State of the Automotive Finance Market · Report No UMTRI-2011-23. Vehicle purchase by generation...
Transcript of State of the Automotive Finance Market · Report No UMTRI-2011-23. Vehicle purchase by generation...
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State of the Automotive Finance
Market
Melinda Zabritski | Sr. Director
Experian Automotive
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Discussion Points
• What’s on the road?
– Return of the US
automotive market
– Shifting consumer
dynamic
• Overall consumer
financing
– Balances & delinquencies
• New & Used financing
and trends in originations
– Return of leasing
– Growth of subprime
Score Ranges
Super prime 740+
Prime 680–739
Nonprime 620–679
Subprime 550–619
Deep subprime <550
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What’s on the Road
What metal is moving and who’s
purchasing
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Scrapped
Vehicles
(13.2M)
Used Vehicle
Sales (38.0M)
VIO Additions/Deletions : 28.1M (11.3%)
VIO Total Changes: 66.1M (26.7%)Vehicles
in
Operation June 2012
246.2M
What’s on the road today
Source: Experian Automotive
Change of Address 39.7M in 2012
Vehicles in
OperationJune 2013
247.9M
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0
5
10
15
20
25
30
YTD 2010 YTD 2011 YTD 2012 YTD 2013
Mil
lio
ns
New Used
Year to date registrations
Source: Experian Automotive as of June 30, 2013 (U.S. light duty vehicles only)
23% 25% 27% 28%
28.427.3
25.924.9
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Licensed drivers as a percentage
of their age-group population
0%
20%
40%
60%
80%
100%
120%
1983 2008
Source:University of Michigan, Transportation Research Institute. Michael Sivak &
Brandon Schoettle. Report No UMTRI-2011-23
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Vehicle purchase by generation
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Millennials Gen X Boomer Silent
Mil
lio
ns
New Used
34.3% 43.6% 52.9% 59.5%
Source: Experian Automotive, purchases made in Q1 2013
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Overall Automotive
Finance Market
Market overview and
delinquency
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Growth in lending balances
$702 $712
$667
$636 $647
$682
$751
$560
$580
$600
$620
$640
$660
$680
$700
$720
$740
$760
Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013
Bil
lio
ns
Total outstanding loan balance
Source: Experian Automotive
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Credit Union balances
Source: Experian-Oliver Wyman Market Intelligence Reports
$133 $141 $143
$149 $142 $142
$148
$167
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013
Bil
lio
ns
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Automotive loan 30-dpd
1.28%
2.38%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013
Bank Captive Credit Union Total
Source: Experian-Oliver Wyman Market Intelligence Reports
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Automotive loan 60-dpd
0.27%
0.58%
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
0.8%
0.9%
Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013
Bank Captive Credit Union Total
Source: Experian-Oliver Wyman Market Intelligence Reports
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Quarterly repossession rates
0.15%
0.36%
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013
Bank Captive Credit Union Total
Source: Experian-Oliver Wyman Market Intelligence Reports
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Average charge-off versus
wholesale values
$7,218
$11,537
$17,396
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
$20,000
Q2 2006Q2 2007Q2 2008Q2 2009Q2 2010Q2 2011Q2 2012Q2 2013
Average charge-off amount KBB avg auction actual all MY
KBB Avg auction C+5MY
Source: Kelley Blue Book Automotive Insights; Experian Automotive
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New and Used
Originations
Automotive financing in the
second quarter 2013
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Automotive finance type
17.4%
47.3%
15.5%
47.1%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
New Used
No lender on title
Q2 2012 Q2 2013
11.36% 12.96%
88.64% 87.04%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q2 2012 Q2 2013
Overall financing
Total Lease Total Loan
Source: Experian Automotive
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Financing trends
17.68%
23.79% 23.62%24.40%
27.64%
0%
5%
10%
15%
20%
25%
30%
Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013
New lease share of new consumer financing
96.87% 96.76%
3.13% 3.24%
0%
20%
40%
60%
80%
100%
Q2 2012 Q2 2013
Leasing by type
New lease Used lease
Source: Experian Automotive
Bank, 19.4%
Captive75.0%
Credit Union0.4%
Finance
Other5.2
New leasing by lender type
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Average credit on new
lease transactions
763 760
250
350
450
550
650
750
850
Q2 2012 Q2 2013
Average new lease score
6.33% 6.74%
12.64% 13.42%
16.40% 16.79%
63.29% 61.59%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q2 2012 Q2 2013
New lease credit distribution
Deep subprime SubprimeNonprime PrimeSuper prime
Source: Experian Automotive
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Average new lease attributes
$416
$408
$375
$385
$395
$405
$415
$425
$435
$445
Q2 2012 Q2 2013
Average monthly payment
9.2%
66.2%
23.9%
0.6%0%
10%
20%
30%
40%
50%
60%
70%
13 - 24 25 - 36 37 - 48 49 - 60
Term distribution
Average
term 35
Source: Experian Automotive
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Market snapshot on
vehicle loan financing
Independent Franchise
YOY Change
Source: Experian Automotive
-1.06%
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Used vehicle financing by
model year
38.7% are
MY2013 – 2010
Source: Experian Automotive
0%
2%
4%
6%
8%
10%
12%
14%
20
13
20
12
20
11
20
10
2009
20
08
20
07
20
06
20
05
2004
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
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Loan share by lender
36.14%
8.38%
25.24%
15.31%14.93%
-10.7%
-12.7%
40.6%
-13.9%
4.9%
-20%
-10%
0%
10%
20%
30%
40%
50%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Bank BHPH Captive CreditUnion
Finance
Automotive loan market share
Market share YOY change in share
35.88%
0.17%
48.30%
8.62% 7.03%-22.3%
20.1%
34.0%
-31.9%
41.7%
-40%-30%-20%-10%0%10%20%30%40%50%
0%
10%
20%
30%
40%
50%
60%
Bank BHPH Captive CreditUnion
Finance
New loan market share
Market share YOY change in share
36.35%
15.20%
6.10%
20.86% 21.49%
-1.4% -2.1%
-7.9%
-0.6%
7.3%
-10%-8%-6%-4%-2%0%2%4%6%8%10%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Bank BHPH Captive CreditUnion
Finance
Used loan market share
Market share YOY change in share
Source: Experian Automotive
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Average credit scores by
vehicle type
-4
-2
YOY Change
Source: Experian Automotive
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Average scores by lender type
Source: Experian Automotive
758 757 762
657
752 763749
662
400
450
500
550
600
650
700
750
800
850
900
Bank Captive CreditUnion
Finance
Average score on new loans
Q2 2012 Q2 2013
709
542
709 715
558
706
551
715 709
564
400
450
500
550
600
650
700
750
800
850
900
Bank BHPH Captive CreditUnion
Finance
Average score on used loans
Q2 2012 Q2 2013
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Average amount financed
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Average monthly payment
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Loan-to-Value by lender type
109.2%108.3%
114.3%121.6%
110.5%
125.1% 123.7%
132.9%
148.1%
131.1%
0%
20%
40%
60%
80%
100%
120%
140%
160%
Bank Captive CreditUnion
Finance MarketTotals
Average LTV by lender
Average LTV new Average LTV used
19 42
222
47
91
413
610
525
200
450
-
100
200
300
400
500
600
700
YOY change in LTV (bps)
YOY change in new LTV
YOY change in used LTV
Market
Totals
FinanceCredit
Union
CaptiveBank
Source: NADA Used Car Guides; Experian Automotive
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Distribution of loan term
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Average rates
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• Strong market growth but a changing
consumer dynamic
• Overall, open portfolios continuing to
experience growth, reaching over
$751B
• Delinquencies remain at historic lows
• Financing for consumers continues to
expand as consumers rely upon the
lending market for vehicle purchase
• Leasing continues to grow with slight
decrease in scores and payments $49
lower than the loan market
• Scores continue slight decline with
growth in the subprime market
• Loan-to-value and terms expand as
payments remain relatively flat
In summary