State of the Automotive Finance Market · Report No UMTRI-2011-23. Vehicle purchase by generation 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 ... Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012

State of the Automotive Finance

Market

Melinda Zabritski | Sr. Director

Experian Automotive

Discussion Points

• What’s on the road?

– Return of the US

automotive market

– Shifting consumer

dynamic

• Overall consumer

financing

– Balances & delinquencies

• New & Used financing

and trends in originations

– Return of leasing

– Growth of subprime

Score Ranges

Super prime 740+

Prime 680–739

Nonprime 620–679

Subprime 550–619

Deep subprime <550

What’s on the Road

What metal is moving and who’s

purchasing

Scrapped

Vehicles

(13.2M)

Used Vehicle

Sales (38.0M)

VIO Additions/Deletions : 28.1M (11.3%)

VIO Total Changes: 66.1M (26.7%)Vehicles

in

Operation June 2012

246.2M

What’s on the road today

Source: Experian Automotive

Change of Address 39.7M in 2012

Vehicles in

OperationJune 2013

247.9M

0

5

10

15

20

25

30

YTD 2010 YTD 2011 YTD 2012 YTD 2013

Mil

lio

ns

New Used

Year to date registrations

Source: Experian Automotive as of June 30, 2013 (U.S. light duty vehicles only)

23% 25% 27% 28%

28.427.3

25.924.9

Licensed drivers as a percentage

of their age-group population

0%

20%

40%

60%

80%

100%

120%

1983 2008

Source:University of Michigan, Transportation Research Institute. Michael Sivak &

Brandon Schoettle. Report No UMTRI-2011-23

Vehicle purchase by generation

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Millennials Gen X Boomer Silent

Mil

lio

ns

New Used

34.3% 43.6% 52.9% 59.5%

Source: Experian Automotive, purchases made in Q1 2013

Overall Automotive

Finance Market

Market overview and

delinquency

Growth in lending balances

$702 $712

$667

$636 $647

$682

$751

$560

$580

$600

$620

$640

$660

$680

$700

$720

$740

$760

Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013

Bil

lio

ns

Total outstanding loan balance

Source: Experian Automotive

Credit Union balances

Source: Experian-Oliver Wyman Market Intelligence Reports

$133 $141 $143

$149 $142 $142

$148

$167

$-

$20

$40

$60

$80

$100

$120

$140

$160

$180

Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013

Bil

lio

ns

Automotive loan 30-dpd

1.28%

2.38%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013

Bank Captive Credit Union Total

Source: Experian-Oliver Wyman Market Intelligence Reports

Automotive loan 60-dpd

0.27%

0.58%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

0.8%

0.9%

Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013

Bank Captive Credit Union Total

Source: Experian-Oliver Wyman Market Intelligence Reports

Quarterly repossession rates

0.15%

0.36%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

0.6%

0.7%

Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013

Bank Captive Credit Union Total

Source: Experian-Oliver Wyman Market Intelligence Reports

Average charge-off versus

wholesale values

$7,218

$11,537

$17,396

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

Q2 2006Q2 2007Q2 2008Q2 2009Q2 2010Q2 2011Q2 2012Q2 2013

Average charge-off amount KBB avg auction actual all MY

KBB Avg auction C+5MY

Source: Kelley Blue Book Automotive Insights; Experian Automotive

New and Used

Originations

Automotive financing in the

second quarter 2013

Automotive finance type

17.4%

47.3%

15.5%

47.1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

New Used

No lender on title

Q2 2012 Q2 2013

11.36% 12.96%

88.64% 87.04%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2 2012 Q2 2013

Overall financing

Total Lease Total Loan

Source: Experian Automotive

Financing trends

17.68%

23.79% 23.62%24.40%

27.64%

0%

5%

10%

15%

20%

25%

30%

Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013

New lease share of new consumer financing

96.87% 96.76%

3.13% 3.24%

0%

20%

40%

60%

80%

100%

Q2 2012 Q2 2013

Leasing by type

New lease Used lease

Source: Experian Automotive

Bank, 19.4%

Captive75.0%

Credit Union0.4%

Finance

Other5.2

New leasing by lender type

Average credit on new

lease transactions

763 760

250

350

450

550

650

750

850

Q2 2012 Q2 2013

Average new lease score

6.33% 6.74%

12.64% 13.42%

16.40% 16.79%

63.29% 61.59%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q2 2012 Q2 2013

New lease credit distribution

Deep subprime SubprimeNonprime PrimeSuper prime

Source: Experian Automotive

Average new lease attributes

$416

$408

$375

$385

$395

$405

$415

$425

$435

$445

Q2 2012 Q2 2013

Average monthly payment

9.2%

66.2%

23.9%

0.6%0%

10%

20%

30%

40%

50%

60%

70%

13 - 24 25 - 36 37 - 48 49 - 60

Term distribution

Average

term 35

Source: Experian Automotive

Market snapshot on

vehicle loan financing

Independent Franchise

YOY Change

Source: Experian Automotive

-1.06%

Used vehicle financing by

model year

38.7% are

MY2013 – 2010

Source: Experian Automotive

0%

2%

4%

6%

8%

10%

12%

14%

20

13

20

12

20

11

20

10

2009

20

08

20

07

20

06

20

05

2004

20

03

20

02

20

01

20

00

19

99

19

98

19

97

19

96

19

95

19

94

19

93

19

92

19

91

19

90

Loan share by lender

36.14%

8.38%

25.24%

15.31%14.93%

-10.7%

-12.7%

40.6%

-13.9%

4.9%

-20%

-10%

0%

10%

20%

30%

40%

50%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Bank BHPH Captive CreditUnion

Finance

Automotive loan market share

Market share YOY change in share

35.88%

0.17%

48.30%

8.62% 7.03%-22.3%

20.1%

34.0%

-31.9%

41.7%

-40%-30%-20%-10%0%10%20%30%40%50%

0%

10%

20%

30%

40%

50%

60%

Bank BHPH Captive CreditUnion

Finance

New loan market share

Market share YOY change in share

36.35%

15.20%

6.10%

20.86% 21.49%

-1.4% -2.1%

-7.9%

-0.6%

7.3%

-10%-8%-6%-4%-2%0%2%4%6%8%10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Bank BHPH Captive CreditUnion

Finance

Used loan market share

Market share YOY change in share

Source: Experian Automotive

Average credit scores by

vehicle type

-4

-2

YOY Change

Source: Experian Automotive

Average scores by lender type

Source: Experian Automotive

758 757 762

657

752 763749

662

400

450

500

550

600

650

700

750

800

850

900

Bank Captive CreditUnion

Finance

Average score on new loans

Q2 2012 Q2 2013

709

542

709 715

558

706

551

715 709

564

400

450

500

550

600

650

700

750

800

850

900

Bank BHPH Captive CreditUnion

Finance

Average score on used loans

Q2 2012 Q2 2013

Average amount financed

Average monthly payment

Loan-to-Value by lender type

109.2%108.3%

114.3%121.6%

110.5%

125.1% 123.7%

132.9%

148.1%

131.1%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Bank Captive CreditUnion

Finance MarketTotals

Average LTV by lender

Average LTV new Average LTV used

19 42

222

47

91

413

610

525

200

450

-

100

200

300

400

500

600

700

YOY change in LTV (bps)

YOY change in new LTV

YOY change in used LTV

Market

Totals

FinanceCredit

Union

CaptiveBank

Source: NADA Used Car Guides; Experian Automotive

Distribution of loan term

Average rates

• Strong market growth but a changing

consumer dynamic

• Overall, open portfolios continuing to

experience growth, reaching over

$751B

• Delinquencies remain at historic lows

• Financing for consumers continues to

expand as consumers rely upon the

lending market for vehicle purchase

• Leasing continues to grow with slight

decrease in scores and payments $49

lower than the loan market

• Scores continue slight decline with

growth in the subprime market

• Loan-to-value and terms expand as

payments remain relatively flat

In summary