in that nonprime sector.”

AutoGrAvity’s nEw APP to Focus on ‘diGitAl EnvironmEnt’

AutoGravity debuted its new iOS app in mid-June, featuring — among other things — the ability to scan the barcode on the back of a driver’s license, Chief of Marketing Serge Vartanov told AFN. The barcode feature is important, Vartanov said, because it circumvents a lengthy application process by gathering “a good deal of credit application information.”

“We’re bringing a creative platform to auto financing where customers can take control of the process, end-to-end, all the way through driving off the lot,” Vartanov said. “There are a lot of fintechs out there trying to originate loans — AutoGravity doesn’t do that.” Instead, the company focuses on building a platform native to the digital environment, to meet the consumer in their own digital, app-laden field of day-to-day smartphone perusal, he said.

After selecting any new vehicle sold in the U.S. by make, model, trim, and year the app’s calculator determines monthly payments based on desired term and trade-in value, according to Vartanov. “From there, the information is sent to lenders. If a lender has auto-decisioning in place, it will happen within ten seconds,” after which, if location is shared, nearby dealers are displayed, Vartanov explained. “We give customers the technology they are used to using for other services like Uber on the same digital platform,” he said.

—Brad Bergan, Natalie Mattila, Larissa Padden


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volkswagen oPts for ridesHare and autonoMous Market strategy

http://bloom.bg/21orXzi via Bloomberg

Volkswagen AG is shifting its market strategy to include autonomous driving and ridesharing after being outed for misrepresenting its vehicle production to pass diesel-emissions regulatory standards for carbon emissions. The shift constitutes $11.2 billion in investments by 2025, partially financed via trimming down the VW brand and grouping its fragmented parts operations, the company said in June.

fintecH coMPanies lobby against executive and legislative fintecH oversigHt

http://bit.ly/1Umv48G via Financial Times

As a sector, financial technology has undergone rapid growth with little regulatory scrutiny. In the auto finance sector, we see fintech providing mobility services like finance apps, ride-hailing and rideshare, automated decisioning and data management systems, and autonomous vehicles. The executive and legislative branches have

established a slew of fintech watchers that the Financial Times charted through briefings from officials, executives, and lobbyists.

gM brings veHicle develoPMent to canada

http://on.wsj.com/25PVaK7 via The WSJ

General Motors is finalizing plans to expand its engineering and software development staff in Ontario, Canada, in a bid to keep pace with Silicon Valley’s attraction for tech experts. This vote of confidence in Ontario’s tech-industry credentials is bolstered by the University of Waterloo’s efforts to become a magnet for recruiters.

loan stacking beHind online lending tHreat

http://reut.rs/1YhEwgE via Reuters

The “stacking” of multiple loans has managed to slip by automated underwriting systems, according to Reuters. The practice is driven by the use of “soft” credit inquiries and less-than-stellar reporting on behalf of credit bureaus. This trend causes multiple lenders to originate

to the same borrowers in a short span of time. Stacking concerns come after LendingClub’s ordeal in early May, when the online lending platform’s stock took a 49.2% dive in four days in reaction to former Chief Executive Renaud Laplanche’s resignation, at the behest of board findings regarding unsavory securitizations.

clouds clearing for MarketPlace lending?

http://bit.ly/1Xpscvy via Bank Innovation

The “rough patch” marketplace lending has been through has absolutely affected investment volume, but not drastically, said Pat Grady, partner at Sequoia Capital. “I wouldn’t call it a drought, but more of calling off the herd,” Grady said at a Future of Fintech conference, “Not all lenders are created the same, and we’ll see some of the more established platforms continue to have great business that will get funding.” Meanwhile, investors are retracting support of companies failing to establish “core competence,” he added.

—B.B.

WatchListInnovation happens one step at a time, and the trickle-down implications for auto finance are not always obvious. Here are the

innovations auto finance should keep on its Watchlist this month.

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July 20168 Auto Finance News AutoFinanceNews.net

It’s no secret that being first to market when investing in innovation can offer a competitive edge, but lenders must be prepared for the

complications that come with investing in unproven technology. However, those that don’t lead the charge, risk being too late to the punch — so where is the balance?

The real risk for first-to-market lenders shows up in a “handful of blindspots,” said Daniel Parry, chief executive of Praxis Finance LLC. “First, thinking you are smarter than you actually are,” he said. “The data can help optimize solutions to problems, but it can’t tell you how dealers or consumers will change behavior in the future, in response to the tool.”

The other blindspots are spending more on the solution than on the benefit expected, and relying on data that is likely to change going forward, Parry added. For example, pre-recession, a lender may have had 4% of its auto loan consumers show up in payday lending databases — a form of alternative data. Post-recession, that rate climbed to 20%. As such, lenders that rely on decisioning models built on alternative data sources need to continually confirm that consumer borrowing habits don’t shift as the economy recovers — or risk employing skewed models.

There are many aspects of innovating that can “end up not going as planned,” said Ian Anderson, president of Westlake Financial Services. “If you are first to go down a path — and invest your time and resources, then it doesn’t work — it can end up hurting.”

Westlake is no stranger to innovation. The nonprime lender recently announced plans to invest in automated originations. “We are working on the system now, but we are a good three months away from really making a splash in the market,” he said. The automated originations will add to the company’s automated underwriting system by enabling the deals to be validated and funded electronically, which eliminates the need for human decisions.

Westlake attempts to be “as innovative as possible,” Anderson said, but the lender — in many aspects — falls in line as a fast follower. The problem with boosting technology investments is that lenders need to weigh the risks and research constraints before proceeding to innovate in a given area, he said, and Westlake has taken plenty of risks over the years. For example, Westlake inked deals with both online dealership Car Harmony and Uber last year. While its partnership with Car Harmony is progressing well, Westlake’s Uber deal has begun to phase out in recent weeks as a result of a volume slowdown caused by the launch of Uber’s own leasing company.

There will be risks involved when a lender invests in innovation, but “I would rather take risks than not try anything, otherwise your competition ends up outpacing you,” Anderson added.

While many lenders fall under the fast-follower mark, America First Credit Union is setting the bar high with its new Innovation Center, a collaborative hub to showcase the company’s latest technology solutions. The Innovation Center is part of the credit union’s attempt to expand its mobility efforts and to create a better customer experience, said Executive Vice President Randy Halley.

The Innovation Center is set up as both a learning facility for consumers and a place to complete transactions, he told AFN. America First will test multiple channel experiences — such as mobile video chats and an in-lobby teller kiosk — to gain real-time feedback so that AFCU can implement the products across its 116 branch locations.

lEndErs sEEk bAlAncE whEn invEstinG in innovAtion

“I think the Innovation Center shows that we are out front, and we’ve always tried to be that way with our products and systems,” he said. “There’s no question that we have spent a fair amount of money with these different systems, but our board has been very positive about that. They wanted us to be innovative, and they’ve given us funding to move forward, but we all know there is risk there.”

AFCU aims to learn from its consumers what devices they prefer, especially when it comes to the loan process, Halley said. Some of the featured products “won’t make it out” of the Innovation Center and into the company’s branches, he said, but it’s all part of the process to create a better lending environment. AFCU projects to have a good sense of which products are working and which are not after six months of testing, at which point the lender will interchange the products.

Ultimately, lenders benefit from innovation whether they are first movers or late to the party, Praxis’s Parry said. For example, many lenders haven’t even scratched the surface of what analytics and data can do to provide a better answer, in terms of expenses, credit losses, or profitability. “As more lenders embrace innovation, they become more efficient and, thus, more competitive — which means those that don’t get moving will ultimately be left behind,” he said.

—N.M.

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Is the Party Over?By Larissa Padden

Inside the Industry’s Turbulent New Chapter

July 2016 11Auto Finance News AutoFinanceNews.net

The good times are rolling to an end in auto finance.

At least that’s the picture JPMorgan Chase & Co. Chief Executive Jamie Dimon painted in early June when he told attendees of an investor conference that auto was “a bit stressed.” His now infamous exact words were, “someone will get hurt in auto lending.”

So will the industry’s greatest, grimmest, most clichéd prediction — the subprime bubble, poised to pop —- finally come to fruition, and blow us all way?

Probably not, but the best of the credit cycle is behind us, according to Matthew Carroll, senior director of financial service ratings at S&P Global Ratings.

“Those years coming out of the credit crisis were probably at about as good as it gets for auto finance, so we’re definitely seeing some weakening in credit conditions,” Carroll told attendees at the AFSA Credit Summit for Fixed Income Investors in early June. “Overall, what we’d describe this as, is a normalization to a normal credit cycle — especially with the typical credit expansion after very tight lending conditions, post financial crisis.”

While “bubble” may be too harsh a term, there are worrisome signs ahead for the industry, Avi Steiner senior director and senior credit analyst at JPMorgan Chase, warned attendees at the AFSA event.

“My equity research counterparts, my ABS research team, my securitization team on the auto side all think, although they are concerned with the lending environment, think it’s a little overblown,” Steiner said. “Now, since Jamie [Dimon] pays my salary, I am going to go with Jamie and say there’s a bit of an issue there.”

Delinquencies, charge-offs, and credit losses are all “definitely trending the wrong way,” and ultimately what Dimon might have been referring to, he said.

wEAkEninG crEdit PErFormAncE

In February, 60-day delinquencies in subprime securitizations hit 5.16% — a 20-year high — versus 4.76% in early 2010, according to Fitch Ratings. However, at that time in 2010, the unemployment rate was 10%, versus 4.9% in February.

“So clearly we have a recessionary type performance going on today in a market that, while certainly not robust from an economic standpoint, is clearly outperforming expectations if you look at unemployment, or if you look at jobless claims,” said John Bella, managing director and co-head of U.S. ABS at Fitch Ratings.

A more accurate term to describe the industry today might be “frothy,” Michael Shapiro, director and co-head of debt capital markets for the Americas at Societe Generale Corporate and Investment Banking, said at the AFSA conference. Things are “a bit overheated,” he added.

“The key thing that draws losses at the end of the day is going to be unemployment, and to think that it could go back to the double digits — I don’t think that any economist would think that we’re going to go near that anytime soon,” he said.

However, some conditions in auto finance today are similar to what occurred in the mortgage industry pre-recession. “Clearly there’s been a loosening in underwriting standards,” Shapiro said. “You’ve seen that [happen] in order to increase affordability. We saw this in the mortgage space with the introduction of exotic mortgage products used to lower monthly payments, and in some cases lower payments down to zero.”

In the auto sector, monthly loan terms have lengthened, leasing activity has increased, and lending to subprime borrowers has risen. Together, these trends have resulted in record sales volume — something that occurred in the housing industry in 2005 and 2006, Shapiro said.

lonGEr tErm loAns

Underwriting is more critical than performance, according to Fitch’s Bella.

“In a lot of the investor dialogue that we continually have, we don’t even spend that much time on the performance aspect of subprime auto,” he said. Instead, investors are concerned with a number of factors, including lengthening loan terms.

“There is considerably more of a percent of extended term collateral in pools today, than [there was] in 2010,” he said. “That has implications on both the severity side, and recovery and losses, and we also see LTVs pushing up.”

The use of longer-term loans — and particularly their performance in subprime securitizations — is a top concern for the industry, according to Amy Martin, senior director for structured finance at Standard & Poor’s.

Since 2011, the percentage of loans in subprime pools that have terms longer than 60 months has generally remained at about 80%, but the composition continues to shift to longer terms, S&P determined in a study conducted in late May. “The most common term now for both new and used vehicles is 72 months,” Martin told AFN. If a 60-month loan were to default in month 24, the loss might be $2,000. However, with a 72-month loan, the loss would be almost $4,000, she explained.

Longer-term loans may also increase default frequency, because they exacerbate the borrower’s negative equity position, causing it to remain negative for a longer period of time, S&P wrote in the report.

“When the individual tires of their vehicle and they want to trade in, they’re going to owe more on the loan than what the vehicle’s worth when they try to purchase a new vehicle,” Martin said. “That negative equity becomes a challenge: Are they going to be able to finance that negative equity into the next loan, and if they do, that’s just going to push the LTV even higher on the next loan.”

If credit markets tighten, it could be difficult to trade out of a vehicle in four years if that person has a six- or seven-year loan, she added.

A soFtEninG in usEd, this wAy comEs

A recession, a downturn, whatever the industry wants to call it, will ultimately be due, in large part, to a softening in used-vehicle pricing — a trend that is already occurring, according to Manheim. This year, Manheim expects 3.2 million cars to come off lease; in 2017, the prediction is 3.6 million cars.

Those years coming out of the credit crisis were probably at about as good as it gets for auto finance, so we’re definitely seeing some weakening in credit conditions.

—Matthew Carroll, senior director financial services at S&P Global Ratings

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“What’s interesting about that is you could have new sales declining as used cars keep coming off lease, which could potentially be a double whammy,” S&P’s Carroll said.

The potential for about 4 million used cars to come off lease across the industry by 2018 will “definitely” put downward pressure on the market, said Andrew Stuart, president and chief executive at TD Auto.

“If you’ve got a large lease book, and there’s a lot of lease returns coming back to market, there’s downward pressure on residual values — residual values that you set three or four years ago,” Stuart told AFN. “I think that you need to be prepared for an adjustment.”

For TD, a lender not active in the leasing space, the biggest impact would be on defaulted loans whose collateral is being disposed of at auction. “You’ll certainly seen some downward pressure on loss given default,” he said. “That will affect us, and I think we all need to prepare.”

Ultimately, the influx of used vehicles entering the market could pose an interesting opportunity for lenders to gear products toward that segment of the industry, he added.

incrEAsEd comPEtition

The pent-up demand, post-recession, has led to a lot of smaller lenders getting into the subprime auto lending industry, which is ultimately another concern for auto ABS investors today, according to Fitch’s Bella.

“Investors are concerned about some of these smaller finance companies’ adherence to their own policies and procedures. They’re concerned with the fact that a number of these subprime issuers have not been in the market, post-recession,” he said. “Their models have not been tested in a previous recession, so there’s concern with how these models might react in a downturn.”

There are a number of new subprime players that have entered the market since the last credit crisis, Martin agreed, the largest of which, with “particularly strong economies of scale,” are making the industry more price-competitive. “I would say the major similarity is the level of competition we’re seeing today,” she said.

However, the rise in competition is seen as part of the “normal ebb and flow” of consumer lending by S&P, according to Martin. “That’s just where we are in the cycle, that’s to be expected,” she said. “But as pricing continues to become more and more competitive we may see profit margins thin, and perhaps there could be some consolidation among the smaller subprime auto players.”

GO Financial, a Mesa, Ariz.-based subprime auto lender, abruptly stopped originating loans on May 12. “This has everything to do with our owners’ choosing to reallocate their resources on different businesses, like DriveTime, Carvana, or SilverRock Group, and focus on core businesses,” Colin Bachinsky, president of GO Financial, told AFN at the time. “GO

was the least connected business, as Carvana and DriveTime are backed with the inventory.”

Similarly, Dealer Funding LLC, an Alpharetta, Ga.-based subprime auto lender, “paused all new business activities as part of an evaluation of its ongoing business operations,” in late June, according to a published report.

“There has been an awful lot of folks jumping in over the last few years, particularly going down market, getting into the deep subprime space, and that’s always risky,” TD Auto’s Stuart said. “We don’t play in that space at TD, but one question I do get a lot is, ‘Do you see similarities between the auto lending space and what happened in mortgages during the financial crisis?’”

Ultimately, the main problems that plagued the mortgage industry — speculative buying, “very little in terms of real adjudication of credit” — are not occurring in the auto finance industry today, he said. “So when I compare the two, I don’t think that we’ve got a bubble effect,” Stuart said. “But I do sense that it’s not going to be as rosy as it has been over the last few years.”

To put things in perspective, the coming downturn is more of a reversion back to the pre-recession norm, but “certainly there are yellow flags on the track,” S&P’s Carroll said.

“I think Jamie Dimon’s statement is right, somebody’s going to get hurt — but it probably won’t be JPMorgan,” he said. “If you’ve got a large, well-diversified portfolio and you’ve got a good mix of prime, subprime, new and used, I think you’re going to be alright. But if you’re one of the players that’s really concentrated in the deep subprime, or you’re doing nothing but leases of passenger cars where residual values are falling, then I think certain pockets could be at risk.”

Investors are concerned about some of these smaller finance companies’ adherence to their own policies and procedures. They’re concerned with the fact that a number of these subprime issuers have not been in the market, post-recession.

—John Bella, managing director and co-head of U.S. ABS at Fitch Ratings

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lonGEr tErm loAns sPur hiGhEr subPrimE loss rAtEs, s&P sAys

Extended loan terms in subprime securitizations are spurring higher loss rates that are appearing later in the transaction cycle. As such,

lenders are being exposed to greater risk for longer periods, according to a Standard & Poor’s Global Ratings report released in late May.

For loans securitized last year, the average term was 68 months, up from 67 months in 2011 and up from 64 months in 2003, according to S&P. As terms lengthen, the breakeven point at which a vehicle’s value exceeds the loan balance comes later in the life of the loan.

Take, for example, a $20,000 vehicle financed at 15% interest. For a 60-month loan, the inflection point on equity occurs at month 40. With a 78-month loan, the crossover occurs at month 64.

In other words, an 18-month term extension adds 24 months to the time required to reach parity on the loan, according to S&P. With parity reached later in the loan term, losses become “more back-loaded” and “extend for a longer period of time,” according to the report.

With these longer terms, subprime lenders face the risk of increased default frequency. The premise is that the longer the borrower lacks

equity in the vehicle, the greater the chance he will walk away from the loan.

To further quantify the effect on loss curves, S&P created an index of 2003 and 2011 securitization transactions from AmeriCredit Corp., Consumer Portfolio Services Inc., First Investors Financial Services, and Prestige Auto Finance. Net losses on the 2011 vintage extended to 53 months, whereas net losses on the 2003 vintage capped out at about 46 months.

On average, the percentage of loans in the index with 60-or-more month terms shot up to 81% in 2011 from 36% in 2003.

In 2013, though, subprime lenders included in their securitizations loans with terms as high as 78 months. For now, the extended term loans have yet to create additional layers of risk, according to S&P. However, that trend may change, particularly for less established securitizers.

Aside from the inflection point on equity, losses have been slowed because of changes to lenders’ collection and repossession policies. “Many servicers have altered their practices due to changes in the regulatory environment,” according to the report. “For example, several servicers have adopted ‘softer and gentler’ collection practices due to increased regulatory oversight, which has shed light on alleged violations of fair debt collection. As a result, it sometimes takes longer for the lender to arrange a payment plan with the borrower or locate the vehicle for possible repossession. The longer it takes to contact the borrower, the longer the account remains delinquent before the account is charged off or payments resume.”

—B.B.

The point at which a vehicle’s value exceeds the outstanding balance occurs later in the life of the loan as the loan term lengthens. For instance, for a 60-month loan, the inflection point on equity occurs at month 40. With a 78-month loan, the crossover occurs at month 64.

Source: S&P Global Ratings


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lEt thE consumEr dEcidE By Michael Benoit

The auto finance industry has had its share of troubles with the Consumer Financial

Protection Bureau over the past few years, and anyone who has been paying attention knows that the industry continues to worry about what might be next. Near the top of the list seems to be concerns about ancillary products — “add-on products,” in CFPB parlance — and

the CFPB’s apparent adoption of consumer advocates’ hostility towards these products. So, what’s the beef?

This column is far too space-constrained to fully develop this topic, so let’s stick to the highlights. I expect that the CFPB’s reasoning would closely mirror that of the consumer advocacy industry (yes, it is an industry, with conferences and meetings just like any other), i.e., it would start from the premise that consumers (1) have a fundamental misunderstanding of the total cost and value of ancillary products, and (2) are often duped into buying them for a price far more than they are worth. Often times, this industry alleges that because products can be purchased in bundled packages, consumers are denied meaningful choice.

Let’s explore. In general, the cure for a lack of understanding is education. I don’t think the consumer advocacy industry can argue that point, but I suspect they would argue about the content of that education. We might think that disclosing the cost and benefits of a particular product would be sufficient. But others might think that one should also disclose that the product has little or no value. See this excerpt from the CFPB’s recent request for information relating to ancillary products:

“Among other practices and concerns, the Bureau has found or alleged that some companies offering ancillary products failed to accurately describe those products, [and] offered products that provided little or no benefit to consumers without disclosing this fact…”

Putting aside the absurdity that any industry would advertises its products are worthless, the excerpt begs the question, “benefit to whom?” A consumer advocate? The CFPB? Benefit, value, and worth are subjective concepts, ones most consumers are capable of evaluating for themselves. If the seller makes a handsome profit, does that eliminate any benefit? The consumer advocacy industry complains that ancillary products lack value because the retail prices far exceed their cost. Or put another way, sellers are making too much profit.

I think the consumer advocacy industry conflates wholesale value with “worth.” If that’s the way we’re going to operate, then it’s high time the government came down hard on the hospitality industry. There is plenty of evidence that the unit cost of that large soda you bought for $2.90 at your local fast food establishment is actually about $0.10. So, you paid 29 times more than the wholesale cost, or 29 times more than it was worth. If you treated the difference as a finance charge on a one-day transaction, that would translate to an APR in excess of 1,000,000%.

Are you outraged? Do you feel cheated or scammed? Since less affluent people (i.e., vulnerable consumers) are more likely to patronize fast food establishments, shouldn’t we be protecting them from this unconscionable behavior?

Similarly, passengers sitting next to each other on a commercial airline flight may have paid vastly different fares for the same service. Should the last-minute business traveler be able to successfully sue the airline because she didn’t get the 90 day leisure fare?

And, does a room service hotdog really cost $25?

The point here is that people who live in a capitalist society decide what a product or service is worth to them and pay accordingly. The cost of a soda at a fast food establishment is a bargain when you compare it to the cost of the same drink at an amusement park, where you are a captive audience with nowhere else to go. Yet we still happily pay $5 or more for a soda that still costs about $0.10. The cost of the plane ticket to the last-minute business traveler had value to her, because she was willing to pay for it to get to where she needed to be. And sometimes, you just need a hotdog at 2 a.m. at the Marriott, and $25 is acceptable in that moment.

I’m all for disclosure and education. I’m also all for letting consumers make decisions based on that education. Will some make decisions we would not? Of course, but that is their prerogative. It is not the province of


industry caLendar

we are. counselorlibrary.com877-464-8326

the government to decide the value of products and services and deem them worthy of sale in a free market society. As long as sufficient information about the retail cost and features of a particular product or service are disclosed, it should be up to consumers to make their own choices.

It’s clear the consumer advocacy industry is interested in the CFPB regulating ancillary products. The big question will be whether it can. GAP, debt cancellation, and certain other products, perhaps — to the extent they can be classified as consumer financial products or services. But the vast majority of those sold and financed in dealerships cannot be classified as such, and thus likely outside the CFPB’s jurisdictional reach. But it doesn’t mean it won’t try. It just means the courts will have to decide.

Michael Benoit is a partner in the Washington, D. C. office of Hudson Cook LLP. He is a frequent speaker and writer on a variety of consumer credit topics. Michael can be reached at 202-327-9705 or [email protected]. Nothing in this article is legal advice and should not be taken as such. Please address all legal questions to your counsel.

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Aug. 29-31 Industry Summit Bobit Business Media Las Vegas industrysummit.com

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ABS East Conference

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Oct. 5 PowerSports Finance 2016 Powersports Finance Las Vegas go.powersportsfinance.com

Oct. 5-7

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Oct. 13-16 AIMExpo 2016 American International

Motorcycle Expo Orlando www.aimexpousa.com

Who/WhatPrEsidEnt And cFo lEAvE wEstErn FundinG

Guerin Senter and Ed Bentzen are no longer

with Western Funding Inc., according to parent company Westlake Financial Services. While Westlake President Ian Anderson confirmed the executive shift with AFN, he declined further comment. No replacements have been named for either position.

Senter, formerly president at Western Funding, joined the company in 2014, and Bentzen served as chief financial officer since August 2013, according to his LinkedIn profile. In November 2015, Western

Funding — a Las Vegas-based subprime auto lender — doubled its dealer base to 2,000 dealers, and in July 2015 hit record origination volume after funding 906 deals in the previous month, Senter told AFN at the time.

ForddirEct nAmEs nEw cEo

Former RouteOne Chief Executive Mike Jurecki

was named chief executive of FordDirect, a joint venture between Ford Motor Co. and its franchised dealers to provide digital marketing services to Ford’s partnered dealers.

F o r d D i r e c t ’ s C h i e f Operating Officer Valerie Fuller served as interim CEO until June 6, at which time Jurecki took over the role, according to a company press release. Fuller remains COO of the Dearborn, Mich.-based company.

Jurecki was at the helm of Farmington, Mich.-based RouteOne since the company was founded in March 2002 by Ford Motor Credit, TD Auto Finance, Toyota Financial Services, and Ally Financial. RouteOne’s Chief Information Officer Justin Oesterle was promoted to the CEO position in June as Jurecki’s replacement.

Prior his tenure at RouteOne, Jurecki spent more than 20 years at Ford Credit in various senior leadership positions, including director of operations of its capital efficiency unit, general manager of Ford Credit’s United Kingdom customer service center, and as manager of worldwide trade financing.



nExtGEAr cAPitAl crEAtEs nEw vP Position

Ne x t G e a r C a p i t a l appointed Joe Carusella

to national vice president of Canada operations in April. The role was created due to the Canadian market’s “rapid growth” based on volume business and its need to serve increasing client needs in that region, Carusella told AFN.

Carusella’s primary focus in his new role will be to offer client solutions and diversity into other related industries. He brings more than 21 years of experience in the auto industry, including his most recent position as senior

director at Desjardins Credit Union. Carusella was also branch manager at Automotive Finance Canada.

NextGear Capital, a Cox Automotive brand, provides inventory financing to more than 23,000 auto dealers globally. The floorplan financier has more than $4 billion in U.S. receivables outstanding.

GE cAPitAl vEtErAn to lEAd wElls FArGo commErciAl unit in cAnAdA

Wells Fargo & Co . named GE Capital

veteran Tim Nixon as leader of its Commercial Distribution Finance Canada division — effective May 18 — following the acquisition of GE Capital’s businesses earlier this year.

N ixon w i l l manage a 180-member team at CDF, which provides floorplan f inanc ing to more than 4,000 dealers across Canada, according to a company press release.

Nixon brings 20 years of industry experience at GE,

where he served in various senior leadership roles within operations and sales. Most recently, he served as senior operations leader for Canada, where he implemented several customer experience improvement projects.

CDF’s Canadian division serves 20 specialized industries, including motorsports and recreational vehicles. Wells Fargo completed the purchase of GE Capital’s global CDF, North American vendor finance, and portions of its corporate finance platforms in March. The sale, expected to close later this year, includes a $24 billion loan portfolio.

—N.M., L.P.

ExEtEr hirEs dEcision sciEncE stAtisticiAn

Exeter Finance Corp. a d d e d K a r t h i k

Chandrasekhar to its team in March as vice president and decision science statistician.

I n h i s n e w p o s i t i o n , Chandrasekhar is in charge of the creation and maintenance of all predictive models at Exeter, from loan acquisition to loan servicing. Chandrasekhar’s

top priority is to enhance the existing models at Exeter to “leverage recent business changes,” he said, and to identify key areas where predictive modeling can play a beneficial role at the company and execute models that address those needs.

Exeter Finance rolled out a new origination platform in January 2015, which has enabled the subprime lender to offer quicker loan decisions. The shift followed an overhaul of Exeter’s corporate structure to a centralized model — from the branch network upon which the company was founded back in 2006. Exeter now operates from locations in Clearfield, Utah, and Irving, Texas.

Prior to joining Exeter, Chandrasekhar served nearly two years as senior quantitative analyst at Ally Financial Inc., more than 10 years as director of statistical analysis at Santander Consumer USA Inc., and one year as risk modeler of decision science at JPMorgan Chase.

onEmAin holdinGs PromotEs EvP to coo

OneMain Ho ld ings Inc. promoted Robert

Hurzeler to chief operating officer in June. Hurzeler has served as the company’s executive vice president of auto lending since January 2014 — a role he will retain, according to the company’s website.

Prior to joining OneMain, Hurze le r was COO for Global Lending Services, an automotive subprime lender. He also served more than 25 years with Wells Fargo & Co., including his most recent position as head of Wells Fargo Auto Finance.

Evansville, Ind.-based OneMain Holdings, formerly known as Springleaf Holdings Inc., provides consumer finance and insurance products — including loans for purchasing new vehicles and to pay off existing auto loans. The company provided services at 1,800 branches in 43 states as of April.

Who/WhatsPotliGht: scotiAbAnk EyEs tEchnoloGy to sPEEd FundinG

John Hiscock, a 27-year auto finance veteran, replaced Joe Oviatt as vice president of Scotia Dealer Advantage — a wholly owned subsidiary of

Scotiabank — effective June 1. Oviatt retired from the position after 40 years with the company. In his new role, Hiscock will execute the Canadian nonprime auto lender’s strategic course, enhance the customer experience for dealers and consumers, and work closely with partner OEMs “to support their sales and marketing programs throughout the Canadian dealer network,” Hiscock told Auto Finance News.

Hiscock first joined Scotiabank’s auto finance unit seven years ago, where he worked in various leadership positions. Prior to Scotiabank, he served more than 20 years as dealer credit and risk manager for Ford Credit Canada.

Hiscock spoke with AFN about his new role, top priorities, and how the bank stays on top of trends in the fintech space.

Following are edited excerpts from the interview:

AFN: What are your top three priorities for the remainder of this year?

JH: My first goal is to continue to enhance the customer experience. Second, we are looking at ways that technology can enable us to provide an efficient credit application and funding process. Our dealers tell us that the two qualities that they most value in a lending partner are consistent decisioning and fast funding. Third, we are working to develop industry-leading talent at all levels in our organization.

AFN: What ways are you looking for technology to help in the credit application and funding process? For instance, have you enabled automated underwriting yet?

JH: Due to the nature of the nonprime market, we do not use any form of automatic approval. Our lenders review every deal as well as provide advice to our dealers on deal structure and ensure they have everything complete to maximize the customer experience. We do see opportunity for technology to enable both our lenders [underwriters] and funders to speed up the process by consolidating key decision-making information and funding requirements in a manner that allows them to minimize as many touch-points as possible.

AFN: How does Scotiabank monitor fintech trends?

JH: We continually monitor the landscape both from a competitive perspective and from a technology perspective. We know that customers want the ease of use and self-service that technology can enable, however, they also want the safety and security of knowing the strength of the loan underwriter. We are working to be a digital leader by staying close to what is happening in fintech in our business, but we are also keeping our eye on what it takes to provide the best customer experience.

—N.M.


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0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16

Auto Loan Delinquency Rates

Total201599.7

0102030405060708090

100

2,2002,2502,3002,3502,4002,4502,5002,5502,6002,6502,700

Jan. 14 May. 14 Oct. 14 Mar. 15 Aug. 15 April 16

industry monitorCapitalFIXED RATE OUTSTANDINGS AT BANKS

*in $billions as of 06/07/16

*in $billions as of 06/24/16

Source: Federal Reserve Board

Source: JPMorgan Securities

YTD 2015

59.4 52.5

YTD 2016

AUTO ABS VOLUME

0

Auto Loan Delinquency Rates

Delinquency Rates Rise 13% YoY

Sixty-day auto loan delinquency rates continue to climb on a yearly basis. The rates rose to 1.12% in 1Q, a 13.1% increase from 0.99% at the same time a year prior, but down from 1.24% last quarter, TransUnion reports.

Source: TransUnion

Rates are for 60-month loans for new and one-year-old used autos. Borrowers with A+ credit have combined credit reporting bureaus exceeding 720; A if their scores fall between 680 and 719; B, 650 and 679; and C, 625 and 649. For more information, contact Informa Research Services at 800-848-0218.

Source: Informa Research Services

Securizations

Automobile Loan RatesNEW/ A+ A+ A A B B C C Nat’l Avg. Nat’l Avg. YoY ChangeCURRENT YEAR 6/24/2016 6/26/2015 6/24/2016 6/26/2015 6/24/2016 6/26/2015 6/24/2016 6/26/2015 6/24/2016 6/26/2015 (in bps)Northeast 2.47 2.40 2.69 2.63 3.09 2.97 4.08 3.80 3.08 2.95 0.13Southeast 2.84 2.55 3.21 2.89 4.19 3.84 5.16 4.78 3.85 3.52 0.33Central Midwest 2.71 2.44 3.09 2.77 3.86 3.70 5.09 4.62 3.69 3.38 0.31Texas & Southwest 2.61 2.53 3.11 2.86 3.98 3.68 5.27 4.77 3.74 3.46 0.28Western 2.62 2.52 3.10 2.95 4.18 3.82 5.66 4.70 3.89 3.50 0.39Northwest 2.67 2.56 2.92 2.84 4.00 3.74 5.42 4.96 3.75 3.53 0.23Tier Avg Rate 2.65 2.50 3.02 2.82 3.88 3.62 5.11 4.61 3.67 3.39 0.28

USED/ A+ A+ A A B B C C Nat’l Avg. Nat’l Avg. YoY Change1-YEAR-OLD 6/24/2016 6/26/2015 6/24/2016 6/26/2015 6/24/2016 6/26/2015 6/24/2016 6/26/2015 6/24/2016 6/26/2015 (in bps)Northeast 2.47 2.45 2.70 2.67 3.10 3.01 4.08 3.85 3.09 2.99 0.10Southeast 2.88 2.59 3.27 3.00 4.35 4.02 5.47 5.16 3.99 3.69 0.30Central Midwest 2.84 2.56 3.19 3.00 4.07 4.05 5.26 5.16 3.84 3.69 0.15Texas & Southwest 2.68 2.55 3.17 2.95 4.18 3.87 5.56 5.00 3.90 3.59 0.30Western 2.62 2.53 3.10 2.96 4.31 3.98 5.84 4.94 3.97 3.60 0.37Northwest 2.68 2.58 2.96 2.91 4.20 3.91 5.53 5.08 3.84 3.62 0.22Tier Avg Rate 2.70 2.54 3.07 2.91 4.04 3.81 5.29 4.87 3.77 3.53 0.24

Date Seller/Servicer Lead Manager Amount ($M) Asset Class6/22 Sierra Auto Finance Wells Fargo/JPMorgan $135.00 Nonprime

6/21 Ford Motor Credit Co. Bank of America/Citibank $1,351.35 Prime

6/17 Foresight Capital LLC JPMorgan $198.62 Nonprime

6/8 California Republic Bank Credit Suisse/JPMorgan $400.00 Prime

6/8 DriveTime Citibank/Deutsche Bank $435.00 Nonprime

6/7 Westlake Financial Services Wells Fargo/Credit Suisse/BMO $550.00 Nonprime


Rank Financier 04/16 All Loans New Loans Used Loans All Leases New Leases Used Leases 03/16 MoM %Ch. 04/15 YoY %Ch.

CALIFORNIA1 Toyota Financial Services 24,137 12,659 8,649 4,010 11,478 11,025 453 27,567 -12.4 25,829 -6.63 Wells Fargo Dealer Services 18,656 15,272 3,856 11,416 3,384 3,261 123 24,241 -23.0 17,991 3.72 American Honda Finance 13,977 5,781 4,937 844 8,196 8,093 103 15,629 -10.6 13,635 2.54 Chase Auto Finance 13,818 10,855 6,542 4,313 2,963 2,946 17 18,756 -26.3 11,793 17.25 Capital One Auto Finance 10,365 10,358 4,312 6,046 7 7 0 11,202 -7.5 8,800 17.86 Ally Financial Inc. 8,667 8,169 3,635 4,534 498 493 5 10,541 -17.8 9,165 -5.47 Ford Motot Credit 8,274 4,419 3,768 651 3,855 3,829 26 10,259 -19.3 8,546 -3.28 Nissan Infiniti Fin'l Services 7,983 4,998 4,033 965 2,985 2,953 32 9,662 -17.4 9,483 -15.8

9 BMW Bank NA 7,526 2,968 1,314 1,654 4,558 3,997 561 8,171 -7.9 8,244 -8.7

10 VW Credit Inc. 5,901 1,700 811 889 4,201 4,178 23 6,880 -14.2 5,786 2.0TOTAL CALIFORNIA 233,064 177,254 70,731 106,523 55,810 53,655 2,155 278,952 -16.5 229,701 1.5

MICHIGAN1 Ford Motor Credit 10,011 1,845 1,532 313 8,166 8,126 40 12,193 -17.9 10,184 -1.72 Wells Fargo Dealer Services 11,218 1,453 169 1,284 9,765 9,651 114 13,429 -16.5 9,230 21.53 Ally Financial Inc. 4,708 2,660 801 1,859 2,048 2,042 6 4,985 -5.6 4,938 -4.74 Chrysler Capital 4,650 708 595 113 3,942 3,938 4 6,267 -25.8 3,160 47.25 Credit Acceptance Corp. 2,368 2,368 6 2,362 0 0 0 4,222 -43.9 2,303 2.86 American Honda Finance 974 316 262 54 658 656 2 1,159 -16.0 1,130 -13.87 Chase Auto Finance 1,542 1,178 747 431 364 356 8 1,947 -20.8 1,539 0.28 Capital One Auto Finance 1,408 1,408 464 944 0 0 0 1,674 -15.9 1,429 -1.59 Huntington National Bank 1,378 1,376 472 904 2 0 2 1,521 -9.4 1,429 -3.6

10 Toyota Financial Services 1,261 516 333 183 745 681 64 1,357 -7.1 1,271 -0.8TOTAL MICHIGAN 71,738 41,763 11,202 30,561 29,975 28,800 1,175 88,252 -18.7 71,406 0.5

NEW YORK1 Toyota Financial Services 9,505 3,443 1,982 1,461 6,062 5,404 658 8,359 13.7 11,495 -17.32 American Honda Finance 8,627 2,637 1,804 833 5,990 5,985 5 8,445 2.2 10,009 -13.83 Nissan Infiniti Fin'l Services 7,669 1,636 1,173 463 6,033 6,013 20 6,669 15.0 9,084 -15.64 Chase Auto Finance 6,822 4,692 2,481 2,211 2,130 2,112 18 6,834 -0.2 7,519 -9.35 Wells Fargo Dealer Services 10,644 4,610 919 3,691 6,034 6,018 16 11,269 -5.5 9,312 14.36 Ford Motor Credit 5,492 1,400 1,093 307 4,092 4,064 28 4,796 14.5 6,532 -15.97 Ally Financial Inc. 4,196 3,260 815 2,445 936 931 5 3,705 13.3 5,646 -25.78 Hyundai Capital America 3,820 607 427 180 3,213 3,207 6 3,314 15.3 4,226 -9.69 Chrysler Capital 3,957 912 651 261 3,045 3,042 3 4,012 -1.4 3,546 11.6

10 BMW Bank NA 2,951 804 320 484 2,147 1,824 323 2,611 13.0 3,652 -19.2TOTAL NEW YORK 115,009 69,105 23,179 45,926 45,904 44,614 1,290 106,483 8.0 133,215 -13.7

TEXAS1 Ally Financial Inc. 12,105 11,929 5,210 6,719 176 161 15 14,367 -15.7 14,021 -13.72 Toyota Financial Services 11,302 8,192 5,494 2,698 3,110 3,055 55 14,320 -21.1 11,742 -3.73 Capital One Auto Finance 10,939 10,939 3,735 7,204 0 0 0 12,431 -12.0 9,481 15.44 Wells Fargo Dealer Services 10,152 8,427 1,960 6,467 1,725 1,647 78 14,797 -31.4 8,875 14.45 Chase Auto Finance 8,164 7,456 4,253 3,203 708 694 14 12,501 -34.7 6,720 21.56 Ford Motor Credit 7,070 6,094 5,321 773 976 951 25 7,580 -6.7 10,110 -30.17 Nissan Infinity Fin'l Services 6,564 5,180 4,268 912 1,384 1,373 11 8,252 -20.5 8,134 -19.38 Suntrust Bank 6,271 6,271 1,081 5,190 0 0 0 9,638 -34.9 8,660 -27.69 Bank of America 5,362 5,275 2,817 2,458 87 87 0 6,621 -19.0 5,472 -2.0

10 American Honda Finance 4,666 3,207 2,749 458 1,459 1,455 4 5,592 -16.6 4,578 1.9TOTAL TEXAS 220,327 206,253 71,410 134,843 14,074 13,536 538 294,133 -25.1 232,512 -5.2

VIRGINIA1 Toyota Financial Services 2,696 1,893 1,434 459 803 766 37 3,024 -10.8 2,636 2.32 Wells Fargo Dealer Services 2,864 2,618 656 1,962 246 237 9 3,630 -21.1 2,748 4.23 Chase Auto Finance 2,263 2,039 1,368 671 224 224 0 3,371 -32.9 1,968 15.04 Capital One Auto Finance 2,064 2,063 865 1,198 1 0 1 2,433 -15.2 2,141 -3.65 Navy FCU 2,026 2,024 586 1,438 2 2 0 2,466 -17.8 2,291 -11.66 American Honda Finance 1,736 1,303 1,174 129 433 433 0 2,023 -14.2 1,632 6.47 Nissan Infiniti Fin'l Services 1,709 1,213 1,086 127 496 495 1 1,953 -12.5 1,437 18.98 Ally Financial Inc. 1,446 1,383 566 817 63 61 2 1,797 -19.5 1,594 -9.39 Ford Motor Credit 1,356 1,135 1,018 117 221 219 2 1,698 -20.1 1,632 -16.9

10 Suntrust Bank 1,292 1,292 595 697 - - - 1,436 -10.0 663 94.9TOTAL VIRGINIA 50,346 46,312 16,659 29,653 4,034 3,758 276 64,353 -21.8 49,380 2.0

The following are the largest financiers, by number of auto liens created through car dealerships, in five emblematic states chosen for their size and location: California, Michigan, New York, Texas, and Virginia, as of April 30. Only after car sale registrations are processed through state departments of motor vehicles are these liens tabulated. Invariably, registration processing fluctuates.

Source: AutoCount, a unit of Experian Automotive (www.autocount.com)

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Auto Finance News: July 2016

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