State of the Auto Finance Market...Bank BHPH Captive Credit Union Finance Co Market Share of Total...

1 © Experian

State of the AutomotiveFinance Market

Presented by: Melinda ZabritskiQ1 2020

2 © Experian

Market Overview

• Outstanding balances

• Total risk distributions

• Delinquency

Originations

• New and Used financing

• Lender and transaction types

• Loan & lease characteristics

Monthly insights

Session overview

Experian Public State of the Automotive Finance Market Q1 2020

3 © Experian

A review of all open automotive loans & leases

Overall Automotive Finance Market


4 © Experian

Loan balances decrease year-over-year by $12 billion


5 © Experian

Loan balance distribution stable: percentage of all subprime balances remains under 20%


3.59% 3.61%

6 © Experian

Delinquency rates for loans and leases decrease YOY


7 © Experian

Delinquent balances also decrease YOY


8 © Experian

Percentage of loan balances 30 dpd


AK = 1.01%

HI = 1.45%

9 © Experian

Percentage of loan balances 60 dpd


AK = 0.29%

HI = 0.48%

10 © Experian

Trends in automotive loan and lease originations

Originations in Q1 2020


11 © Experian

Automotive financing1: snapshot of how and what consumers are financing


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

12 © Experian

Over 74% of current + 8MY vehicles have financing


13 © Experian

Mississippi leads with the largest percentage of loans for used cars; Delaware has the lowest


14 © Experian

32.4

%

6.8

%

28.8

%

19.9

%

12.1

%

33

.4%

6.7

%

28.0

%

19.5

%

12.4

%

Bank BHPH Captive CreditUnion

Finance Co

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

Q1 2019

Q1 2020

Banks continue their market share growth(loan and lease units combined)

27

.6%

0.1

%

54

.5%

12

.4%

5.4

%

30

.0%

0.1

%

52

.9%

11

.8%

5.2

%

Bank BHPH Captive Credit Union Finance Co

Market Share of New Financing

36

.3%

12

.1%

8.1

%

26

.0%

17

.4%

36

.0%

11

.6%

9.2

%

25

.3%

17

.8%


Market Share of Used Financing


15 © 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.


16 © Experian

Credit scores continue to increase year-over-year

645652 655 657 660

673679 681 682 685

601610

615 615620

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

Average used credit scores

Franchise used

All used

Independent used


710

714

716 716

718

712

717

719 719

721

716

722

724725

728

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

Average new credit scores

New lease

All new

New loan

17 © Experian

Only 1-in-5 vehicles financed are subprime; over 75% of new vehicles are prime+; used subprime hits Q1 low

8.44% 8.31%16.01% 15.58%

44.79% 44.22%

30.12% 31.28%

Q1 2019 Q1 2020

New (loan/lease) risk distribution

5.14% 4.79%24.39% 23.67%

21.39% 20.99%

36.40% 37.03%

12.69% 13.52%

Q1 2019 Q1 2020

Used (loan/lease) risk distribution


3.17% 3.06%

17.43% 17.30%

19.04% 18.74%

40.06% 40.01%

20.29% 20.89%

Q1 2019 Q1 2020

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

Deep Subprime Subprime Nonprime Prime Super Prime

Deep subprime =

0.61%

(down 4.1%)

18 © Experian

3.61% 3.44%

19.33% 19.08%

19.77% 19.48%

38.72% 38.94%

18.58% 19.05%

Q1 2019 Q1 2020

Total (new & used units) loan risk distribution


Q1 lows for total and used subprime loans; prime+ is now over 50% of all used loans

9.55% 9.48%16.50% 16.24%

43.19% 42.90%

30.02% 30.67%

Q1 2019 Q1 2020

New loan risk distribution

5.10% 4.77%24.40% 23.71%

21.47% 21.05%

36.40% 37.02%

12.64% 13.45%

Q1 2019 Q1 2020

Used loan risk distribution


Deep subprime =

0.69%

(down 6.2%)

19 © Experian

92.9

9%

83.1

1%

71.4

8%

61.8

8%

44.7

8%

93.4

3%

83.8

2%

72.8

6%

64.1

4%

47.6

1%

DeepSubprime

Subprime Nonprime Prime SuperPrime

Percentage of consumers by risk tier choosing used loans

Q1 2019 Q1 2020

Record highs of prime and super prime consumers choosing used

16.67% 16.14%

22.45% 21.74%

43.25% 43.65%

15.84% 16.81%

Q1 2019 Q1 2020

Used Franchise loan risk distribution


10.47% 9.76%

37.08% 36.00%

20.59% 20.63%

25.24% 26.27%

6.62% 7.34%

Q1 2019 Q1 2020

Used Independent loan risk distribution



Deep subprime =

1.66%

(down 7.5%)

20 © Experian

6.25% 5.88%

15.04% 14.19%

47.96% 46.94%

30.31% 32.54%

Q1 2019 Q1 2020

New lease risk distribution


Leasing remains very prime

24.8%

31.6%

35.1%

23.0%

29.6%

34.2%

Deep &Sub

Nonprime

Prime +

% of new borrowers choosing to lease

Q1 2020

Q1 2019


Deep subprime =

0.44%

(up 0.71%)

21 © Experian

$426 $474 $465 $495

$673 $637 $665

$415$482 $482

$310$368 $324

$390$479 $478 $499

$294$376 $359

CIVIC CR-V EQUINOX RAV4 1500 GRANDCHEROKEE

EXPLORER COROLLA ACCORD ROGUE

Loan vs. lease monthly payment comparison on top leased models Loan payment

Lease payment

Mix of car, truck and CUV make up the top 10 most commonly leased vehicles with average payment difference of $103

3.5%

2.8% 2.6% 2.6% 2.5% 2.3%1.8% 1.8% 1.8% 1.7%

CIVIC CR-V EQUINOX RAV4 1500 GRANDCHEROKEE

EXPLORER COROLLA ACCORD ROGUE

Top 10 new leased models by market share


22 © Experian

$495

$474$464

$456 $452 $457

$488$479

$470 $465 $465 $466

Deep Subprime Subprime Nonprime Prime Super Prime Total

Average new lease paymentQ1 2019 Q1 2020

Leasing payments also rise while terms remain at 36 months


37.57 37.38 37.3636.93

35.92

36.72

37.40 37.47 37.4637.02

35.95

36.76


Average new lease term

23 © Experian

Record high loan amounts for all but Independent used

$1,310

$1,563$1,799

$1,557 $1,524 $1,552

$388 $340$525 $621 $606 $586

$301 $383

$685 $700 $638 $675$429 $481 $545 $651 $588 $616


Year-over-year change in balance

$2

7,8

67

$3

0,9

89

$3

5,3

71

$3

5,6

18

$3

1,1

44

$3

3,7

39

$1

5,8

45

$1

7,3

36

$2

0,3

28

$2

2,4

17

$2

2,0

13

$2

0,7

23

$1

7,4

93

$1

9,4

16

$2

2,3

32

$2

3,8

05

$2

2,9

40

$2

2,5

77

$1

5,0

14

$1

5,7

45

$1

7,7

06

$2

0,0

23

$2

0,2

27

$1

7,9

94


Average loan amount by tierAvg New All Used Franchise used Independent used


24 © Experian

$562 $581 $593 $576 $543 $569$417 $413 $399 $388 $392 $397$422 $427 $419 $406 $406 $412$418 $408 $381 $363 $364 $383


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

Record highs for all but Independent used monthly payments

$16$18 $19

$13$15 $14

$8 $7 $6$4

$6 $5$6 $6 $7$5

$7$6

$9 $10 $9

$6$5

$7


Year-over-year change in payments


25 © Experian

Slight increases in average new loan term while used decreases

72.34 72.99 73.47 70.7163.45

69.1760.32 62.80 65.72 66.46 62.49 64.8365.91 67.35 68.38 67.69

62.98 66.9657.57 59.22 61.98 64.09 61.56 61.61


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

0.030.16

0.370.53 0.50

0.32

0.61

0.35

0.060.18

0.050.17

-0.07 -0.05 -0.06

0.07

-0.07 -0.09

1.06 1.08

0.50 0.37 0.31

0.69


Year-over-year change in used loan term


26 © Experian

20.8%

38.0%32.0%

1.8%

19.8%

40.0%

31.0%

1.7%

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

Percentage of new loans by term

Q1 2019 Q1 2020

Longer term loans continue to dominate the market

9.4%

22.3%

42.1%

20.0%

9.2%

22.7%

42.9%

19.1%

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

Percentage of used loans by term

Q1 2019 Q1 2020

759

704686

704

764

706 689708

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

Average new score by loan term

Q1 2019 Q1 2020

659690

662 673663694

665 677

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

Average used score by loan term

Q1 2019 Q1 2020


27 © Experian

Rates fall all new financing and majority of used loans1

4.3

9%

11

.92

% 7.6

5%

4.6

8%

3.6

5%

5.6

1%

20

.45

%

17

.74

%

11

.26

%

6.0

4%

4.2

9% 9

.65

%

19

.45

%

16

.35

% 10

.34

%

5.7

9%

4.2

6% 8.3

7%

21

.23

%

19

.19

% 13

.15

%

6.7

8%

4.3

3%

12

.40

%


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

-58 -50 -43 -44-56 -55

21 22

-15

-53 -52-41

132

-35

-59 -55 -59

28 21

1

-47-56

-29


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


28 © Experian

• Delinquency trends remain stable with many lenders reporting decreases

• Banks continue to increase market share

• Leasing down year-over-year

• Consumers increasingly choosing used vehicles with record highs of prime & super prime choosing used

• Credit scores rise while prime reaches Q1 highs

• Loan amounts rise bringing sharp increases to monthly payments

• Loan terms shift slightly while rates improve for new and franchise used transactions

Q1 Summary


29 © Experian

How have originations been impacted by COVID

Insights into April 2020


30 © Experian

-50.8% -54.0%

New Used

YOY change in April title volume

How has COVID impacted how & what consumers purchase?

30.0%24.0%

April 2019 April 2020

% of all1 new vehicles that are leased

68.7% 67.3%

31.3% 32.7%


Market1 composition

Used New

65.2% 72.6%

34.8% 27.4%


Financing2 compositionLoan Lease


1 All = loan, lease or cash; 2 Financing = loan or lease

31 © Experian

32.4

3%

7.8

0%

27.5

0%

19.5

1%

12.7

6%

31.5

1%

7.2

9%

28.1

9%

18.7

6%

14.2

5%

Bank BHPH Captive CreditUnion

Finance Co

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

Apr-19

Apr-20

Captive and finance companies gain share(loan and lease units combined)

28

.32

%

0.1

2% 54

.58

%

11

.83

%

5.1

5%

26

.72

%

0.1

7% 5

5.7

2%

11

.44

%

5.9

6%


Market Share of New Financing

48

.27

%

18

.31

%

10

.36

%

34

.24

%

24

.98

%

48

.25

%

17

.17

%

11

.36

%

33

.20

%

27

.96

%


Market Share of Used Financing


Date post:	06-Jul-2020
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State of the Auto Finance Market...Bank BHPH Captive Credit Union Finance Co Market Share of Total...

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