State of the Automotive Finance Market
First Half of 2009
Melinda Zabritski, Director of Automotive Credit
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Presentation Overview
ƒ Second Quarter 2009 Automotive Finance Market Overview
►
All open automotive loans by risk tier
►
Shifting portfolios by risk
►
Automotive loan delinquencies
ƒ Automotive Financing in the first half of 2009
►
Financing by geography
Risk Tiers
Scorex PLUSSM
VantageScore
740+
801 – 990
Prime
680 – 739
701 – 800
Nonprime
620 – 679
641 – 700
Subprime
550 – 619
601 – 640
<550
501 - 600
►
New versus Used vehicles
Category
►
Top Lender report
Super Prime
►
Loan characteristics
Deep Subprime
© 2009 Experian Information Solutions, Inc. All rights reserved.
2
Automotive Finance Market
How has the market been changing?
2Q2009 Risk Distribution of
Open Automotive Loans
Change in Risk Distribution from
2Q2008
15%
Deep
Subprime
15.0%
10.4%
10%
Super
Prime
37.1%
Subprime
8.8%
6.2%
5.1%
5%
2.1%
Nonprime
15.2%
0%
Prime
23.8%
Super
Prime
Prime
Nonprime Subprime
Deep
Subprime
-5%
-10%
-8.0%
Source: Experian, 2Q2009
© 2009 Experian Information Solutions, Inc. All rights reserved.
3
Automotive Finance Market
How has credit quality shifted among the lenders?
2Q2009 Lender Risk Distribution
Change in Risk Distribution
from 2Q2008
100%
90%
14%
80%
9%
70%
10%
7%
7%
13%
15%
38%
19%
20%
15%
15%
23%
27%
25%
17%
9%
10%
6%
40%
30%
20%
25%
16%
60%
50%
12%
45%
37%
41%
10%
19%
5%
14%
0%
12%
-5%
BANK
Share of
Population
CAPTIVE
CREDIT
UNION
FINANCE
-10%
37%
28%
24%
11%
-15%
Super Prime
Prime
Nonprime
Subprime
Deep Subprime
CREDIT
-3% UNION
FINANCE
-5%
0%
BANK
CAPTIVE
-7%
-9%
Super Prime
Prime
Nonprime
Subprime
Deep Subprime
Source: Experian, 2Q2009
© 2009 Experian Information Solutions, Inc. All rights reserved.
4
Recent Automotive Delinquency
How are automotive loans performing?
30 Day Delinquency %
60 Day Delinquency %
3.9%
7%
6.24%
6.01%
6%
2.06%
1.94%
2.00%
5%
14.5%
31.6%
14.6%
4%
3%
5.9%
2.50%
1.50%
29.0%
3.27%
2.84% 2.85%
3.06%
2.67%
16.2%
1.00%
2.16%
2%
24.9%
23.3%
0.78%
0.60%
1.64%
1.41%
21.2%
0.50%
0.63%
0.50%
1%
0.80%
0.66%
0.43%
0.35%
0.00%
0%
Banks
Captive
Auto
Credit Union Finance
2Q08
TOTAL
Bank
2Q09
Captive
Auto
2Q08
Credit
Union
Finance
TOTAL
2Q09
Source: Experian, 2Q2009
© 2009 Experian Information Solutions, Inc. All rights reserved.
5
Recent 30 Day Automotive Delinquency
What’s at stake?
$25,000
$20,000
$4,802
$4,602
$1,949
$2,401
$7,945
$6,668
$15,000
$1,500
$1,238
$1,000
$451
$500
$212
$10,000
$Bank
$5,000
Captive
Auto
Credit
Union
Finance
TOTAL
$(200)
$(500)
$6,672
$5,434
$2Q08
Bank
Millions
Change in 30 Day Delinquency
balance from 2Q2008
Millions
Total Balance of 30 Day
Delinquent Loans
$(1,000)
2Q09
Captive Auto
Credit Union
Finance
$(1,500)
$(1,277)
Source: Experian, 2Q2009
© 2009 Experian Information Solutions, Inc. All rights reserved.
6
Recent 60 Day Automotive Delinquency
What’s at stake?
$6,000
$5,000
Millions
Change in 60 Day Delinquency
balance from 2Q2008
Millions
Total Balance of 60 Day
Delinquent Loans
$400
$300
$359
$301
$1,468
$1,449
$4,000
$200
$623
$464
$160
$3,000
$1,323
$1,462
$100
$2,000
$18
$1,826
$1,525
$1,000
$2Q08
$Bank
Captive
Auto
Credit
Union
Finance
TOTAL
$(100)
2Q09
$(139)
Bank
Captive Auto
Credit Union
Finance
$(200)
Source: Experian, 2Q2009
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7
30 Day Delinquency Rate
Which states lead in 30 day delinquency?
AK = 1.71%
HI = 2.77%
Source: Experian, 2Q2009
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8
Changes in 30 Day Delinquency Rate
Which states are improving/declining?
Michigan
Bank
33
Captive
-14
Credit Union -27
Finance
18
AK = -30
HI = 68
California
Bank
156
Captive
7
Credit Union 29
Finance
-3
Source: Experian, 2Q2009
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9
AUTOMOTIVE
FINANCING
FIRST HALF
2009
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10
Risk Tier Reminder
Risk Tiers
Scorex PLUSSM
VantageScore
740+
801 – 990
Prime
680 – 739
701 – 800
Nonprime
620 – 679
641 – 700
Subprime
550 – 619
601 – 640
<550
501 - 600
Category
Super Prime
Deep Subprime
Source: Experian, 2Q2009
© 2009 Experian Information Solutions, Inc. All rights reserved.
11
Quarterly Financing for New and Used Vehicles
How has financing on vehicles changed?
New - Used Financing
Distribution
Average Credit Score by
Vehicle Type
100%
19 pts
800
90%
5.31%
80%
62.73%
773
754
760
70%
66.06%
780
8 pts
60%
50%
695
40%
37.27%
Jan - June 2008
New Financing
Vehicle Financing
30%
-8.93%
20%
33.94%
Jan - June 2009
Used Financing
Vehicle Financing
660
8 pts
703
740
720
700
680
668
660
640
10%
620
0%
600
Jan - June 2008
All Financing
Jan - June 2009
New Financing
Used Financing
Source: Experian, Jan-June 2009
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12
Average Credit Score on New Vehicles Financed in 2009
Which states have higher credit scores?
AK = 759
HI = 757
Source: Experian, Jan-June 2009
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13
Average Credit Score on Used Vehicles Financed 2009
Which states have higher credit scores?
AK = 695
HI = 683
Source: Experian, Jan-June 2009
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14
Quarterly Financing for New and Used Vehicles
How has credit changed for new and used financing?
Vehicle Financing by Risk
Distribution
Change in Risk Distribution
15%
100%
15.26%
15.74%
90%
14.76%
12.02%
80%
60%
12.84%
13.50%
30%
47.06%
0%
Super Prime
Prime
Jan - June 2009
Nonprime
Subprime
3.2%
0%
-5%
Super
Prime
Prime
Nonprime
Subprime
Deep
Subprime
-4.9%
-10%
20%
10%
Jan - June 2008
5%
50%
40%
42.37%
10%
70%
12.34%
14.10%
11.1%
Deep Subprime
-15%
-20%
-12.5%
-18.6%
-25%
Source: Experian, Jan-June 2009
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15
Quarterly Financing for New and Used Vehicles
How has credit changed for new and used financing?
New Vehicle Financing
Change in Financing from Jan - June 2008
1.62%
6.01%
10.16%
13.52%
3.02%
9.27%
12.66%
14.73%
100%
80%
60%
40%
68.69%
60.32%
20%
0%
Jan - June 2008
Jan - June 2009
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
13.88%
13.37%
2.10%
Super Prime
Prime
Nonprime
-2.22%
-8.19%
Subprime
-10.05%
-19.73%
Deep
Subprime
-16.22%
-35.16%
-46.50%
Change in New Financing
Change in Used Financing
Used Vehicle Financing
100%
22.53%
23.00%
18.03%
15.10%
14.96%
12.77%
13.46%
12.49%
31.71%
80%
60%
40%
20%
35.95%
Deep Subprime
Subprime
Nonprime
Prime
Super Prime
0%
Jan - June 2008
Jan - June 2009
Source: Experian, Jan-June 2009
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16
Used Car Financing by Dealer Type
How is financing changing by dealer type?
Used Vehicle Financing by
Dealer Type
Average Credit Scores on Used
Vehicle Financing
16 pts
100%
30.88%
90%
7.21%
80%
33.11%
706
70%
680
60%
660
40%
Jan - June 2008
Franchise Used
66.89%
Jan - June 2009
700
690
-3 pts
50%
69.12%
720
640
620
594
591
600
30%
-3.22%
20%
580
10%
540
0%
520
560
Jan - June 2008
Independent Used
Franchise Used
Jan - June 2009
Independent Used
Source: Experian, Jan-June 2009
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17
Credit Distribution by Dealer Type
How has dealer type changed by credit mix?
Used Vehicle Risk Distribution by
Dealer Type
Change in Used Financing from Jan June 2008
20% 17.45%
100%
11.76%
90%
15%
13.80%
80%
70%
45.73%
14.71%
10%
5%
60%
6.04%
4.33%
0.57%
0%
14.78%
50%
Super Prime
17.74%
40%
Prime
Nonprime
Subprime
Deep
Subprime
-5%
10.93%
30%
44.96%
20%
-7.19%
-10%
-9.16%
-10.47%
7.86%
-7.57%
-15%
10%
-11.80%
17.74%
-20%
0%
Franchise Used
Super Prime
Prime
Nonprime
Independent Used
Subprime
Deep Subprime
-21.18%
-25%
Franchise Change
Independent Change
Source: Experian, Jan-June 2009
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18
Top 20 Lenders by Market Share
Who gained or lost share?
Top 20 Total Loan Market: Lenders by Market Share
8%
50%
43.4%
40%
7%
30%
24.1%
6%
13.8%
17.3%
16.8%
12.9%
6.7%
5%
16.6%
5.5%
3.0%
2.8%
20%
2.4%
10%
0%
4%
-3.4%
3%
-0.8%
-0.9%
-10%
-7.8%
-20%
-16.7%
2%
-23.8%
-25.2%
1%
-30%
-41.3%
-40%
6.7%
4.7%
4.6%
3.2%
3.1%
3.0%
2.4%
2.2%
1.4%
1.3%
1.3%
1.3%
1.2%
1.2%
0.8%
0.8%
0.8%
0.8%
0.7%
0.7%
-50%
0%
Jan - June 2009 Share
Change in Share from 2008
Source: Experian, Jan-June 2009
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19
Top 20 New Lenders by Market Share
Who gained or lost share on New Vehicle Financing?
Top 20 New Lenders by Market Share
200%
12%
158.2%
10%
150%
8%
100%
80.8%
6%
71.8%
61.8%
53.8%
43.0%
34.2%
4%
50%
18.1%
20.2%
16.0%
14.8%
20.7%
7.2%
-5.6%
2%
-23.0%
-27.8% -16.6% -19.9%
11.1%
8.2%
7.3%
6.7%
0%
-23.2%
-8.5%
6.6%
4.2%
3.5%
3.2%
2.8%
1.9%
1.8%
1.6%
1.5%
1.3%
1.2%
0%
1.1%
1.1%
1.1%
1.1%
0.9%
-50%
Market Share Jan - June 2009
Change in Share from 2008
Source: Experian, Jan-June 2009
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20
Top 20 Used Lenders by Market Share
Who gained or lost share on Used Vehicle Financing?
Top 20 Used Lenders by Market Share
6%
60%
5%
40.6%
28.8%
4%
80%
65.7%
40%
26.6%
18.6%
13.8%
10.7%
5.1%
3%
20%
6.2%
0%
-11.5%
-0.7% -3.6%
-5.2%
-10.1%
2%
-6.6%
-20%
-26.4%
-40%
-33.2%
1%
0%
-45.7%
-66.0%
5.5%
4.4%
2.7%
2.3%
1.5%
1.5%
1.2%
1.2%
1.1%
1.1%
Market Share Jan - June 2009
1.1%
1.1%
1.0%
0.9%
0.9%
0.9%
0.7%
0.7%
-66.8%
0.7%
0.7%
-60%
-80%
Change in Share from 2008
Source: Experian, Jan-June 2009
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21
Year in Review Loan Attributes
How has financing changed?
Average Monthly Payment
Average Amount Financed
$105
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$
$24,160
$500
$24,265
-$1,051
$16,492
$15,441
$458
--$19
$348
$400
$329
$300
$200
$100
$
New Vehicles
N
Jan - June 2008
Used Vehicles
U
N
New Vehicles
Jan - June 2008
Jan - June 2009
Average Term
64
-$5
$453
62
-88 bps
12%
-70 bps
10%
-2 mo
59
60
Jan - June 2009
Average Rate
-1 mo
62
63
U
Used Vehicles
57
58
56
8%
6.59%
6%
10.38%
9.49%
5.89%
4%
2%
54
0%
New Vehicles
N
Jan - June 2008
Used Vehicles
U
N
New Vehicles
Jan - June 2009
Jan - June 2008
U
Used Vehicles
Jan - June 2009
Source: Experian, Jan-June 2009
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22
Vehicle Financing and Credit Tiers
How has financing changed by credit score?
Average Amount Financed on New Vehicles
$26,000
$25,000
$24,000
$23,000
$22,000
$21,000
$20,000
$19,000
$25,561
$25,504
$25,061
$24,815
$24,053
$23,842
$23,760
$23,251
$22,246
$21,802
$500
-$500
Deep
Subprime
-$444
Subprime
-$591
Nonprime
Jan - June 2008
Nonprime
Prime
Super Prime
Jan - June 2009
$13,454
$11,811
$16,503
$15,585
$14,798
$13,624
$17,466
$17,435
$16,754
$16,115
Super Prime
-$712
-$1,320
-$1,643
-$1,961
-$1,705
-$2,500
CHANGE - NEW
Average Amount Financed on Used Vehicles
$20,000
-$2,000
Prime
-$245
-$1,500
Subprime
$292
$57
$
-$1,000
Deep
Subprime
$15,000
Change in Average Amount Financed
CHANGE - USED
• Financing on New vehicles increased in both the
Prime & Super Prime segments
• $292 increase in Super Prime
• Greatest amount financed in Prime
($25,561)
$10,000
$5,000
• Used vehicle financing declined in all risk segments
$
Deep
Subprime
Subprime
Jan - June 2008
Nonprime
Prime
Super Prime
Jan - June 2009
Source: Experian, Jan-June 2009
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23
Vehicle Payments and Credit Tiers
How has monthly payment change by credit score?
Average Monthly Payment on New Vehicles
$480
$470
-$5
$464
$459
$456
$460
$
$472
$467
Change in Average Monthly Payment
$457
$460
$458
-$10
$455 $452
-$20
$450
Deep
Subprime
Subprime
Nonprime
Jan - June 2008
Prime
Super Prime
$340
Nonprime
$347
$339
$343
$332
$319
$320
$342
$323
Super Prime
-$2
-$10
-$12
-$17
-$20
-$30
-$29
-$35
CHANGE - NEW
-$28
CHANGE - USED
• Monthly payments are down across all risk
segments for both new and used vehicle financing
$361
$357
Prime
-$3
-$8
-$11
Jan - June 2009
Average Monthly Payment on Used Vehicles
$360
Subprime
-$25
$440
$380
-$15
Deep
Subprime
$332
• Little difference between payments on new vehicle
financing across the risk segments
• Used vehicle financing declined the greatest with the
mid-tier segments declining the most (-$29 & -$28)
$300
$280
Deep
Subprime
Subprime
Nonprime
Jan - June 2008
Prime
Super Prime
Jan - June 2009
Source: Experian, Jan-June 2009
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24
Interest Rate and Credit Tiers
How does rate change by credit score?
Average Rate on New Vehicles
16%
14%
12%
10%
8%
6%
4%
2%
0%
13.82%
13.63%
Change in Average Rate
(Basis Points)
-
11.49% 11.39%
8.47%
8.28%
6.57%
6.36%
(20)
5.19%
4.87%
Subprime
Nonprime
Prime
Super Prime
(19)
(18)
(40)
Prime
Super Prime
(17)
(21) (19)
(35)
(31)
11.16%
10.81%
10%
(69)
CHANGE - NEW
8%
8.64%
CHANGE - USED
• Steady decreases in rates for both new and used
vehicle financing across all risk tiers
16.26%
15.57% 14.56%
14.15%
12%
(80)
Jan - June 2009
Average Rate on Used Vehicles
14%
Nonprime
(60)
Jan - June 2008
16%
Subprime
(10)
(41)
Deep
Subprime
18%
Deep
Subprime
• Used vehicle financing experienced the greatest
decreases in rates, with most significant decrease in
the Deep Subprime segment (-69 basis points)
8.44%
6%
6.80%
6.63%
4%
Deep
Subprime
Subprime
Nonprime
Jan - June 2008
Prime
Super Prime
Jan - June 2009
Source: Experian, Jan-June 2009
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25
Vehicle Term and Credit Tiers
How has term change by credit score?
Average Term on New Vehicles
70
68.51
68
69.00
68.12
67.51
68.20 67.63
Change in Average Term
-
66.84
66
(1.00)
66.30
(2.00)
64
61.08
62
60
60.62
Deep
Subprime
Subprime
Nonprime
Jan - June 2008
Prime
Super Prime
(0.88)
Nonprime
(0.57)
Prime
(0.54)
Super Prime
(0.46)
(1.20)
(1.90)
(3.00)
(2.60)
66
60.40
61
52.99
61.52
56.15
(4.25)
(5.00)
(6.00)
(5.49)
Jan - June 2009
CHANGE - NEW
62.27
58.92
60.37
CHANGE - USED
• Average terms for both new and used vehicle
financing decreased across all risk segments
Average Term on Used Vehicles
51
(1.00)
Subprime
(4.00)
58
56
Deep
Subprime
60.18 58.98
47.50
• Shortest terms on new vehicle financing is in the
Super Prime segment (60.62 months)
• Longest terms on new vehicle financing found in the
Subprime segment (68.12 months)
46
41
36
Deep
Subprime
Subprime
Nonprime
Jan - June 2008
Prime
Super Prime
Jan - June 2009
• Longest terms on used vehicle financing is in the
Prime risk segment (60.37 months)
• Greatest decrease in terms for used vehicles are
seen in the highest risk segments
Source: Experian, Jan-June 2009
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26
Conclusions
ƒ Overall credit quality of consumers with automotive loans has decreased year-over-year
with more consumers falling into the lower credit quality risk tiers
ƒ Delinquencies continue to increase and are accelerating in 2009 at a faster pace than
2008
ƒ Delinquency debt burden for captive financing has declined as the overall size of the
captive portfolios has decreased
ƒ Consumers have increased financing of used vehicles as a percentage of total vehicles
financed and more consumers are financing at independent dealerships
ƒ New vehicle financing remains predominantly in the Prime and Super Prime segments
ƒ Greater disbursement of financing sources for used vehicle financing while new
financing is increasingly found among the top lenders
ƒ Characteristics of financing continue to be conservative as amounts, payments rates
and terms show year-over-year reductions
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