State of the Automotive Finance MarketFirst Quarter 2011First Quarter 2011
Melinda Zabritski, Director of Automotive Credit
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Session overview
Automotive market overview with aAutomotive market overview with a look at consumer delinquency
How new and used financing is changing
Questions and answers
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Data Overview
First quarter 2011Automotive Finance Market Overview
Risk TiersRisk TiersCategory Scorex
PLUSSMVantageScore
► All open automotive loans by risk tier► Automotive loan delinquencies► Source: Experian-Oliver Wyman
Market Intelligence Reports
PLUSSM
Super Prime 740+ 801 – 990
Prime 680 – 739 701 – 800
Nonprime 620 – 679 641 – 700Market Intelligence Reports
► Visit www.marketintelligencereports.com Automotive Financing in first quarter 2011
► New versus Used vehicles
Subprime 550 – 619 601 – 640
Deep Subprime <550 501 - 600
► New versus Used vehicles► Top Lender report► Loan characteristics, now including Loan-to-Value ► Source: Experian Automotive National Vehicle Database sourced from DMV title► Source: Experian Automotive National Vehicle Database sourced from DMV title
registrations and NADA Used Car Guides. Visit: www.autocount.com
© 2011 Experian Information Solutions, Inc. All rights reserved. 3
Automotive market overview with a look at consumer delinquency
4© 2011 Experian Information Solutions, Inc. All rights reserved.Experian Public. 4
Automotive Finance MarketHow has the market been changing?How has the market been changing?
Risk Distribution of Open Auto Loans
Year-over-Year Change in Risk Distribution
11.8%11.8%
3.31% 3.55%2.59%
0.25%0%
5%
39.1%39.1%
15 5%15 5%
8.6%8.6%-5%
Super Prime
Prime Nonprime Subprime DeepSubprime
25 0%25 0%
15.5%15.5%-10%
Source: Experian-Oliver Wyman Market Intelligence Reports
25.0%25.0%
Super Prime Prime Nonprime Subprime Deep Subprime -17.61%-20%
-15%
© 2011 Experian Information Solutions, Inc. All rights reserved. 5
Source: Experian Oliver Wyman Market Intelligence Reports
Total Automotive BalanceWho holds the open loans?Who holds the open loans?
Year-over-Year Change in Balance
Total Outstanding Automotive Balance
$13
$10
$15
Bill
ions
$64 $64 $77 $77 $600
$700
Bill
ions
$3.3B
$5
$10
$194 $194 $193 $193
$144 $144 $142 $142
$300
$400
$500
$(1)$(2)
$- Bank Captive CreditUnion
Finance/Other
$231 $231 $225 $225 $100
$200
$
Source: Experian-Oliver Wyman Market Intelligence ReportsYOY Change
$(7)
$(10)
$(5)$-
Q1 2010 Q1 2011
Bank Captive Auto Credit Union Finance/Other
© 2011 Experian Information Solutions, Inc. All rights reserved. 6
Source: Experian Oliver Wyman Market Intelligence Reports
Average Age of Automotive LoansAre consumers holding onto loans longer?Are consumers holding onto loans longer?
Average Loan Age by Lender Type
2 18
Average Loan Age by Risk Segment
30.82
30
31
322.18
30.22
32.49
31.44
31
32
331.22
28.12
29.42
28.6428.14
27.59 27.72 27.8928
29
30-0.25
0.30
-1.7-0.53
27 1927.72
30.22
28
29
30
-1.82-0.69
-0.76
-6.25
26.4826.78
25
26
2727.19
26.57
25.3625.88
26.96
26.24
25
26
27
Source: Experian-Oliver Wyman Market Intelligence ReportsYOY Change
24
25
All Banks Captive Auto Credit Union Finance/Other TOTAL
Q1 2010 Q1 2011
24Super Prime Prime Nonprime Subprime Deep
Subprime
Q1 2010 Q1 2011
© 2011 Experian Information Solutions, Inc. All rights reserved. 7
Source: Experian Oliver Wyman Market Intelligence Reports
Recent Automotive Delinquency: 30 Day DelinquencyHow are automotive loans performing?How are automotive loans performing?
6%
30 Day Delinquency- 9.75%
Total Balance of 30 Day Delinquent Loans
5.35%
4.83%5%
10 32%
Overall 22 bps improvement
$3,108 $3,108 $14,000
$16,000
$18,000
Mill
ions
-$2.3 billion
2.50%
2.98%2.74%
2.25%
2.67% 2.52%3%
4% -10.17%-10.32%
3.13%
- 7.95%
$5,345 $5,345 $1,773 $1,773
$2,009 $2,009 $3,612 $3,612
$8,000
$10,000
$12,000
1.47%
2.25%
1.42%
1%
2%
$3 960$3 960$5,348 $5,348
$4,156 $4,156
$2 000
$4,000
$6,000
Source: Experian-Oliver Wyman Market Intelligence ReportsYOY Change
0%Banks Captive Auto Credit Union Finance/Other TOTAL
Q1 2010 Q1 2011
$3,960 $3,960
$-
$2,000
Q1 2011Q1 2010
Bank Captive Auto Credit Union Finance/Other
© 2011 Experian Information Solutions, Inc. All rights reserved. 8
Source: Experian Oliver Wyman Market Intelligence Reports
Recent Automotive Delinquency: 60 Day DelinquencyHow are automotive loans performing?How are automotive loans performing?
2.0%
60 Day Delinquency-9.76%
Total Balance of 60 Day Delinquent Loans
1.75%
1.58%
1.4%
1.6%
1.8% Overall 10 bps improvement
$960 $960 $3,500
$4,000
$4,500
Mill
ions
-$1 billion
0 73% 0.76%0 8%
1.0%
1.2%
1.4%
-17.76%-22.63%
-11 01%
-13.45%
$1,159 $1,159
$517 $517
$396$396
$1,047 $1,047
$2,000
$2,500
$3,000
0.73%0.65%
0.40%
0.76%
0.60%0.50%
0.35%
0.65%
0.4%
0.6%
0.8% -11.01%
$1,477 $1,477 $934$934
$734 $734
$396 $396
$500
$1,000
$1,500
Source: Experian-Oliver Wyman Market Intelligence ReportsYOY Change
0.0%
0.2%
Bank Captive Auto Credit Union Finance/Other TOTAL
Q1 2010 Q1 2011
$934 $934
$-
$500
Q1 2010 Q1 2011
Bank Captive Auto Credit Union Finance/Other
© 2011 Experian Information Solutions, Inc. All rights reserved. 9
Source: Experian Oliver Wyman Market Intelligence Reports
Recent Automotive RepossessionsHow have repossessions changed?How have repossessions changed?
3.0%
Quarterly Repossession Rate-2.0%
$8 713$9,000
Average Charge-Off Amount
2.62%2.57%
2.5%$8,295
$8,713
$8,375 $8,231
$8,371
$8,000
$8,500
-$1,490 -$1,143-$1,149 -$1,312
1.5%
2.0%
-4.3%
$6,729
$7,223 $7,232$7,082 $7,059
$6 500
$7,000
$7,500 -$1,566
$ ,
0.48%0.57%
0 19%
0.71%
0.35%
0.52%
0 20%
0.68%
0.5%
1.0%-27% -9.3%
3.7%
$5,500
$6,000
$6,500
YOY ChangeSource: Experian-Oliver Wyman Market Intelligence Reports
0.19%0.20%
0.0%Bank Captive Auto Credit Union Finance/Other TOTAL
Q1 2010 Q1 2011
$5,000 Bank Captive Auto Credit Union Finance/Other TOTAL
Q1 2010 Q1 2011
© 2011 Experian Information Solutions, Inc. All rights reserved. 10
Source: Experian Oliver Wyman Market Intelligence Reports
Automotive financing in the first quarter 2011
11© 2011 Experian Information Solutions, Inc. All rights reserved.Experian Public. 11
Market Snapshot on Vehicle FinancingHow has financing on vehicles changed?How has financing on vehicles changed?
100%
Used Financing by Model YearFinancing by Vehicle Type
12.5%
13.4%13.4%
1.5%
70%
80%
90%NewNew37.54%37.54%
UsedUsed62 46%62 46%
12.5%
-6.2%
Used Financing by Dealer Type23.9%23.9%
12.3%12.3%
0.2%50%
60%
70%2011201020092008
62.46%62.46%
Independent32.88%
Used Financing by Dealer Type
8 2%8 2%
17.8%17.8%8.7%8.7%
7.5%7.5%3.7%3.7%2.8%2.8%
20%
30%
40% 200720062005
-3.8%
2%
Source: Experian AutomotiveYOY Change
FranchiseFranchise67.12%67.12% 6.9%6.9% 8.9%8.9%
10.2%10.2% 8.2%8.2%
0%
10%
Franchise Dealer Independent Dealer
© 2011 Experian Information Solutions, Inc. All rights reserved. 12
Source: Experian Automotive
Market Snapshot on Vehicle FinancingHow has financing on vehicles changed?How has financing on vehicles changed?
-10800
Average Credit Scores100%
Financing by Risk Segment
753 755762 766
773 774 775 775 776 772 769 767 766
740
760
780
41.89%41.89%40.72%40.72%42.37%42.37%46.22%46.22%70%
80%
90%
2.9%
-2
668 670 668677
684 680 679 683 679680
700
720
40%
50%
60%
0%
653
668 670 668661 665 663
620
640
660
680
58.11%58.11%59.28%59.28%57.63%57.63%53.78%53.78%
10%
20%
30%
40%-2.0%
Source: Experian AutomotiveYOY Change
600
620
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
New Average Score Used Average Score
0%
10%
Q1 2011Q1 2010Q1 2009Q1 2008
Prime Subprime
© 2011 Experian Information Solutions, Inc. All rights reserved. 13
Source: Experian Automotive
Quarterly Financing for New VehiclesHow has credit changed for new financing?How has credit changed for new financing?
New Vehicle Financing by Risk Segmentation
Year-over-Year Change in Risk Distribution
80%
90%
100%44.8%
40%
50%
65.55%65.55%69.89%69.89%
50%
60%
70%
20%
30%-4.7%
10.57%10.57%9.81%9.81%
13.66%13.66%13.25%13.25%
10%
20%
30%
40%
8.5% 7.8%
3.1%
10%
20%
11.1%
Source: Experian AutomotiveYOY Change
2.00%2.00%1.38%1.38%6.16%6.16%5.68%5.68%
9.81%9.81%
0%
10%
Q1 2011Q1 2010
Deep Subprime Subprime Nonprime Prime Super Prime -6.2%-10%
0% Super Prime
PrimeNonprimeSubprimeDeepSubprime
© 2011 Experian Information Solutions, Inc. All rights reserved. 14
Source: Experian Automotive
Quarterly Financing for Used VehiclesHow has credit changed for used financing?How has credit changed for used financing?
Used Vehicle Financing by Risk Segmentation
Year-over-Year Change in Risk Distribution
32.97%32.97%35.12%35.12% 80%
90%
100%
-4%
13.8%
8.8%10%
15%
14.35%14.35%13.19%13.19%
12.47%12.47%12.21%12.21%
%
50%
60%
70%
2.1%
5%
22 81%22 81%24.19%24.19%
17.41%17.41%15.29%15.29%
10%
20%
30%
40%3.60%
0%Super Prime
PrimeNonprimeSubprimeDeepSubprime
Source: Experian AutomotiveYOY Change
22.81%22.81%9%9%
0%
10%
Q1 2011Q1 2010
Deep Subprime Subprime Nonprime Prime Super Prime
-5.7% -6.1%
-10%
-5%
© 2011 Experian Information Solutions, Inc. All rights reserved. 15
Source: Experian Automotive
Automotive Finance by Lender TypeWhat lenders are gaining share?What lenders are gaining share?
37 41% 16.7% 20%40%
Market Share by Lender35.6%
29.6% 40%50%
New Financing
37.41%
14.4%
5.6%
13.7%
%
5%
10%
15%
30%
35%44.90%44.90%
0 43%
39.45%39.45%
8 85%8 85% 0 80%
2.7%
-23.9%
-8.7%
20.8%
-20%
-10%
0%
10%
20%
30%
10%
20%
30%
40%
13.10%
18.85%
15.28%-5%
0%
5%
15%
20%
25%0.43% 8.85%8.85% 5.57%5.57% 0.80%
-30%0%Bank BHPH Captive Credit Union Finance Other
Market Share Change in Share
Used Financing8.67%
6.69%
-21.2%
-13.3%
-20%
-15%
-10%
5%
10%
2.4%9.5%
-12.7%
11.9%20.5%
0%
10%
20%
30%
15%
20%
25%
30%
35%
Used Financing
Source: Experian Automotive
-25%0%Bank BHPH Captive Credit
UnionFinance Other
Market Share Change in Share
33.26%33.26% 20.13%20.13% 7.43%7.43% 18.84%18.84% 10.39%10.39% 9.95%9.95%-25.6%
-30%
-20%
-10%
0%
5%
10%
Bank BHPH Captive Credit Union Finance Other
Market Share Change in Share
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Source: Experian Automotive
Risk Distribution by Lender TypeHow have the lenders shifted?
100%
Lender Type by Risk Distribution
How have the lenders shifted?
18%
Change in Outside of Prime
13.62%13.62%
4.69%4.69%
56.97%56.97%63 14%63 14%
49.13%49.13%
11.01%11.01%
70%
80%
90%16.50%
14%
16%
40.70%40.70%
18.26%18.26%
63.14%63.14%
40%
50%
60%
6 54%8%
10%
12%
29.98%29.98%10 26%10 26% 10 84%10 84%
13.58%13.58%12.87%12.87%
17.56%17.56%
14.99%14.99%14.96%14.96%
10%
20%
30%
40%
3.75%
6.54%
2%
4%
6%
4.21%4.21% 1.72%1.72% 4.21%4.21%
10.26%10.26%7.30%7.30%
10.84%10.84%
0%
10%
Bank Captive Credit Union Finance
Deep Subprime Subprime Nonprime Prime Super Prime -0.33%-2%
0%
2%
Bank Captive Credit Union Finance
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Top 20 Lenders by Market ShareWho gained or lost share?Who gained or lost share?
85 5% 87 3% 100%10%
Top 20 Lenders: Total Loan85.5%
68.6%
28.8%
52.1%
87.3%
40%
60%
80%
6%
7%
8%
9% 51.18% of All 51.18% of All FinancingFinancing
13.1%
1.0%
37 5%
13.8%
-5.6%
7.8% 8.1%
21.8%
4.6%
-14.7%
13.5%
-4.7%0.8% 4.7% 4.1%
12.9%
-20%
0%
20%
2%
3%
4%
5%
6%
9.44%9.44% 6.07%6.07% 5.23%5.23% 4.27%4.27% 3.80%3.80% 3.44%3.44% 2.80%2.80% 1.91%1.91% 1.80%1.80% 1.57%1.57% 1.56%1.56% 1.28%1.28% 1.23%1.23% 1.18%1.18% 1.08%1.08% 1.02%1.02% 0.92%0.92% 0.91%0.91% 0.84%0.84% 0.83%0.83%
-37.5%
-60%
-40%
0%
1%
2%
Source: Experian Automotive
Q1 2011 Share Year-over-Year Change in Share
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Source: Experian Automotive
Top 20 New Lenders by Market ShareWho gained or lost share on New Vehicle Financing?Who gained or lost share on New Vehicle Financing?
123 2% 140%16%
Top 20 New Lenders by Market Share
77.3% of New 77.3% of New FinancingFinancing
65.4%75.1%
123.2%
60%
80%
100%
120%
10%
12%
14%
24.1%
0.7% -1.5%
14.9%
-3.6%
14.4% 11.1%
-6.9%
21.0%
-2.8% -5.8%0%
20%
40%
60%
4%
6%
8%
14.49% 9.43% 8.71% 8.14% 6.02% 4.44% 4.06% 3.18% 2.98% 2.39% 1.91% 1.69% 1.67% 1.44% 1.34% 1.27% 1.22% 1.09% 0.98% 0.90%
-13.4% -12.9%
-48.5%
-14.8% -11.0% -12.3%
-60%
-40%
-20%
0%
2%
4%
Source: Experian Automotive
Q1 2011 Share Year-over-Year Change in Share
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Source: Experian Automotive
Top 20 Used Lenders by Market ShareWho gained or lost share on Used Vehicle Financing?Who gained or lost share on Used Vehicle Financing?
100%8%
Top 20 Used Auto Lenders by Market Share85.1%
68.6%60.2% 60.1%
41.8% 41.0%
60%
80%
5%
6%
7% 38.7% of Used 38.7% of Used FinancingFinancing
15.7% 12.6% 12.9%
25.0% 21.5%
-3.8%
12.2%
-0.7%
20.2%
19 8%
8.8%3.9%
0%
20%
40%
2%
3%
4%
7.18%7.18% 3.85%3.85% 3.30%3.30% 3.03%3.03% 2.91%2.91% 2.68%2.68% 2.09%2.09% 1.58%1.58% 1.38%1.38% 1.32%1.32% 1.31%1.31% 1.11%1.11% 0.99%0.99% 0.97%0.97% 0.94%0.94% 0.93%0.93% 0.88%0.88% 0.83%0.83% 0.75%0.75% 0.67%0.67%
-28.4%-22.6% -19.8%
-40%
-20%
0%
1%
Source: Experian Automotive
Q1 2011 Share Year-over-Year Change in Share
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Source: Experian Automotive
Vehicle FinancingHow has financing changed?How has financing changed?
$30,000
Average Amount Financed$8
$23 924$25,754 $26,738 $25,257$24 120
$26,137 $26,841$25,216
$30,000
Average Amount Financed: New Vehicles
$25,396 $25,404
$20 000
$25,000
$397
$21,900$23,924
$21,860$24,120
$5,000
$10,000
$15,000
$20,000
$25,000
$16,239 $16,636
$15,000
$20,000$
Deep Subprime Subprime Nonprime Prime Super Prime
Q1 2010 Q1 2011
Average Amount Financed: Used Vehicles
$5,000
$10,000
$11,949$13,924
$15,516$16,974 $17,925
$12,830$14,823
$16,133$17,524 $18,294
$10,000
$15,000
$20,000
Average Amount Financed: Used Vehicles
Source: Experian AutomotiveYOY Change
$New Used
Q1 2010 Q1 2011
$
$5,000
Deep Subprime Subprime Nonprime Prime Super Prime
Q1 2010 Q1 2011
© 2011 Experian Information Solutions, Inc. All rights reserved. 21
Source: Experian Automotive
Vehicle Values and Loan-to-ValueHow do the lenders and risk segments compare?How do the lenders and risk segments compare?
Average Loan-to-Value by Risk Segment
Average Loan-to-Value by Lender Type
139.72%
134.41%132.25%
129 54%
140%
150%
138.24%140%
150%
118.82%121.61% 121.53%
116 9%
129.54%
118.05%120%
130%
111 79%
118.79%122.30% 121.91%
129.69%126.35%
120%
130%
116.59%
100.73%100%
110%
103.16%
108.85%111.79%
107.17%
100%
110%
Source: Experian Automotive and NADA Used Car Guides
90%Deep
SubprimeSubprime Nonprime Prime Super Prime
Average New LTV Average Used LTV
90%Bank Captive Credit Union Finance Market
Totals
Average New LTV Average Used LTV
© 2011 Experian Information Solutions, Inc. All rights reserved. 22
Source: Experian Automotive and NADA Used Car Guides
Vehicle PaymentsHow have monthly payments changed?How have monthly payments changed?
$500
Average Monthly Payment$-2 $500
Average Monthly Payment: New Vehicles
$462 $460
$450
$452$461 $462 $466 $463
$450$458 $459 $460 $461
$420
$440
$460
$480
$341 $343$350
$400$2
$400Deep Subprime Subprime Nonprime Prime Super Prime
Q1 2010 Q1 2011
Average Monthly Payment Used Vehicles
$300$347 $343
$331 $334$346$351 $350
$333 $335$345
$340
$360
$380
$400
Average Monthly Payment Used Vehicles
Source: Experian AutomotiveYOY Change
$250New Used
Q1 2010 Q1 2011
$300
$320
Deep Subprime Subprime Nonprime Prime Super Prime
Q1 2010 Q1 2011
© 2011 Experian Information Solutions, Inc. All rights reserved. 23
Source: Experian Automotive
Vehicle Loan TermsHow have terms changed?How have terms changed?
72
Average Term67.93 68.26 67 49
69.29 69.02 67.90 66 4472
Average Term: New Vehicles
63
1
67.93 67.49 66.27
61.00
67.90 66.44
60.8060
62
57
63
5860
1 48Deep Subprime Subprime Nonprime Prime Super Prime
Q1 2010 Q1 2011
Average Term: Used Vehicles
47.89
55.9259.14 60.63 59.47
51.23
57.90 59.82 61.02 59.5660
72
Average Term: Used Vehicles
Source: Experian AutomotiveYOY Change
48New Used
Q1 2010 Q1 2011
36
48
Deep Subprime Subprime Nonprime Prime Super Prime
Q1 2010 Q1 2011
© 2011 Experian Information Solutions, Inc. All rights reserved. 24
Source: Experian Automotive
Vehicle Loan RateHow have rates changed?How have rates changed?
9.51%10%
Average Rate -43 bps
13.41%13.57%14%16%
Average Rate: New Vehicles
9.08%
7%
8%
9%
-48 bps
10.80%
7.57%5.74%
4.38%
10.38%
6.76%4.95%
3.64%
2%4%6%8%
10%12%14%
5.31%4.83%
4%
5%
6%0%
Deep Subprime Subprime Nonprime Prime Super Prime
Q1 2010 Q1 2011
Average Rate: Used Vehicles
1%
2%
3% 18.12%15.31%
10.82%8.04%
6.01%
17.85%
14.64%
9.88%7.04%
5 06%10%
15%
20%
e age ate Used e c es
Source: Experian AutomotiveYOY Change
0%New Used
Q1 2010 Q1 2011
5.06%
0%
5%
Deep Subprime Subprime Nonprime Prime Super Prime
Q1 2010 Q1 2011
© 2011 Experian Information Solutions, Inc. All rights reserved. 25
Source: Experian Automotive
Average Rates by LTVHow do rates and scores vary by LTV?How do rates and scores vary by LTV?
Average Rates by LTV
7 49%7.89%
8.18%8.57%
8.98%9.41% 9.67% 9.75% 9.75% 9.64% 9.63% 9.47%
9.10%
8%
10%
12%
4 62% 4 78% 4.96% 5.07% 5.24% 5.42% 5.55% 5.63% 5.70% 5.72% 5.54% 5.48% 5.51% 5.28%
6.26% 6.02% 6.01% 6.23% 6.45%6.81%
7.21% 7.49%
4%
6%
8%
311bps
404bps 410bps
4.44%3.99% 3.96% 4.00% 4.14% 4.39% 4.62% 4.78%
0%
2%
4%
Source: Experian Automotive and NADA Used Car Guides
0%
NEW USED
© 2011 Experian Information Solutions, Inc. All rights reserved. 26
Source: Experian Automotive and NADA Used Car Guides
In Summary
Overall, open portfolios are still strong with a slight increase ($3 billion/0.5%) over last year( ) y
Strong improvement in both 30 and 60 day delinquencies
Credit continues to loosen on originations
► All of Subprime is up 11.1% on New; 3.6% on Used
► Average scores continue to decrease
Sli ht hift i U d fi t d ld d l hi l► Slight shift in Used finance toward older model vehicles
Financing and payments relatively flat to last year
► Terms increasing among highest risk segments► Terms increasing among highest risk segments
► Rates decreasing for both new and used
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Mark your calendars
Q2 2011Q2 2011 Automotive Credit
Trends BriefingTrends Briefing
August 30, 2011August 30, 2011
© 2011 Experian Information Solutions, Inc. All rights reserved. 28
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