state of automotive finance market - aventri · melinda zabritski experian . 3 ©experian 1....

State of automotive finance market

Introducing:

Melinda Zabritski Experian

©Experian 3

1. Vehicle registration trends

2. Outstanding automotive financing

3. Originations update

Contents

4/12/2017 Experian Public Vision 2017

©Experian 4

Vehicle registration trends


©Experian 5

U.S. vehicles in operation

Source: Experian Automotive as of December 31, 2016 (U.S. light duty vehicles only)


258 266 17.3*

NEW VEHICLES

DEALER

41.9* USED VEHICLES

EXIT

Out of Operation

* In millions;

Q4 2016 includes Puerto Rico,

Q4 2015 does not

Q4 2015

million Vehicles on

the road

Q4 2015

million Vehicles on

the road

93*

198.2* NO

CHANGES

©Experian 6

U.S. passenger car and light truck surpassed 17 million units for the second consecutive year


16.02

13.18

10.15

11.62 12.70

14.31 15.27

16.26 17.12 17.30

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

New

ve

hic

le r

egis

tration

s (

mill

ion

s)

Annual new registrations

New vehicle registrations

all sales categories

through December 2016

Source: Experian Automotive

©Experian 7

Gains in annual new vehicle registrations have been steadily declining since 2012


-17.72%

-23.05%

14.56%

9.26% 12.65%

6.73% 6.52% 5.29%

1.03%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2008 2009 2010 2011 2012 2013 2014 2015 2016

% Y

OY

cha

ng

e

Year-over-year change in new vehicle registrations


©Experian 8

Retail registrations were nearly unchanged from 2015, but fleet categories experienced significant gains


0.09%

0.91%

5.59%

13.69%

0% 2% 4% 6% 8% 10% 12% 14% 16%

Retail

Rental/Lease

Commercial/Taxi

Government

Year-over-year change

2015 vs. 2016 change by sales category


©Experian 9

The majority of new vehicle buyers in the U.S. are 45 years of age or older


4.35%

17.18% 17.17%

21.59% 20.19% 19.52%

0%

5%

10%

15%

20%

25%

18-24 25-34 35-44 45-54 55-64 65+

% N

ew

ind

ivid

ual re

tail

reg

istr

ations

Distribution of new individual retail registrations


©Experian 10

Crossover and sport utility vehicles remain popular with U.S. consumers accounting for 40% of the market in 2016


1.55%

2.11%

2.41%

2.96%

4.61%

15.32%

30.51%

40.53%

0% 10% 20% 30% 40% 50%

Wagon

All Others

Minivan

Coupe

Hatchback

Pickup

Sedan

CUV/SUV

2016 share by vehicle type

2.38%

2.49%

2.75%

4.28%

5.09%

11.57%

12.57%

13.22%

13.89%

17.81%

0% 5% 10% 15% 20%

Non-Luxury Mid-Size Minivan

Non-Luxury Full CUV/SUV

Non-Luxury Mid-Size Pickup

Non-Luxury Small Hatchback

Luxury Mid-Size CUV/SUV

Non-Luxury Small Sedan

Non-Luxury Full Pickup

Non-Luxury Mid-Size CUV/SUV

Non-Luxury Mid-Size Sedan

Non-Luxury Small CUV/SUV

2016 share by vehicle segment


©Experian 11

Overall automotive finance market


©Experian 12

Experian data review


North American vehicle database

• More than 745 million vehicles, of which more than 61 million Canadian vehicles

• Over 300 million U.S. vehicles in operation

• More than 27 million Canadian vehicles in operation

• 1.7 billion titles and 1.8 billion registrations

Consumer credit

• 2 million credit inquiries daily

• 1.3 billion transaction updates/month

• 220 million credit active consumers

• 50 million public records

Category Score range

Super Prime 781 – 850

Prime 661 – 780

Nonprime 601 – 660

Subprime 501 – 600

Deep subprime 300 – 500

©Experian 13

Loan balances break record highs, yet experience slow down in year-over-year growth


$659 $721

$800 $886

$987 $1,072

$-

$200

$400

$600

$800

$1,000

$1,200

2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4

Total open automotive loan balance

9.29%

11.00% 10.75% 11.47%

8.58%

0%

2%

4%

6%

8%

10%

12%

14%

2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4

Year-over-year loan balance change

Source: Experian-Oliver Wyman Market Intelligence Reports

Bill

ion

s

©Experian 14

Loan balances break record highs while credit unions experience largest YOY growth


$284 $313 $337 $364

$222 $230 $244 $252 $178

$208 $241

$277 $116 $135

$166 $179

$0

$200

$400

$600

$800

$1,000

$1,200

2013 Q4 2014 Q4 2015 Q4 2016 Q4

Total open automotive loan balance

All Banks Captive Auto Credit Union Finance

10

.27

%

7.6

4%

8.1

0%

3.6

1%

6.2

6%

3.2

0%

16

.66

%

15

.87

%

15

.00

%

16

.52

% 22

.47

%

8.1

7%

0%

5%

10%

15%

20%

25%

2014 Q4 2015 Q4 2016 Q4

Year-over-year loan balance change

All Banks Captive Auto Credit Union Finance


Bill

ion

s

©Experian 15

Majority of loan balances remain prime or higher with modest growth in high risk segments


3.97% 3.45% 3.66% 3.91%

18.20% 15.58% 15.77% 15.96%

21.82% 18.06% 18.03% 17.90%

29.84%

27.75% 27.23% 26.93%

26.17% 35.16% 35.30% 35.30%

2013 Q4 2014 Q4 2015 Q4 2016 Q4

Loan balance risk distribution

Deep Subprime Subprime Nonprime Prime Super Prime

13

.59

%

14

.82

%

13

.66

%

47

.01

%

13

.79

%

15

.79

%

13

.89

%

44

.42

%

13

.80

%

17

.29

%

13

.79

%

44

.20

%

14

.65

%

18

.86

%

13

.98

%

44

.16

%

Bank Captive Credit Union Finco

Percentage of lenders balances as subprime

Q4 2013 Q4 2014 Q4 2015 Q4 2016


©Experian 16

Percentage of consumer loans and leases that are 60 days past due are on the rise


0.70% 0.73% 0.73% 0.72%

0.77%

0.85%

0.53% 0.55% 0.58%

0.61%

0.68%

0.78%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%

0.70%

0.80%

0.90%

2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4

% of TTL Mkt 60 dpd % of TTL Mkt loan balances 60 dpd


©Experian 17

Higher delinquency rates seen in the used car market even among same origination credit


3.65%

6.43%

0.87%

1.90% 1.83%

5.44%

New Used

Delinquency by vehicle type

WE 30 dpd WE 60 dpd WE 90+

19.81% 17.85%

6.13% 6.10%

12.27%

17.53%

New <600 Used <600

Delinquency in subprime originations by vehicle type

WE 30 dpd WE 60 dpd WE 90+ dpd


©Experian 18

Used loan delinquency decreases with rising terms


0.52%

2.98%

4.16%

1.69%

4.50%

5.91% 5.43%

2.90%

49-60 61-72 73-84 85+

Worst Ever 60+ dpd by loan term

New Used

6.36%

11.19%

13.45%

4.39%

14.79% 14.70% 14.27%

12.02%

49-60 61-72 73-84 85+

WE 60+ dpd in subprime originations by loan term

New Used


©Experian 19

Higher payments ultimately lead to delinquency


$458

$481

$496

$531

$486

$507

$523

$539

49-60 61-72 73-84 85+

Average new loan monthly payment by loan performance on <600

Current WE 60+ dpd

$341

$397 $416

$431

$368

$423

$445 $438

49-60 61-72 73-84 85+

Average used loan monthly payment by loan performance on <600

Current WE 60+ dpd


©Experian 20

Originations trends


©Experian 21

Increased reliance upon financing for vehicle purchases


81.4% 82.1% 84.0% 85.2%

50.9% 52.8% 55.2% 53.5%

Q4 2010 Q4 2012 Q4 2014 Q4 2016

Percentage of vehicles with financing

New Used

19.17% 20.34%

25.11%

28.94%

Q4 2010 Q4 2012 Q4 2014 Q4 2016

Leasing as a percentage of all new transactions


©Experian 22

Transaction types very little by generation with Boomers controlling the largest portion of the market


31

.8%

32

.0%

31

.9%

24

.2%

25

.1%

24

.8%

33

.7%

35

.4%

34

.8%

10

.3%

7.4

%

8.4

%

% all lease % all loan % all

Buying power by generation

Millennial Gen X Boomer Silent

34.1% 33.4% 33.0% 41.9%

65.9% 66.6% 67.0% 58.1%

Millennial Gen X Boomer Silent

Transaction type by generation

Lease Loan

©Experian 23

High consumer leasing rates result in a surge of off-lease vehicles


0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Mar 2017 Apr 2017 May 2017 Jun 2017 Jul 2017 Aug 2017 Sep 2017 Oct 2017 Nov 2017 Dec 2017

Nearly 2.5 million vehicles

coming off lease this year


©Experian 24

Average loan scores are stabilizing for new and increasing in the used market as prime consumers shift to used cars


711

726 736 732 727 723

715 712 711 711

660

678

692 687 678 675 673 672 673 677

Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

New Franchise used


©Experian 25

New vehicle lending remains very prime, but growing in higher risk segments as prime consumers choose leasing


0.66% 0.30% 0.52% 0.68% 0.86% 9.00% 7.07% 9.34% 10.08% 10.67%

13.15% 12.92% 14.15% 17.41% 17.52%

42.43% 44.17% 42.70% 43.80% 43.06%

34.76% 35.54% 33.30% 28.03% 27.89%

New vehicle consumer loan risk distribution

Deep subprime Subprime Nonprime Prime Super prime 17.0%

21.7%

23.8%

21.5%

28.3%

29.7%

24.2%

31.6%

34.8%

<=600

Nonprime

Prime +

Percentage of new borrowers choosing to lease

Q4 2016

Q4 2014

Q4 2012


Q4 2008 Q4 2010 Q4 2012 Q4 2014 Q4 2016

©Experian 26

Used loans have remained stable with growth in higher scores and fewer loans originated in deep subprime


8.86% 5.92% 6.23% 5.82% 5.32%

27.63% 25.26% 28.25% 27.15% 24.81%

17.90% 19.13%

20.18% 21.93% 22.15%

31.94% 35.12% 32.56% 34.24% 35.87%

13.68% 14.57% 12.78% 10.86% 11.85%

Q4 2008 Q4 2010 Q4 2012 Q4 2014 Q4 2016

Used vehicle consumer loan risk distribution

Deep subprime Subprime Nonprime Prime Super prime 86.9%

70.5%

50.9%

87.6%

71.2%

51.0%

84.2%

68.5%

47.6%

83.5%

67.5%

50.9%

81.6%

68.2%

53.3%

<=600

Nonprime

Prime +

Percentage of borrowers with loans choosing used

Q4 2016

Q4 2014

Q4 2012

Q4 2010

Q4 2008


©Experian 27

Consumer loan amounts continue to rise with rates ticking up

$24,439 $25,580 $25,789 $26,419 $26,691 $27,430 $28,381 $29,551 $30,621

$17,278 $17,787 $18,340 $18,780 $19,092 $19,598 $20,023 $20,641 $21,225

Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

Avg new loan amount Avg Franchise used loan amount

$7,161 $7,793 $7,449 $7,639 $7,599 $7,832 $8,358 $8,910 $9,396

Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

Difference between new and franchise used loans



©Experian 28

LTV increases begin to taper off for both new and used vehicles

107.95% 110.03% 109.86% 110.42% 111.90% 112.89% 112.84% 129.83% 130.08% 132.63% 133.75% 137.40% 137.46% 137.15%

Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

New LTV All Used LTV

208

-17

56 148

99

-5

25

255

113

365

6

-31 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

YOY New LTV change YOY All Used LTV change

bps



©Experian 29

Consumer loan amounts continue to rise with rates ticking up

-332 -303 -319 -346 -337 -344 -314 -294 -263

Q3 2008 Q3 2009 Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015 Q3 2016

Difference between average new and franchise used rate

6.30% 5.66% 4.84% 4.52% 4.36% 4.37% 4.56% 4.63% 4.74%

9.62% 8.69% 8.02% 7.98% 7.74% 7.81% 7.70% 7.57% 7.37%

Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

Avg new loan rate Avg Franchise used loan rate



©Experian 30

New rates remain stable while used rates increase


3.7

1%

3.5

4%

3.5

9%

3.5

5%

3.6

0%

2.8

0%

2.6

5%

2.6

9%

2.7

0%

2.6

3%

Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

Prime+ new loan rates

Avg new prime rate Avg new super prime rate

4.0

8%

4.1

4%

4.3

9%

4.4

0%

4.8

9%

2.9

9%

2.8

8%

3.0

0%

3.0

4%

3.3

5%

Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

Prime+ franchise used loan rates

Avg used prime rate Avg used super prime rate


©Experian 31

Vehicle payments rise with the gap between new and used growing

$465 $467 $464 $468 $460 $471 $482 $493 $506

$353 $357 $360 $361 $361 $366 $369 $374 $380

Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

New loan payment Franchise used loan payment

$112 $110 $104 $107 $99 $105 $113 $119 $126

Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

Difference between new and franchise used payments

Average new lease payment = $414


©Experian 32

For new vehicles payments rise, despite lengthening loan terms


62 62 63 63

65 65 66

67 68

61 60

61 62

63 64

65 66 66

Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016

New loan term Franchise used loan term

41.7% 42.9% 40.0% 40.3%

9.6% 16.9%

25.9% 32.1%

Q4 2010 Q4 2012 Q4 2014 Q4 2016

New vehicles

61 - 72 73 - 84

37.0% 40.2% 42.4% 38.5%

7.1% 11.5% 17.3% 17.9%

Q4 2010 Q4 2012 Q4 2014 Q4 2016

Franchise used vehicles

61 - 72 73 - 84


©Experian 33

Within the 73-84 month term, loans are increasingly shifting to 84 months


32.7% 27.3% 24.5% 23.6% 25.7%

43.2% 45.4%

43.4% 40.5% 36.7%

7.0% 8.5% 10.1%

9.3% 8.9%

17.1% 18.8% 22.0% 26.7% 28.7%

0%

20%

40%

60%

80%

100%

Q4 2010 Q4 2012 Q4 2014 Q4 2015 Q4 2016

New loans

73-74 75 76-83 84

51.6% 41.2% 34.7% 29.5% 26.8%

27.8% 39.1%

40.4% 41.5% 43.0%

7.6% 6.7% 8.9%

9.6% 10.0%

13.0% 13.0% 16.0% 19.4% 20.3%

0%

20%

40%

60%

80%

100%

Q4 2010 Q4 2012 Q4 2014 Q4 2015 Q4 2016

Used loans

73-74 75 76-83 84


©Experian 34

Longer term loans are found on late-model used vehicles


10.6% 9.9%

0%

10%

20%

30%

40%

50%

60%

20162015201420132012201120102009200820072006200520042003200220012000Model year

% with 61-72 % with 73-84


©Experian 35

• Portfolio balances reach record levels as loan amounts grow to all-time highs

• Increases in both 30 and 60-day delinquency rates

• Leasing drops below 30% of all new consumer vehicle sales as consumers across all risk tiers increasingly choose to lease

• Originations across all finance types become increasingly more prime and credit scores improve

• Prime consumers also increasing choosing used vehicles resulting in score increases, greater percentages of used financing in the prime risk tier and lower average used rates

• Loan amounts and some payments reach record highs, while terms continue to extend

Summary



©Experian 37

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state of automotive finance market - aventri · melinda zabritski experian . 3 ©experian 1....

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