1 © Experian
State of the AutomotiveFinance Market
Presented by: Melinda ZabritskiQ2 2019
2 © Experian
Market Overview
• Outstanding balances
• Total risk distributions
• Delinquency
Originations
• New and Used financing
• Lender and transaction types
• Loan & lease characteristics
Session overview
Experian Public State of the Automotive Finance Market Q2 2019
3 © Experian
A review of all open automotive loans & leases
Overall Automotive Finance Market
Experian Public State of the Automotive Finance Market Q2 2019
4 © Experian
$1,100
$1,149
$1,197
$1,040
$1,060
$1,080
$1,100
$1,120
$1,140
$1,160
$1,180
$1,200
$1,220
2017 Q2 2018 Q2 2019 Q2
Bill
ion
s
Total open automotive loan balance
Loan balances reach another record high
Source: Experian-Oliver Wyman Market Intelligence Reports
$365.7 $367.0 $371.0
$252.5 $259.8 $261.1
$295.2 $329.4 $351.8
$186.7$192.4 $212.9
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2017 Q2 2018 Q2 2019 Q2
Bill
ion
s
Total open automotive loan balance
Banks Captive Credit Union Finance
Experian Public State of the Automotive Finance Market Q2 2019
7.13%
4.42%
4.20%
5 © Experian
3.71% 3.32% 3.50%
15.97% 15.49% 15.44%
18.73% 18.53% 18.26%
41.97% 42.66% 42.62%
19.62% 20.01% 20.18%
2017 Q2 2018 Q2 2019 Q2
Loan balance risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Loan balance distribution stable: percentage of all subprime balances remains under 19%
9.90%
3.92%2.67%
4.10%5.09%
Deepsubprime
Subprime Nonprime Prime Super prime
Year-over-year balance change
Experian Public State of the Automotive Finance Market Q2 2019
6 © Experian
1.88% 2.15%1.19%
3.67%
2.12%1.84% 2.07%1.14%
3.85%
2.11%
0.0%
2.0%
4.0%
6.0%
Bank Captive Credit Union Finance Total
% of loans & leases 30 dpd2018 Q2 2019 Q2
30 day delinquency decreases for most lenders
Source: Experian-Oliver Wyman Market Intelligence Reports
1.75%2.63%
1.03%
4.18%
2.15%1.69%
2.45%
0.98%
4.39%
2.13%
0.0%
2.0%
4.0%
6.0%
Bank Captive Credit Union Finance Total
% of loan balances 30 dpd2018 Q2 2019 Q2
Experian Public State of the Automotive Finance Market Q2 2019
7 © Experian
Percentage of loan balances 30 dpd
Experian Public State of the Automotive Finance Market Q2 2019
AK = 1.61%
HI = 1.74%
8 © Experian
0.64%0.52%
0.26%
1.32%
0.64%0.64%0.50%
0.25%
1.40%
0.65%
0.0%
0.5%
1.0%
1.5%
Banks Captive Credit Union Finance Total
% of loans & leases 60 dpd2018 Q2 2019 Q2
60 day delinquency remains flat
Source: Experian-Oliver Wyman Market Intelligence Reports
0.58% 0.60%
0.21%
1.49%
0.63%0.59% 0.58%
0.20%
1.58%
0.65%
0.0%
0.5%
1.0%
1.5%
2.0%
Bank Captive Credit Union Finance Total
% of loan balances 60 dpd2018 Q2 2019 Q2
Experian Public State of the Automotive Finance Market Q2 2019
9 © Experian
Percentage of loan balances 60 dpd
Experian Public State of the Automotive Finance Market Q2 2019
AK = 0.38%
HI = 0.53%
10 © Experian
Trends in automotive loan and lease originations
Originations in Q2 2019
Experian Public State of the Automotive Finance Market Q2 2019
11 © Experian
86.1% 85.9%
54.7% 55.9%
Q2 2018 Q2 2019
Percentage of vehicles with financing
New Used
Automotive financing1: snapshot of how and what consumers are financing
30.41% 30.04%
Q2 2018 Q2 2019
% of all2 new vehicles that are leased
44.84% 42.68%
55.16% 57.29%
Q2 2018 Q2 2019
Finance Market: new v used units
New Used
3.55% 4.14%
Q2 2018 Q2 2019
Used % of lease market
Experian Public State of the Automotive Finance Market Q2 2019
1 Financing = either a loan or lease is present on the title; 2 All = loan, lease or cash
12 © Experian
30
.2%
6.8
%
29
.5%
22
.1%
11.4
%
32
.7%
6.7
%
28
.6%
19
.8%
12
.2%
Bank BHPH Captive CreditUnion
Finance Co
Market Share of Total Financing(new/used units & loan/lease)
Q2 2018 Q2 2019
Banks and finance companies show increases in share(loan and lease units combined)
26
.1%
0.1
%
54
.2%
14
.3%
5.2
%
28
.0%
0.1
%
54
.8%
11.8
%
5.2
%
Bank BHPH Captive Credit Union Finance Co
Market Share of New Financing
Q2 2018 Q2 2019
33
.7%
12
.6%
8.3
%
28
.8%
16
.7%
36
.4%
11.9
%
8.1
%
26
.1%
17
.6%
Bank BHPH Captive Credit Union Finance Co
Market Share of Used Financing
Q2 2018 Q2 2019
Experian Public State of the Automotive Finance Market Q2 2019
13 © Experian
Score range refresh
Note: ranges above are those used by Experian Automotive for automotive finance market analysis and trending purposes. Other industries and lenders may use other ranges based on unique scores, portfolio and industry trends.
Experian Public State of the Automotive Finance Market Q2 2019
14 © Experian
Credit scores rise year-over-year
645 648 652 655 656
671 674 673680 680
603608 611
616 617
Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019
Average used credit scores
Franchise used
All used
Independent used
Experian Public State of the Automotive Finance Market Q2 2019
709708
711 711713
711710
714715
717716 716
722 722724
Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019
Average new credit scores
New lease
All new
New loan
15 © Experian
Total market remains stable with little YOY change; Q2 low for deep subprime in used financing
9.45% 9.00%16.88% 16.50%
44.60% 44.57%
28.35% 29.27%
Q2 2018 Q2 2019
New (loan/lease) risk distribution
5.02% 4.96%25.03% 24.71%
22.00% 21.77%
36.10% 36.14%
11.85% 12.43%
Q2 2018 Q2 2019
Used (loan/lease) risk distribution
Experian Public State of the Automotive Finance Market Q2 2019
3.09% 3.12%
18.02% 17.99%
19.70% 19.51%
39.92% 39.74%
19.27% 19.63%
Q2 2018 Q2 2019
Total (loan & lease/new & used units) risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Deep subprime
= 0.66%
(down 8.6%)
16 © Experian
3.54% 3.53%
20.10% 19.88%
20.44% 20.23%
38.41% 38.45%
17.51% 17.91%
Q2 2018 Q2 2019
Total (new & used units) loan risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Q2 record lows for both total subprime and used subprime
10.98% 10.28%17.46% 17.06%
42.67% 43.03%
28.02% 28.86%
Q2 2018 Q2 2019
New loan risk distribution
5.00% 4.93%25.05% 24.72%
22.05% 21.83%
36.09% 36.14%
11.80% 12.38%
Q2 2018 Q2 2019
Used loan risk distribution
Experian Public State of the Automotive Finance Market Q2 2019
Deep subprime
= 0.76%
(down 12%)
17 © Experian
91
.35
%
80
.76
%
69
.92
%
60
.88
%
43
.65
%
92
.74
%
82
.65
%
71
.72
%
62
.47
%
45
.95
%Deep
SubprimeSubprime Nonprime Prime Super
Prime
Percentage of consumers by risk tier choosing used loans
Q2 2018 Q2 2019
All time record highs of prime+ consumers choosing used vehicles
17.06% 17.15%
22.88% 22.67%
43.13% 42.82%
15.13% 15.52%
Q2 2018 Q2 2019
Used Franchise loan risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
9.76% 9.87%
36.99% 36.79%
21.09% 21.09%
25.65% 25.59%
6.51% 6.66%
Q2 2018 Q2 2019
Used Independent loan risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Experian Public State of the Automotive Finance Market Q2 2019
Deep subprime
= 1.82%
(up 1.6%)
18 © Experian
6.47% 6.41%
15.77% 15.35%
48.31% 47.69%
29.01% 30.10%
Q2 2018 Q2 2019
New lease risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Leasing shifts into more prime segments with a slight decreases YOY of consumers choosing to lease
23.1%
31.8%
36.1%
23.5%
30.7%
34.8%
Deep &Sub
Nonprime
Prime +
% of new borrowers choosing to lease
Q2 2019
Q2 2018
Experian Public State of the Automotive Finance Market Q2 2019
Deep subprime
= 0.45%
(up 3.2%)
19 © Experian
4.2%3.2%
2.7% 2.5% 2.4% 2.2% 2.2% 2.0% 1.7% 1.7%
CIVIC EQUINOX RAV4 CR-V 1500 ACCORD GRANDCHEROKEE
ROGUE F150 TIGUAN
Top 10 new leased models by market share
CUVs comprise the majority of the top leased models with average lease difference of $92
Experian Public State of the Automotive Finance Market Q2 2019
$425 $453 $486 $484
$657
$485$606
$485
$667
$474
$304 $321 $383 $368$468
$376$490
$355$478
$391
CIVIC EQUINOX RAV4 CR-V 1500 ACCORD GRANDCHEROKEE
ROGUE F150 TIGUAN
Loan v lease monthly payment comparison on top leased modelsLoan payment Lease payment
20 © Experian
$458 $454$440 $429 $425 $431
$486 $480$466 $457 $450 $458
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average new lease paymentQ2 2018 Q2 2019
Leasing payments also rise while terms remain at 36 months
Experian Public State of the Automotive Finance Market Q2 2019
37.00 37.12 36.91 36.29
35.42 36.19
37.23 37.46 37.4036.96
35.98
36.76
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average new lease term
21 © Experian
Average new loan amount remain over $32k and used reaches record high across all Dealer types
$1,346$1,491 $1,538
$1,341
$504
$1,161
$641 $578 $478 $403 $385 $448$518 $483 $412 $414 $404 $404$673 $576 $474 $366
$197$432
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change in balance
$2
6,7
14
$2
9,7
95
$3
3,7
10
$3
4,0
47
$2
9,1
42
$3
2,1
19
$1
5,7
70
$1
7,2
17
$1
9,9
26
$2
1,7
72
$2
1,2
01
$2
0,1
56
$1
7,4
92
$19,2
14
$2
1,7
79
$2
3,1
13
$2
2,1
51
$2
1,9
22
$1
4,8
77
$1
5,5
45
$1
7,4
27
$1
9,5
05
$1
9,4
54
$1
7,5
85
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average loan amount by tier Avg New All Used Franchise used Independent used
Experian Public State of the Automotive Finance Market Q2 2019
22 © Experian
Terms rise across all loan and risk types to reach record highs
72.34 72.90 73.21 70.4763.17
69.1760.45 62.87 65.79 66.35 62.44 64.8266.06 67.47 68.49 67.63 63.11 67.10
57.33 58.84 61.88 64.00 61.34 61.39
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average loan term by tier New All Used Franchise used Independent used
0.28 0.31 0.400.59
0.38 0.37
1.36
0.94
0.490.33 0.27
0.480.44 0.35 0.31 0.25 0.20 0.25
2.00
1.50
0.80 0.59
0.34
0.92
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change in used loan term
Experian Public State of the Automotive Finance Market Q2 2019
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19.4%
40.2%32.0%
1.2%
19.7%
40.5%31.2%
1.3%
49 - 60 61 - 72 73 - 84 85 - 96
Percentage of new loans by term
Q2 2018 Q2 2019
Longer term loans continue to dominate the market
9.9%
22.9%
41.9%
18.8%9.4%
22.4%
43.7%
18.6%
37 - 48 49 - 60 61 - 72 73 - 84
Percentage of used loans by term
Q2 2018 Q2 2019
757
699 680702
758
701 683 703
49 - 60 61 - 72 73 - 84 85 - 96
Average new score by loan term
Q2 2018 Q2 2019
656686
662 672659688
660 674
37 - 48 49 - 60 61 - 72 73 - 84
Average used score by loan term
Q2 2018 Q2 2019
Experian Public State of the Automotive Finance Market Q2 2019
24 © Experian
$546 $567 $575 $559 $516 $550$411 $408 $394 $384 $383 $392$422 $424 $414 $401 $397 $408$410 $400 $375 $358 $355 $377
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average monthly payment by risk tier New All used Franchise used Independent used
Payments continue to increase with used reaching record highs
$23$27
$32$29
$17
$25
$16 $16 $15$12 $11 $14
$18 $16 $15 $13 $12 $14$14 $14 $14$10
$7$12
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change in payments
Experian Public State of the Automotive Finance Market Q2 2019
25 © Experian
New rates remain over 6% and continue to increase across all risk segments
14
.70
%
12
.20
% 8.1
2%
5.1
7%
4.2
3%
6.2
7%
20
.09
%
17
.36
% 11
.38
%
6.5
4%
4.7
7% 10
.07
%
19
.28
%
16.2
1% 10
.65
%
6.3
4%
4.7
4%
8.9
7%
20
.76
%
18
.75
% 13
.08
%
7.2
2%
4.8
8%
12
.55
%
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average loan rates by tier Avg New All Used Franchise used Independent used
-24
7
5772 76
5158 6376
59 58 6779 72 76
58 5669
4254
7059 58 67
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change (bps) in loan rate
Experian Public State of the Automotive Finance Market Q2 2019
26 © Experian
• Record highs continue with loan balances over $1.19 trillion
• Delinquency trends remain stable
• Banks increase market share in Q2
• Credit scores increase for new financing and growth seen across prime and super prime segments
• Q2 record highs seen in finance traits – especially used loan amounts and payments
• New loan terms reach record highs
• Leasing remains over 30% of the new market
Summary
Experian Public State of the Automotive Finance Market Q2 2019
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