State of the Automotive Finance Market A look at loans and leases in Q1 2016

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1 State of the Automotive Finance Market A look at loans and leases in Q Presented by: Melinda Zabritski Sr. Director, Financial Solutions Experian Information Solutions, Inc. 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 are 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 Experian Information Solutions, Inc. All rights reserved. Experian Public. Experian Public. 1

Session overview Market Overview Outstanding balances

and Used financing Lender and transaction types Loan &

850 Nonprime 601 660 Subprime 300 600 2016 Experian

2 Session overview Market Overview Outstanding balances Total risk distributions Delinquency Originations New and Used financing Lender and transaction types Loan & lease characteristics Category Score Ranges Prime Nonprime Subprime Experian Information Solutions, Inc. All rights reserved. Experian Public. 2

4 A look at all open automotive balances (loans and leases regardless of origination period) 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. Source: Experian-Oliver Wyman Market Intelligence Reports 4

Open automotive loans and leases by risk segment (loans and leases regardless of origination period with score based on the quarter shown) Prime

5 Open automotive loans and leases by risk segment (loans and leases regardless of origination period with score based on the quarter shown) Prime Nonprime Subprime 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. Source: Experian-Oliver Wyman Market Intelligence Reports 5

6 30 day delinquency on all open automotive loans and leases (loans and leases regardless of origination period) 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. Source: Experian-Oliver Wyman Market Intelligence Reports 6

7 30-day delinquency balances by state (loans and leases regardless of origination period) 1.36% HI = 1.70% 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. Source: Experian-Oliver Wyman Market Intelligence Reports 7

8 60 day delinquency on all open automotive loans and leases (loans and leases regardless of origination period) 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. Source: Experian-Oliver Wyman Market Intelligence Reports 8

9 60-day delinquency balances by state (loans and leases regardless of origination period) 0.31% HI = 0.38% 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. Source: Experian-Oliver Wyman Market Intelligence Reports 9

11% New Finance Market: new v used Used Used % of lease market 56.11% 55.99% 43.89% 44.01% 3.90% 3.

11 Automotive financing: snapshot of how and what consumers are financing Percentage of vehicles with financing New Used 84.9% 86.3% 55.6% 55.3% %of all new vehicles that are leased 26.67% 31.11% New Finance Market: new v used Used Used % of lease market 56.11% 55.99% 43.89% 44.01% 3.90% 3.98% Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 11

4% Lender Market share loan and lease combined Market Share of Total Financing (new/used & loan/lease) Market Share of New Financing Bank BHPH

12 34.4% 35.2% 8.5% 7.7% 17.3% 18.0% 13.6% 13.4% 15.2% 13.8% 7.6% 7.2% 22.7% 23.9% 20.1% 19.9% 26.5% 26.2% 34.1% 34.8% 33.8% 34.2% 0.2% 0.2% 50.1% 10.6% 5.4% 49.4% 10.7% 5.4% Lender Market share loan and lease combined Market Share of Total Financing (new/used & loan/lease) Market Share of New Financing Bank BHPH Captive Credit Union Finance Co Market Share of Used Financing Bank BHPH Captive Credit Union Finance Co Bank BHPH Captive Credit Union Finance Co Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 12

13 Average consumer loan scores by vehicle type Average new credit scores Average used credit scores All New New Loan All Used Franchise Used New Lease Independent Used Q Q Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 13

14 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 Experian Information Solutions, Inc. All rights reserved. Experian Public. 14

15 Risk distribution of total finance market loan and lease combined Total (new & used) risk distribution New risk distribution 73.18% 72.21% 56.43% 56.49% 19.34% 19.85% 24.23% 23.66% Subprime Nonprime Prime 17.11% 17.60% 9.71% 10.19% Subprime Nonprime Prime Used risk distribution 43.18% 44.01% 21.11% 21.64% 35.71% 34.35% Subprime Nonprime Prime Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 15

16 Risk distribution of new leasing loans not included New lease risk distribution %of new borrowers choosing leasing 36.3% Prime 75.86% 74.91% 31.5% 34.2% Nonprime 30.1% 16.97% 17.18% 7.17% 7.91% Subprime Nonprime Prime Subprime 27.2% 22.5% Q Q Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 16

17 Risk distribution of the loan market lease is not included Total (new & used) loan risk distribution New loan risk distribution 72.02% 70.76% 53.49% 53.15% 19.74% 20.37% 26.77% 26.48% Subprime Nonprime Prime 17.17% 17.83% 10.82% 11.41% Subprime Nonprime Prime Used loan risk distribution 43.21% 43.99% 21.17% 21.70% 35.62% 34.31% Subprime Nonprime Prime Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 17

52.0% 54.5% 69.0% 70.1% 85.6% 85.3% Shifts within the used loan market lease is not included Percentage of consumers by risk tier choosing used Used Franchise loan risk distribution 54.50% 55.39% 23.

18 52.0% 54.5% 69.0% 70.1% 85.6% 85.3% Shifts within the used loan market lease is not included Percentage of consumers by risk tier choosing used Used Franchise loan risk distribution 54.50% 55.39% 23.18% 23.53% 22.31% 21.08% Q Q 2016 Subprime Nonprime Prime Used Independent loan risk distribution 24.83% 26.67% 18.70% 19.77% 56.47% 53.56% Subprime Nonprime Prime Q Q 2016 Subprime Nonprime Prime Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 18

$19,884 $15,605 $20,723 $16,124 $28,711 $30,032 Average loan amounts lease is not included Average loan amount Average loan amount by risk tier for Q1 2016 Avg new loan amount Avg Franchise used loan

19 $19,884 $15,605 $20,723 $16,124 $28,711 $30,032 Average loan amounts lease is not included Average loan amount Average loan amount by risk tier for Q Avg new loan amount Avg Franchise used loan amount Avg Independent used loan amount Avg Independent used Avg Franchise used Avg New $18,501 $16,254 $13,981 $21,817 $20,644 $17,771 $30,075 $31,367 $27,733 Prime Nonprime Subprime Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 19

Average term on loans and leases used transactions do not include leasing Average new term 67 68 36 36 New loan New lease Avg new term by risk tier for Q1 2016 New lease New loan 36 37 37 66 72 72

20 Average term on loans and leases used transactions do not include leasing Average new term New loan New lease Avg new term by risk tier for Q New lease New loan Prime Nonprime Subprime Average used term Avg used term by risk tier for Q Independent used Franchise used Franchise used Independent used Prime Nonprime Subprime Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 20

21 Average score by loan term lease is not included Average new score by loan term Average used score by loan term Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 21

22 For new vehicles payments rise and leasing becomes more attractive Average new payment $488 $503 $405 $406 New lease Average new payment by risk tier for Q $405 $411 $416 $497 New loan $521 $517 New loan New lease Prime Nonprime Subprime Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 22

23 Average used payments lease not included Average used payment by Dealer $376 $368 Average used payment by risk tier for Q Independent used $334 $346 $369 $345 $351 Franchise used $372 $380 $385 Franchise used Independent used Prime Nonprime Subprime Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 23

24 Average loan rates are showing some increases but remain historically low Average loan rates 12.23% 12.22% 8.03% 7.81% 4.71% 4.79% Average loan rate by risk tier for Q Avg Independent used Avg Franchise used Avg New 5.48% 11.83% 4.60% 9.12% 3.29% 6.57% 11.03% 15.25% 18.53% New Franchise used Independent used Prime Nonprime Subprime Source: Experian Automotive 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 24

Summary Portfolio balances reach record levels as loan amounts grow to all-time highs Increases in both 30 & 60-day delinquency rates rise as the percentage of loans in

consumers also increasing choosing used vehicles resulting in score increases, greater percentages of used financing in the prime risk tier and lower average used rates

25 Summary Portfolio balances reach record levels as loan amounts grow to all-time highs Increases in both 30 & 60-day delinquency rates rise as the percentage of loans in the subprime portion of open portfolios grow Leasing surpasses 30% of all new consumer vehicle sales as consumers across all risk tiers increasingly choose to lease Prime consumers also increasing choosing used vehicles resulting in score increases, greater percentages of used financing in the prime risk tier and lower average used rates Loan amounts and payments reach all-time highs for new loans while terms continue to extend 2016 Experian Information Solutions, Inc. All rights reserved. Experian Public. 25

26 Insights about the market, the vehicles and the people who buy them Experian Information Solutions, Inc. 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 are 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 Experian Information Solutions, Inc. All rights reserved. Experian Public. Experian Public. 26

State of the Automotive Finance Market

State of the Automotive Finance Market A look at loans and leases in Q4 2016 Presented by: Melinda Zabritski Sr. Director, Financial Solutions www.experian.com/automotive 2016 Experian Information Solutions,