State of the Auto Finance Market...Note: ranges above are those used by Experian Automotive for automotive finance market analysis and trending purposes. Other industries and lenders

1 © Experian

State of the AutomotiveFinance Market

Presented by: Melinda ZabritskiQ2 2019

2 © Experian

Market Overview

• Outstanding balances

• Total risk distributions

• Delinquency

Originations

• New and Used financing

• Lender and transaction types

• Loan & lease characteristics

Session overview

Experian Public State of the Automotive Finance Market Q2 2019

3 © Experian

A review of all open automotive loans & leases

Overall Automotive Finance Market


4 © Experian

$1,100

$1,149

$1,197

$1,040

$1,060

$1,080

$1,100

$1,120

$1,140

$1,160

$1,180

$1,200

$1,220

2017 Q2 2018 Q2 2019 Q2

Bill

ion

s

Total open automotive loan balance

Loan balances reach another record high

Source: Experian-Oliver Wyman Market Intelligence Reports

$365.7 $367.0 $371.0

$252.5 $259.8 $261.1

$295.2 $329.4 $351.8

$186.7$192.4 $212.9

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2017 Q2 2018 Q2 2019 Q2

Bill

ion

s

Total open automotive loan balance

Banks Captive Credit Union Finance


7.13%

4.42%

4.20%

5 © Experian

3.71% 3.32% 3.50%

15.97% 15.49% 15.44%

18.73% 18.53% 18.26%

41.97% 42.66% 42.62%

19.62% 20.01% 20.18%

2017 Q2 2018 Q2 2019 Q2

Loan balance risk distribution

Deep Subprime Subprime Nonprime Prime Super Prime

Loan balance distribution stable: percentage of all subprime balances remains under 19%

9.90%

3.92%2.67%

4.10%5.09%

Deepsubprime

Subprime Nonprime Prime Super prime

Year-over-year balance change


6 © Experian

1.88% 2.15%1.19%

3.67%

2.12%1.84% 2.07%1.14%

3.85%

2.11%

0.0%

2.0%

4.0%

6.0%

Bank Captive Credit Union Finance Total

% of loans & leases 30 dpd2018 Q2 2019 Q2

30 day delinquency decreases for most lenders


1.75%2.63%

1.03%

4.18%

2.15%1.69%

2.45%

0.98%

4.39%

2.13%

0.0%

2.0%

4.0%

6.0%


% of loan balances 30 dpd2018 Q2 2019 Q2


7 © Experian

Percentage of loan balances 30 dpd


AK = 1.61%

HI = 1.74%

8 © Experian

0.64%0.52%

0.26%

1.32%

0.64%0.64%0.50%

0.25%

1.40%

0.65%

0.0%

0.5%

1.0%

1.5%

Banks Captive Credit Union Finance Total

% of loans & leases 60 dpd2018 Q2 2019 Q2

60 day delinquency remains flat


0.58% 0.60%

0.21%

1.49%

0.63%0.59% 0.58%

0.20%

1.58%

0.65%

0.0%

0.5%

1.0%

1.5%

2.0%


% of loan balances 60 dpd2018 Q2 2019 Q2


9 © Experian

Percentage of loan balances 60 dpd


AK = 0.38%

HI = 0.53%

10 © Experian

Trends in automotive loan and lease originations

Originations in Q2 2019


11 © Experian

86.1% 85.9%

54.7% 55.9%

Q2 2018 Q2 2019

Percentage of vehicles with financing

New Used

Automotive financing1: snapshot of how and what consumers are financing

30.41% 30.04%

Q2 2018 Q2 2019

% of all2 new vehicles that are leased

44.84% 42.68%

55.16% 57.29%

Q2 2018 Q2 2019

Finance Market: new v used units

New Used

3.55% 4.14%

Q2 2018 Q2 2019

Used % of lease market


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

12 © Experian

30

.2%

6.8

%

29

.5%

22

.1%

11.4

%

32

.7%

6.7

%

28

.6%

19

.8%

12

.2%

Bank BHPH Captive CreditUnion

Finance Co

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

Q2 2018 Q2 2019

Banks and finance companies show increases in share(loan and lease units combined)

26

.1%

0.1

%

54

.2%

14

.3%

5.2

%

28

.0%

0.1

%

54

.8%

11.8

%

5.2

%

Bank BHPH Captive Credit Union Finance Co

Market Share of New Financing

Q2 2018 Q2 2019

33

.7%

12

.6%

8.3

%

28

.8%

16

.7%

36

.4%

11.9

%

8.1

%

26

.1%

17

.6%

Bank BHPH Captive Credit Union Finance Co

Market Share of Used Financing

Q2 2018 Q2 2019


13 © 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.


14 © Experian

Credit scores rise year-over-year

645 648 652 655 656

671 674 673680 680

603608 611

616 617

Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019

Average used credit scores

Franchise used

All used

Independent used


709708

711 711713

711710

714715

717716 716

722 722724

Q2 2015 Q2 2016 Q2 2017 Q2 2018 Q2 2019

Average new credit scores

New lease

All new

New loan

15 © Experian

Total market remains stable with little YOY change; Q2 low for deep subprime in used financing

9.45% 9.00%16.88% 16.50%

44.60% 44.57%

28.35% 29.27%

Q2 2018 Q2 2019

New (loan/lease) risk distribution

5.02% 4.96%25.03% 24.71%

22.00% 21.77%

36.10% 36.14%

11.85% 12.43%

Q2 2018 Q2 2019

Used (loan/lease) risk distribution


3.09% 3.12%

18.02% 17.99%

19.70% 19.51%

39.92% 39.74%

19.27% 19.63%

Q2 2018 Q2 2019

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


Deep subprime

= 0.66%

(down 8.6%)

16 © Experian

3.54% 3.53%

20.10% 19.88%

20.44% 20.23%

38.41% 38.45%

17.51% 17.91%

Q2 2018 Q2 2019

Total (new & used units) loan risk distribution


Q2 record lows for both total subprime and used subprime

10.98% 10.28%17.46% 17.06%

42.67% 43.03%

28.02% 28.86%

Q2 2018 Q2 2019

New loan risk distribution

5.00% 4.93%25.05% 24.72%

22.05% 21.83%

36.09% 36.14%

11.80% 12.38%

Q2 2018 Q2 2019

Used loan risk distribution


Deep subprime

= 0.76%

(down 12%)

17 © Experian

91

.35

%

80

.76

%

69

.92

%

60

.88

%

43

.65

%

92

.74

%

82

.65

%

71

.72

%

62

.47

%

45

.95

%Deep

SubprimeSubprime Nonprime Prime Super

Prime

Percentage of consumers by risk tier choosing used loans

Q2 2018 Q2 2019

All time record highs of prime+ consumers choosing used vehicles

17.06% 17.15%

22.88% 22.67%

43.13% 42.82%

15.13% 15.52%

Q2 2018 Q2 2019

Used Franchise loan risk distribution


9.76% 9.87%

36.99% 36.79%

21.09% 21.09%

25.65% 25.59%

6.51% 6.66%

Q2 2018 Q2 2019

Used Independent loan risk distribution



Deep subprime

= 1.82%

(up 1.6%)

18 © Experian

6.47% 6.41%

15.77% 15.35%

48.31% 47.69%

29.01% 30.10%

Q2 2018 Q2 2019

New lease risk distribution


Leasing shifts into more prime segments with a slight decreases YOY of consumers choosing to lease

23.1%

31.8%

36.1%

23.5%

30.7%

34.8%

Deep &Sub

Nonprime

Prime +

% of new borrowers choosing to lease

Q2 2019

Q2 2018


Deep subprime

= 0.45%

(up 3.2%)

19 © Experian

4.2%3.2%

2.7% 2.5% 2.4% 2.2% 2.2% 2.0% 1.7% 1.7%

CIVIC EQUINOX RAV4 CR-V 1500 ACCORD GRANDCHEROKEE

ROGUE F150 TIGUAN

Top 10 new leased models by market share

CUVs comprise the majority of the top leased models with average lease difference of $92


$425 $453 $486 $484

$657

$485$606

$485

$667

$474

$304 $321 $383 $368$468

$376$490

$355$478

$391

CIVIC EQUINOX RAV4 CR-V 1500 ACCORD GRANDCHEROKEE

ROGUE F150 TIGUAN

Loan v lease monthly payment comparison on top leased modelsLoan payment Lease payment

20 © Experian

$458 $454$440 $429 $425 $431

$486 $480$466 $457 $450 $458

Deep Subprime Subprime Nonprime Prime Super Prime Total

Average new lease paymentQ2 2018 Q2 2019

Leasing payments also rise while terms remain at 36 months


37.00 37.12 36.91 36.29

35.42 36.19

37.23 37.46 37.4036.96

35.98

36.76


Average new lease term

21 © Experian

Average new loan amount remain over $32k and used reaches record high across all Dealer types

$1,346$1,491 $1,538

$1,341

$504

$1,161

$641 $578 $478 $403 $385 $448$518 $483 $412 $414 $404 $404$673 $576 $474 $366

$197$432


Year-over-year change in balance

$2

6,7

14

$2

9,7

95

$3

3,7

10

$3

4,0

47

$2

9,1

42

$3

2,1

19

$1

5,7

70

$1

7,2

17

$1

9,9

26

$2

1,7

72

$2

1,2

01

$2

0,1

56

$1

7,4

92

$19,2

14

$2

1,7

79

$2

3,1

13

$2

2,1

51

$2

1,9

22

$1

4,8

77

$1

5,5

45

$1

7,4

27

$1

9,5

05

$1

9,4

54

$1

7,5

85


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


22 © Experian

Terms rise across all loan and risk types to reach record highs

72.34 72.90 73.21 70.4763.17

69.1760.45 62.87 65.79 66.35 62.44 64.8266.06 67.47 68.49 67.63 63.11 67.10

57.33 58.84 61.88 64.00 61.34 61.39


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

0.28 0.31 0.400.59

0.38 0.37

1.36

0.94

0.490.33 0.27

0.480.44 0.35 0.31 0.25 0.20 0.25

2.00

1.50

0.80 0.59

0.34

0.92


Year-over-year change in used loan term


23 © Experian

19.4%

40.2%32.0%

1.2%

19.7%

40.5%31.2%

1.3%

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

Percentage of new loans by term

Q2 2018 Q2 2019

Longer term loans continue to dominate the market

9.9%

22.9%

41.9%

18.8%9.4%

22.4%

43.7%

18.6%

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

Percentage of used loans by term

Q2 2018 Q2 2019

757

699 680702

758

701 683 703

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

Average new score by loan term

Q2 2018 Q2 2019

656686

662 672659688

660 674

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

Average used score by loan term

Q2 2018 Q2 2019


24 © Experian

$546 $567 $575 $559 $516 $550$411 $408 $394 $384 $383 $392$422 $424 $414 $401 $397 $408$410 $400 $375 $358 $355 $377


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

Payments continue to increase with used reaching record highs

$23$27

$32$29

$17

$25

$16 $16 $15$12 $11 $14

$18 $16 $15 $13 $12 $14$14 $14 $14$10

$7$12


Year-over-year change in payments


25 © Experian

New rates remain over 6% and continue to increase across all risk segments

14

.70

%

12

.20

% 8.1

2%

5.1

7%

4.2

3%

6.2

7%

20

.09

%

17

.36

% 11

.38

%

6.5

4%

4.7

7% 10

.07

%

19

.28

%

16.2

1% 10

.65

%

6.3

4%

4.7

4%

8.9

7%

20

.76

%

18

.75

% 13

.08

%

7.2

2%

4.8

8%

12

.55

%


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

-24

7

5772 76

5158 6376

59 58 6779 72 76

58 5669

4254

7059 58 67


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


26 © Experian

• Record highs continue with loan balances over $1.19 trillion

• Delinquency trends remain stable

• Banks increase market share in Q2

• Credit scores increase for new financing and growth seen across prime and super prime segments

• Q2 record highs seen in finance traits – especially used loan amounts and payments

• New loan terms reach record highs

• Leasing remains over 30% of the new market

Summary


State of the Auto Finance Market...Note: ranges above are those used by Experian Automotive for automotive finance market analysis and trending purposes. Other industries and lenders

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