state of the auto finance market - experian · note: ranges above are those used by experian...

1 © Experian

State of the AutomotiveFinance Market

Presented by: Melinda ZabritskiQ1 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 Q1 2019

3 © Experian

A review of all open automotive loans & leases

Overall Automotive Finance Market


4 © Experian

$1,083

$1,108

$1,181

$1,020

$1,040

$1,060

$1,080

$1,100

$1,120

$1,140

$1,160

$1,180

$1,200

2017 Q1 2018 Q1 2019 Q1

Bill

ion

s

Total open automotive loan balance

Loan balances reach another record high

Source: Experian-Oliver Wyman Market Intelligence Reports

$363.5 $368.7 $367.5

$252.7 $259.0 $260.5

$286.8 $318.7 $351.4

$180.1 $161.9$201.5

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2017 Q1 2018 Q1 2019 Q1

Bill

ion

s

Total open automotive loan balance

Banks Captive Credit Union Finance


7.8%

2.3%

6.5%

5 © Experian

3.76% 3.47% 3.59%

15.94% 15.23% 15.18%

18.86% 18.55% 18.20%

41.70% 42.46% 42.31%

19.74% 20.29% 20.71%

2017 Q1 2018 Q1 2019 Q1

Loan balance risk distribution

Deep Subprime Subprime Nonprime Prime Super Prime

Percentage of all subprime balances remains under 19%

10.48%

6.19%

4.50%

6.19%

8.75%

Deepsubprime

Subprime Nonprime Prime Super prime

Year-over-year balance change


6 © Experian

1.74% 1.61%1.17%

3.83%

1.90%1.73% 1.95%1.15%

3.52%

1.98%

0.0%

2.0%

4.0%

6.0%

Bank Captive Credit Union Finance Total

% of loans & leases 30 dpd2018 Q1 2019 Q1

30 day delinquency rates rise for most lenders


1.60% 1.79%1.02%

4.26%

1.86%1.58%2.32%

0.98%

3.99%

1.98%

0.0%

2.0%

4.0%

6.0%


% of loan balances 30 dpd2018 Q1 2019 Q1


7 © Experian

Percentage of loan balances 30 dpd


AK = 1.46%

HI = 1.39%

8 © Experian

0.63% 0.53%0.30%

1.60%

0.68%0.67%0.50%

0.29%

1.45%

0.68%

0.0%

0.5%

1.0%

1.5%

2.0%

Banks Captive Credit Union Finance Total

% of loans & leases 60 dpd2018 Q1 2019 Q1

60 day delinquency remains flat


0.57% 0.60%0.24%

1.80%

0.66%0.63% 0.59%0.23%

1.64%

0.67%

0.0%

0.5%

1.0%

1.5%

2.0%


% of loan balances 60 dpd2018 Q1 2019 Q1


9 © Experian

Percentage of loan balances 60 dpd


AK = 0.40%

HI = 0.52%

10 © Experian

Trends in automotive loan and lease originations

Originations in Q1 2019


11 © Experian

85.3% 85.4%

54.0% 55.5%

Q1 2018 Q1 2019

Percentage of vehicles with financing

New Used

Automotive financing1: snapshot of how and what consumers are financing

29.83% 29.07%

Q1 2018 Q1 2019

% of all2 new vehicles that are leased

44.52% 43.32%

55.48% 56.68%

Q1 2018 Q1 2019

Finance Market: new v used units

New Used

4.01% 4.68%

Q1 2018 Q1 2019

Used % of lease market


1 Financing = either a loan or lease is present on the title; 2 All = loan, lease or cash

12 © Experian

31

.6%

6.9

%

29

.0%

21

.3%

11

.1%

32

.4%

6.8

%

28

.8%

19

.9%

12

.1%

Bank BHPH Captive CreditUnion

Finance Co

Market Share of Total Financing(new/used units & loan/lease)

Q1 2018 Q1 2019

Banks and finance companies show increases in share(loan and lease units combined)

28

.1%

0.1

%

53

.5%

13

.5%

4.8

%

27

.6%

0.1

%

54

.5%

12

.4%

5.4

%

Bank BHPH Captive Credit Union Finance Co

Market Share of New Financing

Q1 2018 Q1 2019

34

.6%

12

.7%

8.3

%

28

.0%

16

.5%

36

.3%

12

.1%

8.1

%

26

.0%

17

.4%

Bank BHPH Captive Credit Union Finance Co

Market Share of Used Financing

Q1 2018 Q1 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.


14 © Experian

Credit scores remain stable with some improvements

642 645652 655 657

671 673679 681 682

596601

610615 615

Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019

Average used credit scores

Franchise used

All used

Independent used


713

710

714716 716

715

712

717719 719

718716

722724

725

Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019

Average new credit scores

New lease

All new

New loan

15 © Experian

Total market subprime remains at just over 20% of the finance space while super prime continues to rise

8.20% 8.44%16.25% 16.01%

45.42% 44.79%

29.55% 30.12%

Q1 2018 Q1 2019

New (loan/lease) risk distribution

5.17% 5.14%25.11% 24.39%

21.57% 21.39%

36.11% 36.40%

12.04% 12.69%

Q1 2018 Q1 2019

Used (loan/lease) risk distribution


3.11% 3.17%

17.54% 17.43%

19.19% 19.04%

40.28% 40.06%

19.88% 20.29%

Q1 2018 Q1 2019

Total (loan & lease/new & used units) risk distribution


Deep

subprime =

0.64%

16 © Experian

3.58% 3.61%

19.59% 19.33%

19.92% 19.77%

38.78% 38.72%

18.13% 18.58%

Q1 2018 Q1 2019

Total (new & used units) loan risk distribution


Q1 record lows for both total subprime and used subprime: total falls below 23% and used subprime below 30%

9.26% 9.55%16.72% 16.50%

43.76% 43.19%

29.60% 30.02%

Q1 2018 Q1 2019

New loan risk distribution

5.13% 5.10%25.13% 24.40%

21.63% 21.47%

36.12% 36.40%

11.99% 12.64%

Q1 2018 Q1 2019

Used loan risk distribution


Deep

subprime =

0.74%

17 © Experian

93

.47

%

83

.52

%

70

.72

%

60

.64

%

43

.06

%

92

.99

%

83

.11

%

71

.48

%

61

.88

%

44

.78

%Deep

SubprimeSubprime Nonprime Prime Super

Prime

Percentage of consumers by risk tier choosing used loans

Q1 2018 Q1 2019

All time record highs of prime+ consumers choosing used vehicles

16.69% 16.67%

22.55% 22.45%

43.51% 43.25%

15.51% 15.84%

Q1 2018 Q1 2019

Used Franchise loan risk distribution


10.18% 10.47%

37.66% 37.08%

20.46% 20.59%

25.21% 25.24%

6.49% 6.62%

Q1 2018 Q1 2019

Used Independent loan risk distribution



18 © Experian

6.21% 6.25%

15.36% 15.04%

48.57% 47.96%

29.46% 30.31%

Q1 2018 Q1 2019

New lease risk distribution


Leasing shifts into more prime segments with a slight decreases YOY of consumers choosing to lease

26.0%

32.6%

35.9%

24.8%

31.6%

35.1%

Deep &Sub

Nonprime

Prime +

% of new borrowers choosing to lease

Q1 2019

Q1 2018


Deep

subprime =

0.44%

19 © Experian

3.7%3.3% 3.1% 2.9%

2.4% 2.1% 2.1% 2.0% 2.0% 1.7%

CIVIC EQUINOX CR-V ACCORD RAV4 ROGUE GRANDCHEROKEE

CHEROKEE 1500 F150

Top 10 new leased models by market share

CUVs comprise the majority of the top leased models with average lease difference of $97


$426 $449 $469 $487 $478 $475 $617

$491

$654 $666

$309 $316 $362 $370 $377 $358$487

$365$463 $481

CIVIC EQUINOX CR-V ACCORD RAV4 ROGUE GRANDCHEROKEE

CHEROKEE 1500 F150

Loan v lease monthly payment comparison on top leased modelsLoan payment Lease payment

20 © Experian

$452 $452$439 $433 $435 $436

$495$474

$464 $456 $452 $457

Deep Subprime Subprime Nonprime Prime Super Prime Total

Average new lease paymentQ1 2018 Q1 2019

Leasing payments also rise while terms remain at 36 months


37.29 37.32 37.16 36.63

35.84 36.53

37.57 37.38 37.3636.93

35.92

36.72


Average new lease term

21 © Experian

Average new loan amount surpasses $32k and used hits record highs

$794$584

$924$1,051

$346

$733$828 $765$623 $594

$435$601

$785 $830$669 $629

$473$612$690

$535 $442 $484$245

$442


Year-over-year change in balance

$2

6,5

56

$2

9,4

26

$3

3,5

72

$3

4,0

61

$2

9,6

20

$3

2,1

87

$1

5,4

57

$1

6,9

96

$1

9,8

03

$2

1,7

95

$2

1,4

07

$2

0,1

37

$1

7,1

92

$19,0

33

$2

1,6

47

$2

3,1

06

$2

2,3

02

$2

1,9

02

$1

4,5

84

$1

5,2

64

$1

7,1

62

$19,3

72

$1

9,6

39

$1

7,3

78


Average loan amount by tier Avg New All Used Franchise used Independent used


22 © Experian

New loan term decreases; used terms increase

72.31 72.83 73.11 70.1962.96

68.8559.71 62.45 65.66 66.29 62.44 64.6765.97 67.40 68.44 67.62

63.05 67.0556.51 58.15 61.48 63.72 61.26 60.92


Average loan term by tier New All Used Franchise used Independent used

0.480.26 0.18

-0.06

-0.71

-0.18

1.43

0.87

0.460.31 0.18

0.44

0.810.59

0.40 0.290.13

0.34

1.42

0.82

0.45 0.46 0.21

0.53


Year-over-year change in used loan term


23 © Experian

17.6%

41.3%33.6%

1.3%

20.8%

38.0%32.0%

1.8%

49 - 60 61 - 72 73 - 84 85 - 96

Percentage of new loans by term

Q1 2018 Q1 2019

Longer term loans continue to dominate the market however new loans saw growth in shorter terms

9.9%

23.1%

40.7%

19.7%9.4%

22.3%

42.1%

20.0%

37 - 48 49 - 60 61 - 72 73 - 84

Percentage of used loans by term

Q1 2018 Q1 2019

760711

688 705

759

704 686 704

49 - 60 61 - 72 73 - 84 85 - 96

Average new score by loan term

Q1 2018 Q1 2019

658688

665 672659690

662 673

37 - 48 49 - 60 61 - 72 73 - 84

Average used score by loan term

Q1 2018 Q1 2019


24 © Experian

$546 $564 $574 $563 $528 $554 $410 $406 $392 $384 $386 $391 $416 $421 $412 $401 $399 $406 $409 $398 $372 $357 $359 $376


Average monthly payment by risk tier New All used Franchise used Independent used

Average new loan payments passes $550 with record highs seen across all loan types

$28 $26$32

$35

$27$31

$21 $21 $21$18

$15$19

$24 $25 $22$19

$16$20

$17 $16 $16 $15$11

$16


Year-over-year change in payments


25 © Experian

Gap between new and franchise used payments widen


$136$157

$182 $179$142

$163$130 $143

$163 $162$128

$148


Gap between new and used paymentsGap between new and used

Gap between new and Franchise used

$7$5

$11

$17

$12 $12$4

$2$9

$16

$11 $11


YOY change in payment gap

26 © Experian

New rates remain over 6% and continue to increase across all risk segments

14

.97

%

12

.42

% 8.0

8%

5.1

2%

4.2

0%

6.1

6%

20

.24

%

17

.52

% 11

.40

%

6.5

7%

4.8

2% 10

.06

%

19

.32

%

16.3

3% 10

.69

%

6.3

9%

4.8

0%

8.9

6%

20

.95

%

18

.97

% 13

.14

%

7.2

5%

4.8

8%

12

.69

%


Average loan rates by tier Avg New All Used Franchise used Independent used

90107 103 96 97 99

4360

97 89 86 8869

80

10491 87

101

3050

91 91 84 87


Year-over-year change (bps) in loan rate


27 © Experian

• Record highs continue with loan balances over $1.18 trillion

• 30 day delinquency increase YOY while 60 day delinquency remains stable

• Subprime record lows continue driven by decreases in the used loan space while subprime new sees slight increase

• Credit scores remain flat YOY

• New loan amounts passed $32k driving payments over $550 as new terms show a slight YOY decrease

• Used loan amounts also hit record highs entrenching Franchise used payments over $400

• Leasing continues to be a sought after product generating payments on average $98 lower than loans

Summary


state of the auto finance market - experian · note: ranges above are those used by experian...

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