experian state of the automotive finance market
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Experian Automotive: Gain insights into how the latest industry developments can impact your automotive lending business.TRANSCRIPT
© 2014 Experian Information Solutions, Inc. All rights reserved. Experian and the Experian marks used herein are trademarks or registered trademarks
of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners.
No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian.
Experian Public.
Automotive Market Update
Melinda Zabritski Senior Director | Experian Automotive
2 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Discussion points
What’s on the road
Market share and registrations
Finance and delinquency
Originations and payment trends
3 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Vehicles in Operation
What’s on the road today?
4 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
What’s on the road today?
Vehicles in
operation
2013
246.1 million
Vehicles in
operation
2012
247 million
Scrapped
vehicles
16.2 million
Carryover
New vehicle sales
15.3 million
Used vehicle sales
39.1 million
VIO additions/deletions: 31.5 million (12.8%) (scrapped + new sales)
VIO total changes: 70.6 million (28.7%) (used sales + scrappage + new sales)
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
5 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
VIO by model year
0
2
4
6
8
10
12
14
16
201
5
201
3
201
1
200
9
20
07
200
5
200
3
200
1
199
9
199
7
199
5
19
93
199
1
198
9
198
7
198
5
198
3
198
1
19
79
197
7
197
5
197
3
197
1
196
9
196
7
Mil
lio
ns
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
6 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
VIO by model year
0
2
4
6
8
10
12
14
16
201
5
201
3
201
1
200
9
20
07
200
5
200
3
200
1
199
9
199
7
199
5
19
93
199
1
198
9
198
7
198
5
198
3
198
1
19
79
197
7
197
5
197
3
197
1
196
9
196
7
Mil
lio
ns
98 million vehicles
within “sweet spot”
(MY2002 – 2008)
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
7 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
VIO by model year
0
2
4
6
8
10
12
14
16
201
5
201
3
201
1
200
9
20
07
200
5
200
3
200
1
199
9
199
7
199
5
19
93
199
1
198
9
198
7
198
5
198
3
198
1
19
79
197
7
197
5
197
3
197
1
196
9
196
7
Mil
lio
ns
Shrinking sweet spot in the
coming year
(-4.2 million to 93.8 million)
plus estimated 1 million scrap
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
8 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Average age of vehicles on the road today
9.5 9.6 9.9
10.2 10.4 10.4
6.9 7.1 7.3 7.4 7.5 7.4
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013
Average Age 15-Year Rolling Age
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
9 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Vehicle registration
and market share
What metal is moving?
10 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Annual vehicle registrations
0
10
20
30
40
50
60
2009 2010 2011 2012 2013
Mil
lio
ns
New Used
22% 25% 27% 24% 28%
47.4 51.5
55.1
49.5 53.6
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
11 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Census regions
West Region
South Region
Northeast
Region
Midwest Region
12 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Total (new and used) registrations by Census region
0
5
10
15
20
25
2009 2010 2011 2012 2013
Millio
ns
Midwest Region Northeast Region South Region West Region
4.4%
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
13 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
New and used registrations by region (millions)
0
2
4
6
8
10
12
14
2009 2010 2011 2012 2013
Northeast region
0
5
10
15
20
25
2009 2010 2011 2012 2013
South region
0
2
4
6
8
10
12
14
2009 2010 2011 2012 2013
West region
0
2
4
6
8
10
12
14
2009 2010 2011 2012 2013
Midwest region
19.9% 21.1% 24.4% 25.1%
New Used
23.1% 27.8% 29.3% 32.6% 33.4% 30.8%
20.6% 21.8% 26.4% 28.0% 23.2% 22.1% 24.2% 27.7% 28.8% 25.6%
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
14 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Top new registrations by segment
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Th
ou
sa
nd
s
2012 2013
30.6% 30.0%
138,000 more Alt Power
registrations in 2013
than prior year
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
15 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Winners and losers by year-over-year registration change
0 100000 200000 300000
Pickup - Full Sized
CUV - Entry Level
SUV - Lower Mid Range
Alt Power
Small Car - Econ
CUV - Premium
CUV - Mid Range
Mid Range Car - Std
Upscale - Near Luxury
Upscale - Luxury
Winners
-60000 -40000 -20000 0
Losers
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
Sport Car – Ultra Luxury
Small Car – Budget
Upscale – Premium
Traditional Car
Van – Mini
Sport Car – Touring
Pickup – Small
Mid Range Car – Premium
SUV – Entry Level
16 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Top and bottom states for hybrid registrations (by share of state registrations)
0%
2%
4%
6%
8%
10%
CA OR DC WA HI VA NC MD VT AZ
Top-10 hybrid states
0%
1%
1%
2%
2%
3%
MIMSMOSDOKWVWYLAAKND
Bottom-10 hybrid states
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
17 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Import vs. domestic new registrations
0
1
2
3
4
5
2009 2010 2011 2012 2013
Midwest region
0
1
2
3
4
5
2009 2010 2011 2012 2013
Northeast region
0
1
2
3
4
5
6
7
2009 2010 2011 2012 2013
South region
0
1
2
3
4
5
2009 2010 2011 2012 2013
West region Import Domestic
60.5% 61.5% 62.7% 60.9% 62.0% 35.8% 36.2% 40.5% 38.5% 39.5%
37.1% 37.7% 39.9% 37.6% 38.4% 48.0% 48.8% 49.1% 47.6% 48.0%
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
18 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Who is down (bps)?
Kia -42
VW -32
Hyundai -22
Toyota -14
GM -10
Manufacturer market share (Ranking based on 2013 share)
GM 18.0%
Ford 15.2%
Toyota 14.5%
Chrysler 11.3%
Honda 9.9%
Nissan 7.9%
Hyundai 4.8%
VW 4.0%
Kia 3.9%
Others 10.5%
2012
GM 17.9%
Ford 15.6%
Toyota 14.4%
Chrysler 11.5%
Honda 9.9%
Nissan 8.1%
Hyundai 4.6%
VW 3.7%
Kia 3.5%
Others 10.8%
2013 Who is up (bps)?
Ford 42
Others 38
Chrysler 20
Nissan 18
Honda 2
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
19 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Top-5 new regional manufacturer market share
0%
10%
20%
30%
GM Ford Chrysler Toyota Honda
Midwest Region
0%
10%
20%
30%
Toyota GM Honda Ford Chrysler
Northeast Region
0%
10%
20%
30%
Toyota Ford GM Honda Chrysler
Western Region
0%
10%
20%
30%
GM Toyota Ford Chrysler Nissan
South Region
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
20 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Top-5 regional manufacturer market share gains (Basis points)
0
20
40
60
80
100
Ford Chrysler Subaru Honda Nissan
Midwest Region
0
20
40
60
80
100
Subaru Chrysler Ford GM BMW
Northeast Region
0
20
40
60
80
Subaru Ford Tesla Nissan Mazda
West Region
0
20
40
60
80
100
Ford Subaru Nissan Chrysler Hyundai
South Region
Source: Experian Automotive as of December 31, 2013 (U.S. light duty vehicles only)
21 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Overall automotive
finance market
Balances and delinquency
22 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Total outstanding automotive loan balance
$555 $571 $555 $507 $491 $516 $562
$621
$140 $143 $148 $147 $143
$142 $157
$178
$-
$100
$200
$300
$400
$500
$600
$700
$800
$900
Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013
Bil
lio
ns
Rest of Market Credit Union Market
Source: Experian-Oliver Wyman Market Intelligence Reports
23 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Delinquency rates on automotive loans
0.74%
0.94%
0.65% 0.65%
0.71%
0.48%
0.40%
0.52%
0.32%
0.15% 0.19%
0.10%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.80%
0.90%
1.00%
Q4 2013Q4 2012Q4 2011Q4 2010Q4 2009Q4 2008Q4 2007Q4 2006
60-DPD Repo CU 60-DPD CU Repo
Source: Experian-Oliver Wyman Market Intelligence Reports
24 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
New and used
originations
Loans, leases
and characteristics
25 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Percentage of transactions with a lien holder
78.7% 75.0%
84.1%
51.2% 45.9%
52.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2006 2007 2008 2009 2010 2011 2012 2013
New Used
Source: Experian Automotive
26 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Percentage of cash payment by used model year
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
201
5
201
4
201
3
201
2
20
11
201
0
200
9
200
8
200
7
200
6
200
5
200
4
200
3
20
02
200
1
200
0
199
9
199
8
199
7
199
6
199
5
199
4
19
93
199
2
199
1
199
0
<19
90
Source: Experian Automotive
27 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
New lease market share
20.6
5%
23.6
6%
23.1
3%
24.7
9%
28.8
4%
16.8
%
19.2
%
19.0
%
20.3
%
24.2
%
0%
5%
10%
15%
20%
25%
30%
35%
Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013
Share of new financing Share of all new
Source: Experian Automotive
28 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Market snapshot on vehicle loan financing
48.93% 48.90%
0%
20%
40%
60%
80%
100%
Q4 2012 Q4 2013
Current +5 model year
New 37.52% Used
62.48%
Loans by vehicle type
54.7%
45.3%
Used financing by dealer type
Independent Franchise
Source: Experian Automotive
29 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Used financing by model year
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2014201320122011201020092008200720062005200420032002200120001999
Credit Union
Bank
Current +5MY is 65% of bank financing
and nearly 50% of credit union loans
Source: Experian Automotive
30 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
New loan market share by lender type
32.99%
45.84% 47.98% 46.69% 41.08%
49.60%
42.91% 36.16% 36.12% 41.26%
12.72% 9.68%
11.04% 12.54% 12.80%
4.39% 1.17% 4.68% 4.51% 4.68%
0%
20%
40%
60%
80%
100%
Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013
Bank Captive Credit Union FinanceSource: Experian Automotive
31 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Used loan market share by lender type
32.73% 31.99% 38.39% 37.84% 36.25%
14.94% 15.48% 13.97% 14.78% 13.61%
11.15% 8.67% 7.03% 6.26% 7.64%
25.25% 19.96% 21.10% 21.42% 22.37%
15.93% 23.91% 19.51% 19.70% 20.13%
0%
20%
40%
60%
80%
100%
Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013
Bank BHPH Captive Credit Union Finance
Source: Experian Automotive
32 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Shifts in average credit scores
727 715
731
710
637
646
688 680
600
620
640
660
680
700
720
740
760
Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013
New CU New Used CU Used
Source: Experian Automotive
33 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Average scores by lender type
718 676
720 710 651
684
563
675 680
568
0
100
200
300
400
500
600
700
800
Bank Buy here /pay here
Captive Credit union Finance
New Used
Source: Experian Automotive
34 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Score categories
Score ranges
Category VantageScore® 3.0
Super prime 740+
Prime 680–739
Nonprime 620–679
Subprime 550–619
Deep subprime <550
35 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Quarterly financing for new vehicles
2.22% 1.35% 1.34% 1.64% 2.03% 2.96%
11.36% 8.44% 9.70% 11.13% 12.07% 10.81%
17.76% 16.34% 17.71% 18.38% 18.71% 20.32%
18.78% 18.83%
18.82% 18.47% 18.54% 21.59%
49.88% 55.04% 52.43% 50.38% 48.65% 44.32%
0%
20%
40%
60%
80%
100%
Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013
Deep subprime Subprime Nonprime Prime Super prime
Source: Experian Automotive
36 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Quarterly financing for used vehicles
17.96% 15.99% 13.62% 13.89% 14.60% 17.63%
25.01% 22.31% 24.21% 26.57% 27.11% 21.94%
19.87% 20.08% 21.62%
22.16% 22.11% 23.23%
14.53% 15.56% 15.64%
14.69% 14.46% 17.71%
22.64% 26.05% 24.92% 22.69% 21.72% 19.49%
0%
20%
40%
60%
80%
100%
Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013
Deep subprime Subprime Nonprime Prime Super prime
Source: Experian Automotive
37 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Risk comparisons by lender type on new loans
2.02% 2.87% 1.82%
15.23% 9.52% 10.36% 10.04%
29.14%
20.49% 19.01% 24.77%
18.78%
23.22% 19.94%
24.70%
13.09%
44.74% 47.82% 38.66%
23.77%
0%
20%
40%
60%
80%
100%
Bank Captive Credit union Finance
Deep Subprime Subprime Nonprime Prime Super Prime
Source: Experian Automotive
38 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Risk comparisons by lender type on new loans
4.99%
51.75%
7.14% 4.95%
39.76% 16.59%
25.06%
19.89% 16.01%
40.18%
26.73%
12.09%
26.53% 30.03%
13.97%
23.67%
5.82%
20.31% 24.43%
3.93%
28.02%
5.27%
26.13% 24.58%
2.17%
0%
20%
40%
60%
80%
100%
Bank Buy here /pay here
Captive Credit Union Finance
Deep Subprime Subprime Nonprime Prime Super Prime
Source: Experian Automotive
39 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Rising prices and loan amounts on new vehicles
$2
4,4
37
$2
4,6
55
$2
5,0
67
$2
5,5
03
$2
4,5
02
$2
4,8
60
$2
5,2
85
$2
6,1
35
$2
5,7
89
$2
6,4
19
$2
6,6
91
$2
7,4
30
$2
7,1
50
$2
7,2
70
$2
7,8
83
$2
9,6
09
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
Q4 2010 Q4 2011 Q4 2012 Q4 2013
Avg MSRP Avg CU MSRP Amount Financed CU Amount Financed
108% / 113% 110% / 112% 110% / 113% 110% / 116%
Source: Experian Automotive
40 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Rising prices and loan amounts used vehicles
$13,9
68
$1
4,3
41
$1
4,3
39
$14,6
04
$1
2,6
76
$1
3,0
36
$1
3,2
45
$1
3,6
55
$1
6,9
92
$1
7,3
90
$1
7,6
29
$1
7,9
74
$1
5,8
37
$1
6,2
12
$1
6,7
16
$1
7,3
47
$
$4,000
$8,000
$12,000
$16,000
$20,000
Q4 2010 Q4 2011 Q4 2012 Q4 2013
Avg Trade-In Avg CU MSRP Amount Financed CU Amount Financed
130% / 132% 130% / 132% 133% / 134% 134% / 136%
Source: Experian Automotive
41 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Average payments
$4
64
$468
$4
60
$4
71
$466
$4
57
$4
57
$4
73
$3
47
$3
49
$3
48
$3
52
$3
10
$3
10
$3
12
$3
16
$
$100
$200
$300
$400
$500
Q4 2010 Q4 2011 Q4 2012 Q4 2013
New payment CU new payment Used payment CU used payment
Source: Experian Automotive
42 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Average terms
63 63
65 65 66 66
67
69
58
60 60 61
58 59 59
61
52
54
56
58
60
62
64
66
68
70
Q4 2010 Q4 2011 Q4 2012 Q4 2013
New term CU new term Used term CU used term
Source: Experian Automotive
43 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Distribution of loan term
4.7% 4.4%
28.5% 20.4%
41.2%
34.5%
20.1% 35.8%
0%
20%
40%
60%
80%
100%
New loans CU new loans
New financing by term
37-48 49-60 61-72 73-84
12.7% 13.1%
26.5% 30.1%
39.0% 32.2%
12.5% 13.8%
0%
20%
40%
60%
80%
100%
Used loans CU used loans
Used financing by term
37-48 49-60 61-72 73-84
Source: Experian Automotive
44 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Average rates
4.84% 4.52% 4.36% 4.37% 5.10%
4.17% 3.86% 3.79%
8.71% 8.67% 8.48% 8.71%
6.75% 6.23%
5.84% 5.68%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
Q4 2010 Q4 2011 Q4 2012 Q4 2013
New rate CU new rate Used rate CU used rate
Source: Experian Automotive
45 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.
Overall automotive market decreased slightly (0.4%) with near-term shrinking of “sweet spot” older model year vehicles
Total registrations have increased nearly 3% YOY with new vehicles gaining an increase share of total registrations
Overall, open portfolios continuing to experience growth
Steady delinquency behavior
Financing for consumers continues to expand as consumers rely upon the lending market for vehicle purchase with strong growth in leasing
Loan amounts and payments inching up with slight increases in rates
In summary
46 © 2014 Experian Information Solutions, Inc. All rights reserved.
Experian Public.