state of the auto finance market - experian2017 q3 2018 q3 2019 q3 s total open automotive loan...
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1 © Experian
State of the AutomotiveFinance Market
Presented by: Melinda ZabritskiQ3 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 Q3 2019
3 © Experian
A review of all open automotive loans & leases
Overall Automotive Finance Market
Experian Public State of the Automotive Finance Market Q3 2019
4 © Experian
$1,121
$1,174
$1,220
$1,060
$1,080
$1,100
$1,120
$1,140
$1,160
$1,180
$1,200
$1,220
$1,240
2017 Q3 2018 Q3 2019 Q3
Bill
ion
s
Total open automotive loan balance
Loan balances reach another record high
Source: Experian-Oliver Wyman Market Intelligence Reports
$370.2 $368.8 $378.9
$255.6 $262.6 $264.2
$305.1 $342.0 $358.6
$190.3$200.0 $218.7
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2017 Q3 2018 Q3 2019 Q3
Bill
ion
s
Total open automotive loan balance
Banks Captive Credit Union Finance
Experian Public State of the Automotive Finance Market Q3 2019
6.3%
4.7%
4.0%
5 © Experian
3.87% 3.60% 3.73%
16.06% 15.70% 15.60%
18.72% 18.50% 18.29%
41.71% 42.17% 42.27%
19.63% 20.03% 20.11%
2017 Q3 2018 Q3 2019 Q3
Loan balance risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Loan balance distribution stable: percentage of all subprime balances remains under 19%
7.79%
3.30% 2.82%
4.26% 4.41%
Deepsubprime
Subprime Nonprime Prime Super prime
Year-over-year balance change
Experian Public State of the Automotive Finance Market Q3 2019
6 © Experian
1.95% 2.26%
1.22%
3.95%
2.23%1.92% 2.17%1.20%
4.18%
2.25%
Bank Captive Credit Union Finance Total
% of loans & leases 30 dpd2018 Q3 2019 Q3
30 day delinquency rates decrease for most lenders
Source: Experian-Oliver Wyman Market Intelligence Reports
1.80%2.74%
1.04%
4.57%
2.26%1.76%
2.58%
1.03%
4.69%
2.25%
Bank Captive Credit Union Finance Total
% of loan balances 30 dpd2018 Q3 2019 Q3
Experian Public State of the Automotive Finance Market Q3 2019
7 © Experian
Percentage of loan balances 30 dpd
Experian Public State of the Automotive Finance Market Q3 2019
AK = 1.50%
HI = 1.94%
8 © Experian
0.69% 0.57%0.31%
1.54%
0.73%0.71%0.56%
0.29%
1.66%
0.75%
Banks Captive Credit Union Finance Total
% of loans & leases 60 dpd2018 Q3 2019 Q3
60 day delinquency tics up slightly for some lenders
Source: Experian-Oliver Wyman Market Intelligence Reports
0.65% 0.67%
0.24%
1.76%
0.72%0.66% 0.65%
0.23%
1.85%
0.75%
Bank Captive Credit Union Finance Total
% of loan balances 60 dpd2018 Q3 2019 Q3
Experian Public State of the Automotive Finance Market Q3 2019
9 © Experian
Percentage of loan balances 60 dpd
Experian Public State of the Automotive Finance Market Q3 2019
AK = 0.30%
HI = 0.50%
10 © Experian
Trends in automotive loan and lease originations
Originations in Q3 2019
Experian Public State of the Automotive Finance Market Q3 2019
11 © Experian
85.2% 85.4%
52.8% 54.7%
Q3 2018 Q3 2019
Percentage of vehicles with financing
New Used
Automotive financing1: snapshot of how and what consumers are financing
28.90% 28.76%
Q3 2018 Q3 2019
% of all2 new vehicles that are leased
46.14% 44.85%
53.86% 55.15%
Q3 2018 Q3 2019
Finance Market: new v used units
New Used
3.88% 4.07%
Q3 2018 Q3 2019
Used % of lease market
Experian Public State of the Automotive Finance Market Q3 2019
1 Financing = either a loan or lease is present on the title; 2 All = loan, lease or cash
12 © Experian
31
.0%
5.8
%
30
.1%
22
.6%
10
.5%
35
.9%
1.3
%
34
.8%
19.5
%
8.5
%
Bank BHPH Captive CreditUnion
Finance Co
Market Share of Total Financing(new/used units & loan/lease)
Q3 2018
Q3 2019
Banks and captives show increases in share(loan and lease units combined)
26
.7%
0.1
% 53
.7%
14.5
%
5.0
%
29
.4%
0.1
% 53
.8%
11.7
%
5.0
%
Bank BHPH Captive Credit Union Finance Co
Market Share of New Financing
34
.8%
10
.9%
8.9
%
29.9
%
15
.5%
43
.7%
2.6
% 12
.1%
28
.8%
12
.7%
Bank BHPH Captive Credit Union Finance Co
Market Share of Used Financing
Experian Public State of the Automotive Finance Market Q3 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 Q3 2019
14 © Experian
New scores continue to rise while franchise used experiences a slight decrease
650655 659 661 662
674 678 682 683 681
609615
620 623630
Q3 2015 Q3 2016 Q3 2017 Q3 2018 Q3 2019
Average used credit scores
Franchise used
All used
Independent used
Experian Public State of the Automotive Finance Market Q3 2019
710712
713714
715712714
716717
718
715
718
722724
725
Q3 2015 Q3 2016 Q3 2017 Q3 2018 Q3 2019
Average new credit scores
New lease
All new
New loan
15 © Experian
Total market remains stable with modest YOY change
8.91% 8.73%16.31% 16.11%
44.63% 44.66%
29.47% 29.83%
Q3 2018 Q3 2019
New (loan/lease) risk distribution
4.35% 4.39%22.84% 22.70%
21.92% 21.61%
37.85% 37.83%
13.05% 13.47%
Q3 2018 Q3 2019
Used (loan/lease) risk distribution
Experian Public State of the Automotive Finance Market Q3 2019
2.64% 2.73%
16.33% 16.44%
19.30% 19.15%
41.02% 40.89%
20.72% 20.80%
Q3 2018 Q3 2019
Total (loan & lease/new & used units) risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Deep subprime
= 0.67%
(down 2.1%)
16 © Experian
3.02% 3.07%
18.17% 18.09%
20.02% 19.87%
39.67% 39.77%
19.12% 19.20%
Q3 2018 Q3 2019
Total (new & used units) loan risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Used prime+ reaches highest point since recession peak in 2009
10.26% 9.84%16.74% 16.66%
42.75% 43.26%
29.45% 29.49%
Q3 2018 Q3 2019
New loan risk distribution
4.33% 4.37%22.86% 22.72%
21.97% 21.67%
37.85% 37.82%
12.99% 13.42%
Q3 2018 Q3 2019
Used loan risk distribution
Experian Public State of the Automotive Finance Market Q3 2019
Deep subprime
= 0.76%
(down 6.4%)
17 © Experian
89.9
5%
78
.97
%
68
.87
%
59
.87
%
42
.63
%
91
.08
%
80
.44
%
69
.84
%
60
.88
%
44
.75
%Deep
SubprimeSubprime Nonprime Prime Super
Prime
Percentage of consumers by risk tier choosing used loans
Q3 2018 Q3 2019
Q3 record high of prime+ consumers choosing used vehicles while Independent stores see prime increase
15.87% 16.79%
22.57% 22.59%
43.94% 42.84%
15.98% 15.91%
Q3 2018 Q3 2019
Used Franchise loan risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
8.79% 8.31%
34.72% 32.59%
21.62% 21.18%
27.59% 29.47%
7.28% 8.45%
Q3 2018 Q3 2019
Used Independent loan risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Experian Public State of the Automotive Finance Market Q3 2019
Deep subprime
= 1.87%
(up 13%)
18 © Experian
6.15% 6.29%
15.43% 14.89%
48.47% 47.74%
29.52% 30.60%
Q3 2018 Q3 2019
New lease risk distribution
Deep Subprime Subprime Nonprime Prime Super Prime
Leasing remains very prime with some growth in subprime prime while YOY fewer consumers choose 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 Q3 2019
Deep subprime
= 0.48%
(up 11%)
19 © Experian
$418 $478 $485 $465
$652 $600 $484 $483
$659
$415
$303 $363 $379 $326$451 $478
$370 $351$457
$302
CIVIC CR-V RAV4 EQUINOX 1500 GRANDCHEROKEE
ACCORD ROGUE F150 COROLLA
Loan vs. lease monthly payment comparison on top leased models Loan payment
Lease payment
CUVs comprise the majority of the top leased models with average lease difference of $101
3.9%3.4% 3.1%
2.5% 2.5% 2.4% 2.4%1.8% 1.8% 1.7%
CIVIC CR-V RAV4 EQUINOX 1500 GRANDCHEROKEE
ACCORD ROGUE F150 COROLLA
Top 10 new leased models by market share
Experian Public State of the Automotive Finance Market Q3 2019
20 © Experian
$469 $459$443
$427 $420 $430
$483 $474 $462 $450 $444 $452
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average new lease paymentQ3 2018 Q3 2019
Leasing payments also rise while terms remain at 36 months
Experian Public State of the Automotive Finance Market Q3 2019
37.21 36.99 36.81 36.29
35.50 36.18
36.97 37.15 37.1636.71
35.8636.54
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average new lease term
21 © Experian
Loan amounts set yet another record high
$1,478
$1,919 $1,928$1,602
$880
$1,503
$746 $712 $652 $552 $441 $585$130 $115 $139 $248 $244 $152
$912$1,144
$1,489 $1,519$1,197
$1,452
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change in balance
$2
7,5
35
$3
0,6
33
$34,2
45
$3
4,2
32
$2
9,5
16
$3
2,4
80
$1
6,2
96
$1
7,7
59
$2
0,1
72
$2
1,8
45
$2
1,2
16
$2
0,4
46
$1
7,4
86
$1
9,2
27
$2
1,4
98
$2
2,8
47
$2
1,8
92
$2
1,7
11
$15,6
02
$1
6,4
96
$1
8,5
85
$2
0,6
19
$2
0,4
85
$1
8,8
34
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 Q3 2019
22 © Experian
Terms rise to reach record highs for all but Franchise used
72.52 73.05 73.31 70.5363.58
69.2860.89 63.26 65.78 66.24 62.42 64.8964.89 66.62 67.70 67.31 63.08 66.60
58.36 60.20 63.23 64.70 61.60 62.59
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average loan term by tier New All Used Franchise used Independent used
0.22 0.43 0.610.88 1.01 0.81
1.220.89
0.53 0.42 0.41 0.53
-1.03-0.67
-0.35
0.150.40
-0.08
1.93 2.11 1.95
1.31
0.60
1.73
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change in used loan term
Experian Public State of the Automotive Finance Market Q3 2019
23 © Experian
20.8%
40.2%30.0%
1.1%
20.1%
41.0%30.9%
1.3%
49 - 60 61 - 72 73 - 84 85 - 96
Percentage of new loans by term
Q3 2018 Q3 2019
Longer term loans continue to dominate the market
9.9%
23.5%
42.2%
18.1%9.2%
22.9%
42.9%
19.0%
37 - 48 49 - 60 61 - 72 73 - 84
Percentage of used loans by term
Q3 2018 Q3 2019
758
701 682 700
761
703 685 703
49 - 60 61 - 72 73 - 84 85 - 96
Average new score by loan term
Q3 2018 Q3 2019
664691
665 675665693
664 675
37 - 48 49 - 60 61 - 72 73 - 84
Average used score by loan term
Q3 2018 Q3 2019
Experian Public State of the Automotive Finance Market Q3 2019
24 © Experian
$556 $574 $578 $557 $515 $550$419 $414 $395 $383 $382 $393$424 $424 $410 $396 $391 $404$421 $411 $385 $371 $372 $387
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average monthly payment by risk tier New All used Franchise used Independent used
Payments remain high
$20
$25$28
$22
$11
$20
$16 $16$13
$10 $9$12$13
$11$9
$6 $5$8
$16$18 $19 $21 $21
$19
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change in payments
Experian Public State of the Automotive Finance Market Q3 2019
25 © Experian
Rates continue to increase across all risk segments1
4.3
0%
11
.71
% 7.7
7%
4.9
6%
4.0
1%
5.9
6%
19
.72
%
16
.89
% 11
.01
%
6.3
6%
4.6
6% 9.5
7%
19
.06
%
15
.98
% 10
.59
%
6.2
8%
4.6
5%
8.8
3%
20
.39
%
18
.10
% 12
.17
%
6.6
8%
4.6
3% 1
1.3
3%
Deep Subprime Subprime Nonprime Prime Super Prime Total
Average loan rates by tier Avg New All Used Franchise used Independent used
-11 -18
2540 33 23
74 75 6738 32
54
134119
96
5137
8367 54
3919 26
7
Deep Subprime Subprime Nonprime Prime Super Prime Total
Year-over-year change (bps) in loan rate
Experian Public State of the Automotive Finance Market Q3 2019
26 © Experian
• Record highs continue with loan balances over $1.2 trillion
• Delinquency trends remain stable
• Banks increase market share in Q3
• Leasing remains high with nearly 29% of new leased
• Credit scores increase for new financing and growth seen across prime and super prime segments
• Used Independent dealers saw increases in prime and loan attributes as more prime consumers buy used and purchase from Independent stores
• Q3 record highs seen in finance characteristics
• New loan terms reach record highs
Summary
Experian Public State of the Automotive Finance Market Q3 2019