Experian State of the Automotive Finance Market

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Experian Automotive: Gain insights into how the latest industry developments can impact your automotive lending business.

Experian Automotive: Gain insights into how the latest industry developments can impact your automotive lending business.

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  • 1. ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the Experian marks used herein are trademarks 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. Automotive Market Update Melinda Zabritski Senior Director | Experian Automotive
  • 2. 2©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Discussion points What’s on the road Market share and registrations Finance and delinquency Originations and payment trends
  • 3. 3©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Vehicles in Operation What’s on the road today?
  • 4. 4©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. What’s on the road today? Vehicles in operation 2013 246.1 million Vehicles in operation 2012 247 million Scrapped vehicles 16.2 million Carryover New vehicle sales 15.3 million Used vehicle sales 39.1 million VIO additions/deletions: 31.5 million (12.8%) (scrapped + new sales) VIO total changes: 70.6 million (28.7%) (used sales + scrappage + new sales) Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 5. 5©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. VIO by model year 0 2 4 6 8 10 12 14 16 2015 2013 2011 2009 2007 2005 2003 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 1979 1977 1975 1973 1971 1969 1967 Millions Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 6. 6©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. VIO by model year 0 2 4 6 8 10 12 14 16 2015 2013 2011 2009 2007 2005 2003 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 1979 1977 1975 1973 1971 1969 1967 Millions 98 million vehicles within “sweet spot” (MY2002 – 2008) Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 7. 7©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. VIO by model year 0 2 4 6 8 10 12 14 16 2015 2013 2011 2009 2007 2005 2003 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 1979 1977 1975 1973 1971 1969 1967 Millions Shrinking sweet spot in the coming year (-4.2 million to 93.8 million) plus estimated 1 million scrap Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 8. 8©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Average age of vehicles on the road today 9.5 9.6 9.9 10.2 10.4 10.4 6.9 7.1 7.3 7.4 7.5 7.4 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Average Age 15-Year Rolling Age Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 9. 9©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Vehicle registration and market share What metal is moving?
  • 10. 10©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Annual vehicle registrations 0 10 20 30 40 50 60 2009 2010 2011 2012 2013 Millions New Used 22% 25% 27%24% 28% 47.4 51.5 55.1 49.5 53.6 Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 11. 11©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Census regions West Region South Region Northeast Region Midwest Region
  • 12. 12©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Total (new and used) registrations by Census region 0 5 10 15 20 25 2009 2010 2011 2012 2013 Millions Midwest Region Northeast Region South Region West Region 4.4% Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 13. 13©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. New and used registrations by region (millions) 0 2 4 6 8 10 12 14 2009 2010 2011 2012 2013 Northeast region 0 5 10 15 20 25 2009 2010 2011 2012 2013 South region 0 2 4 6 8 10 12 14 2009 2010 2011 2012 2013 West region 0 2 4 6 8 10 12 14 2009 2010 2011 2012 2013 Midwest region 19.9% 21.1% 24.4% 25.1% New Used 23.1% 27.8% 29.3% 32.6% 33.4%30.8% 20.6% 21.8% 26.4% 28.0%23.2% 22.1% 24.2% 27.7% 28.8%25.6% Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 14. 14©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Top new registrations by segment 0 200 400 600 800 1000 1200 1400 1600 1800 2000 Thousands 2012 2013 30.6%30.0% 138,000 more Alt Power registrations in 2013 than prior year Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 15. 15©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Winners and losers by year-over-year registration change 0 100000 200000 300000 Pickup - Full Sized CUV - Entry Level SUV - Lower Mid Range Alt Power Small Car - Econ CUV - Premium CUV - Mid Range Mid Range Car - Std Upscale - Near Luxury Upscale - Luxury Winners -60000 -40000 -20000 0 Losers Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only) Sport Car – Ultra Luxury Small Car – Budget Upscale – Premium Traditional Car Van – Mini Sport Car – Touring Pickup – Small Mid Range Car – Premium SUV – Entry Level
  • 16. 16©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Top and bottom states for hybrid registrations (by share of state registrations) 0% 2% 4% 6% 8% 10% CA OR DC WA HI VA NC MD VT AZ Top-10 hybrid states 0% 1% 1% 2% 2% 3% MIMSMOSDOKWVWYLAAKND Bottom-10 hybrid states Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 17. 17©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Import vs. domestic new registrations 0 1 2 3 4 5 2009 2010 2011 2012 2013 Midwest region 0 1 2 3 4 5 2009 2010 2011 2012 2013 Northeast region 0 1 2 3 4 5 6 7 2009 2010 2011 2012 2013 South region 0 1 2 3 4 5 2009 2010 2011 2012 2013 West region ImportDomestic 60.5% 61.5% 62.7% 60.9% 62.0% 35.8% 36.2% 40.5% 38.5% 39.5% 37.1% 37.7% 39.9% 37.6% 38.4% 48.0% 48.8% 49.1% 47.6% 48.0% Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 18. 18©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Who is down (bps)?  Kia -42  VW -32  Hyundai -22  Toyota -14  GM -10 Manufacturer market share (Ranking based on 2013 share) GM 18.0% Ford 15.2% Toyota 14.5% Chrysler 11.3% Honda 9.9% Nissan 7.9% Hyundai 4.8% VW 4.0% Kia 3.9% Others 10.5% 2012 GM 17.9% Ford 15.6% Toyota 14.4% Chrysler 11.5% Honda 9.9% Nissan 8.1% Hyundai 4.6% VW 3.7% Kia 3.5% Others 10.8% 2013Who is up (bps)?  Ford 42  Others 38  Chrysler 20  Nissan 18  Honda 2 Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 19. 19©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Top-5 new regional manufacturer market share 0% 10% 20% 30% GM Ford Chrysler Toyota Honda Midwest Region 0% 10% 20% 30% Toyota GM Honda Ford Chrysler Northeast Region 0% 10% 20% 30% Toyota Ford GM Honda Chrysler Western Region 0% 10% 20% 30% GM Toyota Ford Chrysler Nissan South Region Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 20. 20©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Top-5 regional manufacturer market share gains (Basis points) 0 20 40 60 80 100 Ford Chrysler Subaru Honda Nissan Midwest Region 0 20 40 60 80 100 Subaru Chrysler Ford GM BMW Northeast Region 0 20 40 60 80 Subaru Ford Tesla Nissan Mazda West Region 0 20 40 60 80 100 Ford Subaru Nissan Chrysler Hyundai South Region Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
  • 21. 21©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Overall automotive finance market Balances and delinquency
  • 22. 22©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Total outstanding automotive loan balance $555 $571 $555 $507 $491 $516 $562 $621 $140 $143 $148 $147 $143 $142 $157 $178 $- $100 $200 $300 $400 $500 $600 $700 $800 $900 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Billions Rest of Market Credit Union Market Source: Experian-Oliver Wyman Market Intelligence Reports
  • 23. 23©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Delinquency rates on automotive loans 0.74% 0.94% 0.65% 0.65% 0.71% 0.48% 0.40% 0.52% 0.32% 0.15% 0.19% 0.10% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% Q4 2013Q4 2012Q4 2011Q4 2010Q4 2009Q4 2008Q4 2007Q4 2006 60-DPD Repo CU 60-DPD CU Repo Source: Experian-Oliver Wyman Market Intelligence Reports
  • 24. 24©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. New and used originations Loans, leases and characteristics
  • 25. 25©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Percentage of transactions with a lien holder 78.7% 75.0% 84.1% 51.2% 45.9% 52.8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 2006 2007 2008 2009 2010 2011 2012 2013 New Used Source: Experian Automotive
  • 26. 26©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Percentage of cash payment by used model year 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 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 <1990 Source: Experian Automotive
  • 27. 27©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. New lease market share 20.65% 23.66% 23.13% 24.79% 28.84% 16.8% 19.2% 19.0% 20.3% 24.2% 0% 5% 10% 15% 20% 25% 30% 35% Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Share of new financing Share of all new Source: Experian Automotive
  • 28. 28©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Market snapshot on vehicle loan financing 48.93% 48.90% 0% 20% 40% 60% 80% 100% Q4 2012 Q4 2013 Current +5 model year New 37.52%Used 62.48% Loans by vehicle type 54.7% 45.3% Used financing by dealer type Independent Franchise Source: Experian Automotive
  • 29. 29©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Used financing by model year 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 2014201320122011201020092008200720062005200420032002200120001999 Credit Union Bank Current +5MY is 65% of bank financing and nearly 50% of credit union loans Source: Experian Automotive
  • 30. 30©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. New loan market share by lender type 32.99% 45.84% 47.98% 46.69% 41.08% 49.60% 42.91% 36.16% 36.12% 41.26% 12.72% 9.68% 11.04% 12.54% 12.80% 4.39% 1.17% 4.68% 4.51% 4.68% 0% 20% 40% 60% 80% 100% Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Bank Captive Credit Union Finance Source: Experian Automotive
  • 31. 31©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Used loan market share by lender type 32.73% 31.99% 38.39% 37.84% 36.25% 14.94% 15.48% 13.97% 14.78% 13.61% 11.15% 8.67% 7.03% 6.26% 7.64% 25.25% 19.96% 21.10% 21.42% 22.37% 15.93% 23.91% 19.51% 19.70% 20.13% 0% 20% 40% 60% 80% 100% Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Bank BHPH Captive Credit Union Finance Source: Experian Automotive
  • 32. 32©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Shifts in average credit scores 727 715 731 710 637 646 688 680 600 620 640 660 680 700 720 740 760 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 New CU New Used CU Used Source: Experian Automotive
  • 33. 33©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Average scores by lender type 718 676 720 710 651 684 563 675 680 568 0 100 200 300 400 500 600 700 800 Bank Buy here / pay here Captive Credit union Finance New Used Source: Experian Automotive
  • 34. 34©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Score categories Score ranges Category VantageScore® 3.0 Super prime 740+ Prime 680–739 Nonprime 620–679 Subprime 550–619 Deep subprime <550
  • 35. 35©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Quarterly financing for new vehicles 2.22% 1.35% 1.34% 1.64% 2.03% 2.96% 11.36% 8.44% 9.70% 11.13% 12.07% 10.81% 17.76% 16.34% 17.71% 18.38% 18.71% 20.32% 18.78% 18.83% 18.82% 18.47% 18.54% 21.59% 49.88% 55.04% 52.43% 50.38% 48.65% 44.32% 0% 20% 40% 60% 80% 100% Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Deep subprime Subprime Nonprime Prime Super prime Source: Experian Automotive
  • 36. 36©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Quarterly financing for used vehicles 17.96% 15.99% 13.62% 13.89% 14.60% 17.63% 25.01% 22.31% 24.21% 26.57% 27.11% 21.94% 19.87% 20.08% 21.62% 22.16% 22.11% 23.23% 14.53% 15.56% 15.64% 14.69% 14.46% 17.71% 22.64% 26.05% 24.92% 22.69% 21.72% 19.49% 0% 20% 40% 60% 80% 100% Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Deep subprime Subprime Nonprime Prime Super prime Source: Experian Automotive
  • 37. 37©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Risk comparisons by lender type on new loans 2.02% 2.87% 1.82% 15.23%9.52% 10.36% 10.04% 29.14% 20.49% 19.01% 24.77% 18.78% 23.22% 19.94% 24.70% 13.09% 44.74% 47.82% 38.66% 23.77% 0% 20% 40% 60% 80% 100% Bank Captive Credit union Finance Deep Subprime Subprime Nonprime Prime Super Prime Source: Experian Automotive
  • 38. 38©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Risk comparisons by lender type on new loans 4.99% 51.75% 7.14% 4.95% 39.76% 16.59% 25.06% 19.89% 16.01% 40.18% 26.73% 12.09% 26.53% 30.03% 13.97% 23.67% 5.82% 20.31% 24.43% 3.93% 28.02% 5.27% 26.13% 24.58% 2.17% 0% 20% 40% 60% 80% 100% Bank Buy here / pay here Captive Credit Union Finance Deep Subprime Subprime Nonprime Prime Super Prime Source: Experian Automotive
  • 39. 39©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Rising prices and loan amounts on new vehicles $24,437 $24,655 $25,067 $25,503 $24,502 $24,860 $25,285 $26,135 $25,789 $26,419 $26,691 $27,430 $27,150 $27,270 $27,883 $29,609 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Avg MSRP Avg CU MSRP Amount Financed CU Amount Financed 108% / 113% 110% / 112% 110% / 113% 110% / 116% Source: Experian Automotive
  • 40. 40©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Rising prices and loan amounts used vehicles $13,968 $14,341 $14,339 $14,604 $12,676 $13,036 $13,245 $13,655 $16,992 $17,390 $17,629 $17,974 $15,837 $16,212 $16,716 $17,347 $ $4,000 $8,000 $12,000 $16,000 $20,000 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Avg Trade-In Avg CU MSRP Amount Financed CU Amount Financed 130% / 132% 130% / 132% 133% / 134% 134% / 136% Source: Experian Automotive
  • 41. 41©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Average payments $464 $468 $460 $471 $466 $457 $457 $473 $347 $349 $348 $352 $310 $310 $312 $316 $ $100 $200 $300 $400 $500 Q4 2010 Q4 2011 Q4 2012 Q4 2013 New payment CU new payment Used payment CU used payment Source: Experian Automotive
  • 42. 42©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Average terms 63 63 65 65 66 66 67 69 58 60 60 61 58 59 59 61 52 54 56 58 60 62 64 66 68 70 Q4 2010 Q4 2011 Q4 2012 Q4 2013 New term CU new term Used term CU used term Source: Experian Automotive
  • 43. 43©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Distribution of loan term 4.7% 4.4% 28.5% 20.4% 41.2% 34.5% 20.1% 35.8% 0% 20% 40% 60% 80% 100% New loans CU new loans New financing by term 37-48 49-60 61-72 73-84 12.7% 13.1% 26.5% 30.1% 39.0% 32.2% 12.5% 13.8% 0% 20% 40% 60% 80% 100% Used loans CU used loans Used financing by term 37-48 49-60 61-72 73-84 Source: Experian Automotive
  • 44. 44©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Average rates 4.84% 4.52% 4.36% 4.37%5.10% 4.17% 3.86% 3.79% 8.71% 8.67% 8.48% 8.71% 6.75% 6.23% 5.84% 5.68% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% Q4 2010 Q4 2011 Q4 2012 Q4 2013 New rate CU new rate Used rate CU used rate Source: Experian Automotive
  • 45. 45©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Overall automotive market decreased slightly (0.4%) with near-term shrinking of “sweet spot” older model year vehicles  Total registrations have increased nearly 3% YOY with new vehicles gaining an increase share of total registrations  Overall, open portfolios continuing to experience growth  Steady delinquency behavior  Financing for consumers continues to expand as consumers rely upon the lending market for vehicle purchase with strong growth in leasing  Loan amounts and payments inching up with slight increases in rates In summary
  • 46. 46©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.