vision 2014: making the trends actionable - automotive market expansion
DESCRIPTION
This session will explore how Toyota Financial Services is using market trends to create actionable insights. From buying deeper to monitoring portfolio performance, hear how this lender is growing their business in today’s competitive automotive market.TRANSCRIPT
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Making the trends actionable: Automotive market expansion
Jessica Dees Toyota Financial Services
Michael McGrath Toyota Financial Services
#vision2014
Melinda Zabritski Experian
2 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
TFS monitors industry trends closely
► How are we performing vs. the industry?
► How are we performing vs. our competitors and peers?
Apples to apples comparison
► We prepare a high level trends report
► Side by side comparison of metrics
► Overall trends
► Links to our performance metrics and risk appetite
Shared with executives at multiple levels
► HQ – ERC and portfolio review meetings
► Field operations
Leveraging consumer credit trends from Experian
3 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
2013 Q4 snapshot: Industry market share
5.80% 5.16% 5.00%
4.61% 4.61% 4.59%
3.58% 3.54%
1.85% 1.72%
0%
1%
2%
3%
4%
5%
6%
7%
Toyota(TFS)
Ally WellsFargo
Honda Ford Chase NissanInfiniti
CapitalOne
HyundaiCapital
BMW
Share of total finance units (loan and lease) Data provided by Experian
5.8% 4.8% 4.6% 4.5% 4.1%
3.6% 3.4% 2.7%
1.7% 1.6%
0%
2%
4%
6%
8%
Top-10 – loan market share
14.2% 12.5%
11.6% 9.6% 9.1% 7.3% 6.8% 5.9%
5.3% 3.8%
0%
4%
8%
12%
16%
Top 10-lessors – share of new lease market
Source: Experian Automotive
Top-10 represent 40.5%
of total finance units
4 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
2013 Q4 snapshot: Industry loan market share
8.34% 8.18% 7.99%
6.38% 6.31% 5.85%
4.40% 4.04%
2.81% 2.52%
0%
2%
4%
6%
8%
10%
Toyota(TFS)
Ford Honda Chase NissanInfiniti
Ally Capital OneWells Fargo Chrysler Hyundai
Top lenders – new loan market share
6.83%
3.91% 3.81% 3.79%
2.24% 2.20% 1.64% 1.53% 1.37% 1.23%
0%
2%
4%
6%
8%
10%
Wells FargoCapital One Ally Chase Toyota(TFS)
Santander Carmax CreditAcceptance
Bank ofAmerica
5th 3rdBank
Top lenders – used loan market share
Source: Experian Automotive
5 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
New lease market share trends
0%
5%
10%
15%
20%
25%
30%
Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013
New lease market share (Experian data used for industry averages)
Industry TFS
0%
5%
10%
15%
20%
25%
30%
35%
40%
TFS lease market share trend
Source: TFS Risk Management and Experian Automotive
6 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
New lease credit distribution on originations Fourth quarter 2012 – 2013
1.9% 2.5%
9.5% 8.9%
18.5% 20.5%
18.8% 23.9%
51.3% 44.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CY 2012 Q4 CY 2013 Q4
Industry Risk distribution of new lease
Deep subprime Subprime Nonprime Prime Super prime
Based on VantageScore® 3.0 *
0.5% 0.5%
4.5% 5.0%
15.0% 15.5%
25.0% 26.0%
55.0% 53.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CY 2012 Q4 CY 2013 Q4
TFS Risk distribution of new lease
Deep subprime Subprime Nonprime Prime Super prime
Based on FICO scores *
-2.9%
+6.7%
Score ranges: Deep Subprime <550; Subprime 550-619; Nonprime 620-679; Prime 680-739; Super prime 740+
TFS amounts do not represent actual amounts. The data provided is for illustrative purposes only
Source: TFS Risk Management and Experian Automotive
7 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Lease term distribution Fourth quarter 2013 and TFS trend
TFS amounts do not represent actual amounts. The data provided is for illustrative purposes only
Source: TFS Risk Management and Experian Automotive
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
13 - 24 25 - 36 37 - 48 49 - 60
Q4 2013 lease term distribution (Experian data used for industry averages)
Industry TFS
0%
2%
4%
6%
8%
10%
12%
TFS lease term distribution trend Effective 24-month term (0–27)
8 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
New loan credit distribution on originations Fourth quarter 2012 – 2013
2.0% 3.0%
12.1% 10.8%
18.7% 20.3%
18.5% 21.6%
48.6% 44.3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CY 2012 Q4 CY 2013 Q4
Industry Risk distribution of new loans
Deep subprime Subprime Nonprime Prime Super prime
Based on VantageScore® 3.0 *
0.5% 0.5% 2.5% 3.0%
12.0% 12.5%
20.0% 20.0%
65.0% 64.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CY 2012 Q4 CY 2013 Q4
TFS Risk distribution of new loans
Deep subprime Subprime Nonprime Prime Super prime
Based on FICO scores *
-1.9%
+3.9%
Score ranges: Deep Subprime <550; Subprime 550-619; Nonprime 620-679; Prime 680-739; Super prime 740+
TFS amounts do not represent actual amounts. The data provided is for illustrative purposes only
Source: TFS Risk Management and Experian Automotive
9 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Used loan credit distribution on originations Fourth quarter 2012 – 2013
14.6% 17.6%
27.1% 21.9%
22.1% 23.2%
14.5% 17.7%
21.7% 19.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CY 2012 Q4 CY 2013 Q4
Industry Risk distribution of used loans
Deep subprime Subprime Nonprime Prime Super prime
Based on VantageScore® 3.0 *
1.5% 2.0%
6.5% 8.0%
22.0% 25.0%
30.0% 30.0%
40.0% 35.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CY 2012 Q4 CY 2013 Q4
TFS Risk distribution of used loans
Deep subprime Subprime Nonprime Prime Super prime
Based on FICO scores *
+2.8%
-1.6%
Score ranges: Deep Subprime <550; Subprime 550-619; Nonprime 620-679; Prime 680-739; Super prime 740+
TFS amounts do not represent actual amounts. The data provided is for illustrative purposes only
Source: TFS Risk Management and Experian Automotive
10 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Comparison of average loan amount and term Fourth quarter 2012 – 2013
0
5,000
10,000
15,000
20,000
25,000
30,000
New Used
Average amount financed ($) (Experian data used for industry averages)
2012 (Industry) 2013 (Industry)
2012 (TFS) 2013 (TFS)
57
58
59
60
61
62
63
64
65
66
New Used
Average term (months) (Experian data used for Industry averages)
2012 (Industry) 2013 (Industry)
2012 (TFS) 2013 (TFS)
TFS amounts do not represent actual amounts. The data provided is for illustrative purposes only
Source: TFS Risk Management and Experian Automotive
11 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Term distribution comparison for new loans Fourth quarter 2012 – 2013
-5.5%
1.3%
-4.8% -3.9%
19.0%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
25-36 37-48 49-60 61-72 73-84
Industry % of new financing by term *
Industry YOY change in Distribution
0%
10%
-10%
5%
15%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
25-36 37-48 49-60 61-72 73-84
TFS % of new financing by term *
TFS YOY change in Distribution
* Excludes showing loan terms less than 25 months and greater than 84 months
TFS amounts do not represent actual amounts. The data provided is for illustrative purposes only
Source: TFS Risk Management and Experian Automotive
12 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Term distribution comparison for used loans Fourth quarter 2012 – 2013
-5.8% -7.0% -8.2%
3.9%
23.2%
-30%
-10%
10%
30%
50%
70%
90%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
25-36 37-48 49-60 61-72 73-84
Industry % of used financing by term *
Industry YOY change in Distribution
25%
-5%
-20%
5%
35%
-30%
-10%
10%
30%
50%
70%
90%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
25-36 37-48 49-60 61-72 73-84
TFS % of used financing by term *
TFS YOY change in Distribution
* Excludes showing loan terms less than 25 months and greater than 84 months
TFS amounts do not represent actual amounts. The data provided is for illustrative purposes only
Source: TFS Risk Management and Experian Automotive
13 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
We also insert other relevant industry factors
Source: Experian-Oliver Wyman Intelligence Report
Total consumer debt (in $ billions)
Deb
t se
rvic
e ra
tio
Pe
rce
nta
ge c
han
ge, a
ye
ar
ag
o
2013 2007 2009 2010 2008 2011 2012
14%
12%
10%
8%
6%
4%
2%
0%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
14 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.
Who is paying off their card balances?
Source: Experian-Oliver Wyman Intelligence Report
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When will card payment compete with auto payment?
Source: Experian-Oliver Wyman Intelligence Report
Outstanding balances by VantageScore® (in $ billions)
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What type of debts are being paid off first? Percent of balance 90+ days delinquent
Source: FRBNY Consumer Credit Panel/Equifax
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Information provided on a regular basis
Can be used as an input to internal discussions
Experian account executives are available to help
Thank you
Providing value for TFS
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