© Experian Information Solutions, Inc. 2007. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein may be 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 Information Solutions, Inc.Confidential and proprietary.
Automotive Finance Industry Trends
Melinda Zabritski
Director, Automotive Credit
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Concerns in Auto Finance
- Overall, the studies discovered that consumers appear to be struggling more than ever with their finances, with one
survey even finding that one in four Americans missed making one or more bill payments on time last year… (Sub-prime Auto Finance News)
— Consumers will owe more on their car loans than the actual value of the car at an increasing level. According to Edmunds.com, 25.6 percent of customers who traded in used vehicles in 2007 for a new one had negative equity in the transaction. (Auto Remarketing)
… “The delinquency rate (30 day) on ‘indirect’ auto loans arranged through dealerships jumped in the third quarter to 2.86 percent, a 16-year high.…” – American Bankers Association
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Automotive Trends: Data Sources
Quarterly 5% random national sample of consumer credit files
Overall trends looks at all open automotive loans as a quarterly snapshot and extrapolates
65.9MM loans with $818 billion (3Q07)
Originations trend looks at only those loans opened within the quarter 5.1 MM loans with $94 billion (3Q07)
AutoCount Risk Report Loans only – no leases Vehicle sales with automotive financing
Sourced from state title registrations
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2007 Loan Originations
Captive Bank Credit Union Finance
0.20% increase in loan originations
0.20% increase in loan originations
-2.39% decrease in amount financed-2.39% decrease in amount financed
Source: Experian, 1Q2007 – 3Q2007
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Changing credit quality in loan originations
Source: Experian, 1Q2007 – 3Q2007
25% increase in highest risk category25% increase in highest risk category
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Rolling Quarters: Loan Originations
Source: Experian
35.5% increase in Below Subprime Market Share35.5% increase in Below Subprime Market Share
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Portfolio Snapshot
More consumers are slipping into the higher risk categories: they’re coming on prime – but not staying there
More consumers are slipping into the higher risk categories: they’re coming on prime – but not staying there
Source: Experian
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Recent Delinquency: Currently 60 DPD
Source: Experian
18% increase in current delinquency
18% increase in current delinquency
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Where are we on term?
Source: Experian
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When is Attrition Occurring
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2007 Attrition by Term
Half of all 60 MO Term loans attrite by months 34/35
Half of all 60 MO Term loans attrite by months 34/35
8.67% of all 60 MO Term loans attrite by month 68.67% of all 60 MO Term loans attrite by month 6
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What are consumer purchasing
Source: Experian Automotive, November 2007
1.6% increase in used vehicle market share over October 2007
1.6% increase in used vehicle market share over October 2007
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New v Used Vehicle Sales
Source: Experian Automotive, November 2007
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Sales by Score Distribution
Source: Experian Automotive, November 2007
27.47% of NEW vehicle loans score below 68027.47% of NEW vehicle loans score below 680
56.02% of USED vehicle loans score
below 680
56.02% of USED vehicle loans score
below 680
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Captives v Non-Captive finance
Source: Experian Automotive, November 2007
Over 52% of November 2007 financed vehiclesOver 52% of November 2007 financed vehicles
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In conclusion
Over -2% decrease in outstandings despite a slight increase in originations Continued growth in both lowest and highest risk tiers Loan quality appears to be shifting away from prime after originations Increased occurrences of 60 day delinquency – excluding finance companies Decreases in loan term from peak of 3Q2006 Attrition continues to plague lenders: new purchase and refinance Growth in used vehicle financing with shifting credit quality between captives
and non-captives
© Experian Information Solutions, Inc. 2007. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein may be 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 Information Solutions, Inc.Confidential and proprietary.
Automotive Finance Industry Trends
Contact: [email protected]