State of the Automotive Finance Market Fourth Quarter 2015

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1 State of the Automotive Finance Market Fourth Quarter 2015 Melinda Zabritski Sr. Director Financial Solutions Experian Information Solutions, Inc. Inc. All rights All rights reserved. reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned Experian herein are Public. 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 Public 1

2 Session overview Originations New and Used financing Lender and transaction types Loan characteristics Market overview Outstanding balances Total risk distributions Delinquency 2

3 Credit score ranges Category Score Range Super prime Prime Nonprime Subprime Deep subprime Vantage Score 3.0 3

4 INSERT PICTURE HERE Originations New and used lending 4

5 50.9% 53.3% 52.8% 53.5% 55.2% 54.7% 81.4% 82.2% 82.1% 83.7% 84.0% 85.9% Growing reliance upon financing 100% 90% New Used Percentage of vehicles with financing 80% 70% 60% 50% 40% 30% 20% 10% 0% Q Q Q Q Q Q

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

6 <=1990 Percentage of used model year vehicles without loans 100% 90% 62.8% of all vehicles financed in Q were used 80% 70% 60% 50% 40% 30% 20% 10% 0% 6

7 Consumer leasing 40% 35% 30% 25% 20% 15% 10% 5% 0% 33.61% 28.84% 29.89% 28.87% 23.66% 23.13% 24.79% 24.16% 25.11% 20.34% 19.17% 19.02% 16.36% 13.58% 14.13% 10.37% 10.45% 11.53% Lease % of total Lease % of new financing Lease % of all new Q Q Q Q Q Q

Leasing and consumer credit 800 700 600 500 400 300 New 96.

New leasing by risk segment 26.75% 26.15% 48.75% 47.84% 17.

8 Leasing and consumer credit New 96.2% Lease by vehicle type Average lease scores Q Q Used 3.8% New Used 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% New leasing by risk segment 26.75% 26.15% 48.75% 47.84% 17.15% 17.69% 6.93% 7.78% Q Q Deep subprime Subprime Nonprime Prime Super prime 8

9 1.4% 1.7% 2.2% 2.1% 2.1% 2.4% 2.2% 2.6% 2.5% 2.4% 2.2% 2.2% 2.1% 2.1% 1.9% 1.9% 3.2% 3.2% 3.1% 3.0% Top 10 new models based on share of the new lease market 3.5% 3.0% Q Q % 2.0% 1.5% 1.0% 0.5% 0.0% * Silverado

681 688 676 689 694 697 696 698 714 706 706 704 713 707 727 727 718 725 722 744 Average

10 Average score comparison on top new leased models 760 Loan score Lease score

Average new lease characteristics Average

11 Average new lease characteristics Average monthly payment Term distribution $445 70% 64.07% $435 $425 $415 $426 $420 60% 50% 40% Average term = 36 months $405 $408 $412 30% 26.64% $395 20% $385 10% 8.77% $375 Q Q Q Q % 0.49%

12 $248 $353 $322 $297 $322 $325 $328 $300 $259 $359 $318 $426 $421 $431 $415 $423 $410 $384 $431 $544 Average payment comparison on top new leased models $600 $500 Loan payment Lease payment $400 $300 $200 $100 $ 12

13 Automotive finance by lender type Q total loan market share YOY change in market share -3.9% Finance Credit Union 17.6% Finance 13.34% Bank 35.8% -1.2% Captive Credit Union 2.7% -9.7% BHPH Captive 27.4% BHPH 6.2% Bank 2.0% -15% -10% -5% 0% 5% 13

14 Automotive finance by lender type 100% 90% 80% 70% 60% 50% 40% 30% Q market share by lender type 4.9% 10.1% 21.4% 24.0% 49.8% 7.3% 11.5% 0.2% 6% 4% 2% 0% -2% -4% YOY Change in market share 1.8% 0.6% Bank BHPH 0.6% Captive 2.1% Credit Union 1.1% 3.6% Finance 20% 10% 0% 35.1% 35.8% New loan Used loan -6% -8% -10% -8.1% -5.7% -8.7% Bank BHPH Captive Credit Union Finance New Used 14

15 2.08% 1.98% 1.84% 1.72% 1.70% 1.32% 1.19% 1.08% 1.08% 1.07% 1.04% 0.83% 0.82% 2.67% 4.17% 3.93% 3.64% 4.97% 5.75% 5.66% Top 20 lenders in the retail loan market 7% 6% 5% Top 20 represent 48.5% of all retail loans 4% 3% 2% 1% 0% 15

16 3.03% 2.92% 2.59% 2.39% 2.29% 1.96% 1.80% 1.55% 1.37% 1.26% 1.23% 5.48% 5.20% 4.84% 4.49% 7.28% 10.41% 9.71% 9.13% 8.93% Top 20 lenders in the NEW retail loan market 12% 10% Top 20 represent 87.9% of all new retail loans 8% 6% 4% 2% 0% 16

17 3.22% 2.71% 2.10% 1.95% 1.88% 1.47% 1.30% 1.19% 1.13% 1.00% 0.98% 0.80% 0.79% 0.77% 0.77% 0.74% 0.70% 4.75% 4.13% 6.68% Top 20 lenders in the USED retail loan market 8% 7% 6% 5% Top 20 represent 39.1% of all used retail loans 4% 3% 2% 1% 0% 17

Average loan credit scores by vehicle type 760 740 720 711 726 736 732 727 723 715 712 711 700 680 660 640 640 647 657

18 Average loan credit scores by vehicle type New Used 580 Q Q Q Q Q Q Q Q Q

19 Automotive loans by risk segment 100% 90% 80% 70% New loans 28.03% 27.68% 100% 90% 80% 70% Used loans 10.86% 11.07% 34.24% 34.41% 60% 60% 50% 40% 43.80% 43.15% 50% 40% 21.93% 22.28% 30% 30% 20% 17.41% 17.69% 20% 27.15% 26.61% 10% 0% 10.08% 0.68% 10.70% 0.78% Q Q % 0% 5.82% 5.63% Q Q Super prime Prime Nonprime Subprime Deep subprime 19

20 Risk distribution by lender type 100% 90% 80% 70% Risk distribution of market share 3.7% 3.3% 20.3% 13.5% 26.3% 17.7% 11.0% 14.7% 20.1% 8% 6% YOY change in highest risk (<600) segment 7.3% 60% 50% 40% 44.7% 48.0% 41.1% 47.2% 54.2% 4% 2% 1.5% 30% 20% 10% 0% 21.3% 19.1% 22.9% 12.8% 20.1% 12.4% 11.3% 0.8% 1.0% 0.9% Bank BHPH Captive Credit Union Deep subprime Subprime Nonprime Prime Super prime 11.3% Finance 0% -2% -4% -6% Bank BHPH Captive Credit Union -3.1% -4.2% Finance -1.0% 20

Risk distribution by lender type Percentage of financing in

Bank 14.1% 6.9% 19.3% 11.6% 16.4% 9.5% 39.2% 70.0% 68.

-200-250 YOY change (bps) in highest risk segments 48 7 (222)

21 Risk distribution by lender type Percentage of financing in highest risk segments (<600) Finance Credit Union Captive BHPH Bank 14.1% 6.9% 19.3% 11.6% 16.4% 9.5% 39.2% 70.0% 68.4% Used New 0% 20% 40% 60% 80% YOY change (bps) in highest risk segments 48 7 (222) 162 New Used 32 Bank BHPH Captive Credit Finance Union (48) (74) (66) (117) 21

$28,231 $24,907 $25,411 Q4 2014 Q4 2015 $ $10,000 $20,000 $30,000 $40,000 Average used amount financed $10,000 $5,000 $ New Q4 2014 Q4 2015 Used Super Prime

22 $18,411 $18,850 $28,381 $29,551 Average financing by risk segment on new and used vehicle loans $35,000 $30,000 $25,000 $20,000 $15,000 Average amount financed $1,170 $439 Super Prime Prime Nonprime Subprime Deep subprime Average new amount financed $25,711 $26,858 $29,680 $31,008 $30,105 $31,147 $27,399 $28,231 $24,907 $25,411 Q Q $ $10,000 $20,000 $30,000 $40,000 Average used amount financed $10,000 $5,000 $ New Q Q Used Super Prime Prime Nonprime Subprime Deep subprime $19,433 $20,051 $19,872 $20,486 $18,389 $18,832 $15,854 $16,071 $14,022 $14,203 Q Q $ $10,000 $20,000 $30,000 22

23 $355 $359 $482 $493 Average payments by risk segment on new and used vehicle loans $600 $500 $400 $300 $200 $100 $ Average monthly payment $11 $4 New Used Q Q Average new monthly payment Super Prime $456 $466 Prime $485 $497 Nonprime $503 $513 Subprime $508 $516 Deep subprime $497 $505 Q Q $420 $440 $460 $480 $500 $520 $540 Average used monthly payment Super Prime $349 $355 Prime $347 $353 Nonprime $355 $360 Subprime $371 $372 Deep subprime $373 $374 Q Q $330 $340 $350 $360 $370 $380 23

24 Payment gap grows between new and used loans $140 $135 Average payment difference between new & used car loans $134 $130 $127 $125 $120 $117 $119 $119 $115 $112 $110 $105 $100 Q Q Q Q Q Q

25 Average term by risk segment on new and used vehicle loans Average term 1 mo New Used Q Q mo Super Prime Prime Nonprime Subprime Deep subprime Average new loan term Average used loan term Super Prime Prime Nonprime Subprime Deep subprime Q Q Q Q

26 Distribution of loan term 100% Vehicle financing by term 90% 80% New Used 70% 60% 50% 40% 30% 20% 10% 0% 5% 2.6% 12% 42.0% 41.1% 10.8% 29.0% 23.6% 20.8% 16.4% 11.3% 3.1% 5.8% 3.8%

24% Subprime 10.49% 10.36% Deep subprime 13.29% 13.31% Q4 2014 Q4 2015 0.00% 5.00% 10.00% 15.00% 20.00% Average used loan rate Super Prime 3.

27 4.56% 4.63% 8.65% 8.78% Average rate by risk segment on new and used vehicle loans 10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Average rate 7 bps New Used Q Q bps Average new loan rate Super Prime 2.69% 2.70% Prime 3.59% 3.55% Nonprime 6.22% 6.24% Subprime 10.49% 10.36% Deep subprime 13.29% 13.31% Q Q % 5.00% 10.00% 15.00% 20.00% Average used loan rate Super Prime 3.34% 3.35% Prime 5.09% 5.08% Nonprime 9.40% 9.51% Subprime 15.79% 15.90% Deep subprime 18.95% 19.27% Q Q % 5.00% 10.00% 15.00% 20.00% 27

28 INSERT PICTURE HERE Overall Automotive Finance Market Market overview and delinquency 28

29 A look at automotive loan balances Source: Experian-Oliver Wyman Market Intelligence Reports 29

30 Open loan overview Super prime Prime Nonprime Subprime Deep subprime Source: Experian-Oliver Wyman Market Intelligence Reports 30

31 Recent automotive delinquency: 30 day delinquency Source: Experian-Oliver Wyman Market Intelligence Reports 31

32 30-day delinquency balances by state 1.23 HI = 1.90% Source: Experian-Oliver Wyman Market Intelligence Reports 32

33 Recent automotive delinquency: 60 day delinquency Source: Experian-Oliver Wyman Market Intelligence Reports 33

34 60-day delinquency balances by state 0.26% HI = 0.50% Source: Experian-Oliver Wyman Market Intelligence Reports 34

35 Balances at risk Source: Experian-Oliver Wyman Market Intelligence Reports 35

in terms Rates on new financing have increased in conjunction with growth in high risk originations Open balances reach all-time

36 In summary Modest high risk growth for new financing; used down YOY Leasing reaching all-time highs at 28.9% of all new consumer transactions Loan amounts continue to grow; with gap between new and used payments rising despite increase in terms Rates on new financing have increased in conjunction with growth in high risk originations Open balances reach all-time highs with majority of loans/balances in prime+ 30 day down, yet 60 day delinquency creeping up with both percentage of units and dollars on the rise 36

State of the Automotive Finance Market Third Quarter 2015

State of the Automotive Finance Market Third Quarter 2015 Melinda Zabritski Sr. Director Financial Solutions 2015 2015 Experian Information Solutions, Inc. Inc. All rights All rights reserved. reserved.