Captives % of New vs. Used Auto Loans by Count Q1 2019 to ...

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Automotive Finance

Market Trends and Insights

APRIL 2021Trans Union LLC Confidential Information

© 2021 TransUnion LLC All Rights Reserved | 1

Presented by: Satyan Merchant


Meet Satyan Merchant

Global information and insights

company maintaining

confidential information on over

1 billion consumers (over 230

million US consumers).

Providing an accurate and

comprehensive view of people to

help resolve identity and enable

addressable consumer

experiences.

People-based technology to help

media companies deploy data

and audiences rooted in identity.

Satyan Merchant leads the

automotive finance business and

oversees the formation and

execution of TransUnion’s auto

market strategy and development

plan.

Satyan has been with TransUnion

for five years, previously leading the

strategy and product development

function for the mortgage line of

business.

He brings over 20 years of business

strategy, planning and technology

experience to TransUnion from

Lenovo, McKinsey & Company,

Akamai and Accenture.

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The State of Auto Finance

A look at recent trends in auto lending


Source: TransUnion US consumer credit database

Volume increases are heavily skewed toward mortgage, but

all lines are showing recovery


VantageScore® 4.0 risk ranges

Subprime = 300–600; Near prime = 601–660; Prime = 661–720; Prime plus = 721–780; Super prime = 781-850 Source: TransUnion consumer credit database

U.S. New Vehicle Sales Actuals and Forecast per IHS Markit

The new vehicle sales forecast reflects an improving outlook

on near-term COVID recovery

17.617.2 17.3

17.1

14.5

15.716.0

16.2 16.2 16.3

17.617.2 17.3

17.1

14.6

16.1 16.2 16.3 16.4 16.5

202320172016 20212018 2019 20222020 2024 2025

+11%

Mar 2020 Forecast Jan 2021 Forecast

Source: IHS Markit



Total auto balances and accounts continued to grow in Q1, but

at a slower rate


Source: TransUnion consumer credit databaseVantageScore® 3.0 risk ranges

Subprime = 300–600; Near prime = 601–660; Prime = 661–720; Prime plus = 721–780; Super prime = 781-850

Balance growth was seen across all risk tiers, with the

exception of subprime




Auto originations turned positive to start Q1 as all tiers

reflected positive growth, with the exception of subprime




Subprime auto inquiries underperformed beginning in July, suggesting

a disproportionate demand impact from the “K-shaped recovery”

AugJan JuneAprilFeb March May July Sept Oct

Super prime Prime plus SubprimeNear primePrime

Subprime inquiry volume

continued to decline and trended

below 2019 levels

YoY % Change in TransUnion Auto Inquiry Volume (2020 vs. 2019)

Subprime+ inquiry volume returning to

~2019 levels after a strong rebound in June

Note: (1) Analysis done with same-day deduped inquiry data (2) Taken from a sample of ~80% of total inquiry volume


APR decreased materially year-over-year, particularly for new

vehicles, helping to partially offset monthly payment increases

4.2 4.2

8.5 8.6

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

2018

-

Qtr1

2019

-

Qtr1

2020

-

Qtr1

2021

- Jan

2021

- Feb

2017

-

Qtr1

Used

New

Avg. Estimated APR (Loans) – Q1 2017 to Feb 2021

Source: TransUnion consumer credit database; IHS Markit Catalyst for Insight – Credit Module


Captive market share remains high, particularly in

new vehicle loans after increasing in Q2 2020

60%

20%

0%

40%

100%

80%

2020

- Qtr3

2020

- Qtr1

2020

- Qtr2

2019

- Qtr4

2020

- Qtr4

New Financing Used Financing

Market share, Auto Loans by Count – Q4 2019 to Q4 2020

+4.7%

(1.0%)

(3.1%)

(0.6%)

+1.6%

YoY %

(0.5%)

(1.7%)

+0.7%

Bank

Captive

Credit Union

Independent

40%

60%

20%

0%

100%

80%

2020

- Qtr2

2019

- Qtr4

2020

- Qtr3

2020

- Qtr4

2020

- Qtr1

YoY %



Aggressive APR reductions among Captives during Q2 helped

to drive share gains

Auto Loan APRs – 2020New Financing Used Financing

2%

1%

3%

10%

4%

5%

11%

12%

2020

- Qtr1

2020

- Qtr2

2019

- Qtr4

2020

- Qtr3

2020

- Qtr4

CREDIT UNION

BANK

CAPTIVE

INDEPENDENT

4%

6%

19%

18%

7%

5%

17%

2019

- Qtr4

2020

- Qtr1

2020

- Qtr2

2020

- Qtr3

2020

- Qtr4

BANK

CAPTIVE

CREDIT UNION

INDEPENDENT



In early 2021, the average amount financed continued to grow

for both new and used, with used materially outpacing new

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

2017

- Qtr1

2019

- Qtr1

2018

- Qtr1

2020

- Qtr1

2021

- Jan

2021

- Feb

YoY Change in Avg. Amount Financed (Loans) – Q1 2017 to Feb 2021

New

Used



Monthly payments grew in January and February 2021, but

less than the growth of average amount financed

0%

1%

2%

3%

4%

5%

6%

7%

2017

- Qtr1

2018

- Qtr1

2019

- Qtr1

2020

- Qtr1

2021

- Jan

2021

- Feb

New

Used

YoY Change in Avg. Monthly Payment (Loans) – Q1 2017 to Feb 2021



Term remained mostly unchanged for both new and used after

growing YoY for the past few quarters

70

71

70 70 70 70

6465 65

65 65 65

62

64

66

68

70

72

2019

-

Qtr1

2017

-

Qtr1

2018

-

Qtr1

2020

-

Qtr1

2021

- Jan

2021

- Feb

-0.2%

+1.6%

New

Used

Avg. Term Length (Loans) – Q1 2017 to Feb 2021



Six out of eight quarters of

YoY growth

-2.7%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Q4

2016

Q4

2020

Q4

2017

Q4

2018

Q4

2019

-11.9%

-1.8%

Total Auto originations were resilient, declining 2.7% year-over-

year in Q4 2020Y

oY

chan

ge (

%)

Note: Originations are viewed one quarter in arrears to account for reporting lag Source: TransUnion consumer credit database

YoY change in originations (auto only) — Q4 2016 to Q4 2020

Pandemic

decline and

partial recovery


-3.8%

-30

-20

-10

0

10Q

2 2

019

Q4 2

018

Q1 2

019

Q4 2

019

Q3 2

019

Q2 2

020

Q1 2

020

Q3 2

020

Q4 2

020

-30

-20

-10

0

10

Q1 2

019

Q4 2

018

Q2 2

019

Q3 2

019

Q4 2

019

Q1 2

020

Q2 2

020

Q3 2

020

Q4 2

020

-25.4%

4.4%

-30

-20

-10

0

10

Q1 2

020

Q4 2

018

Q1 2

019

Q2 2

019

Q3 2

019

Q4 2

019

Q2 2

020

Q3 2

020

Q4 2

020

4.2%

-30

-20

-10

0

10

Q3 2

020

Q4 2

019

Q3 2

019

Q4 2

018

Q1 2

019

Q2 2

019

Q1 2

020

Q2 2

020

Q4 2

020

-1.2%

-30

-20

-10

0

10

Q3 2

019

Q4 2

018

Q1 2

019

Q3 2

020

Q2 2

019

Q4 2

019

Q1 2

020

Q2 2

020

Q4 2

020

VantageScore® 3.0 risk ranges, calculated at origination

Subprime = 300–600, near prime = 601–660, prime = 661–720, prime plus = 721–780, super prime = 781+

Note: Originations are viewed one quarter in arrears to account for reporting lag Source: TransUnion consumer credit database

Subprime Near prime Prime Prime plus Super prime

YoY change, % YoY change, % YoY change, % YoY change, % YoY change, %

YoY change in originations (count) — Q4 2018 to Q4 2020

Prime and Prime plus originations continued to grow YoY in Q4,

while Super prime was ~ flat


The proportion of financed vehicles that are used fell for the

first time in the past few years in Jan – Feb

43% 43%41% 41%

43%44%

57% 57%59% 59%

57%56%

30%

40%

50%

60%

2017 - Qtr1 2018 - Qtr1 2019 - Qtr1 2020 - Qtr1 2021 - Jan 2021 - Feb

New

Used

% of New vs. Used Financing by Count – Q1 2017 to Feb 2021




Serious auto loan delinquency rates saw moderate increases

in Q1 2021




Auto’s serious delinquency totals are more elevated when

segmented for subprime consumers




While subprime delinquency totals are climbing, the absolute

number of delinquent consumers is relatively stable




Auto’s subprime vintage performance has reflected consistent

performance over the past several quarters



Serious delinquency totals decreased across lender types in

March, while overall hardship totals also declined




Auto’s overall hardship totals decreased in March, while below

prime consumers now account for 65% of all hardships

56%56%46%

Totals may not equal 100 due to rounding


Vintage performance for consumers exiting auto loan

accommodations has been deteriorating

Source: TransUnion consumer credit database

For more information contact:

Satyan Merchant

Senior Vice President, Auto Line of Business Leader

[email protected]

Thank you!

mailto:[email protected]

Captives % of New vs. Used Auto Loans by Count Q1 2019 to ...

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