State of the Automotive Finance Market. Melinda Zabritski Sr. Director Experian Automotive

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1 State of the Automotive Finance Market Melinda Zabritski Sr. Director Experian Automotive

2 Discussion Points What s on the road? Return of the US automotive market Shifting consumer dynamic Overall consumer financing Balances & delinquencies New & Used financing and trends in originations Return of leasing Growth of subprime Score Ranges Super prime 740+ Prime Nonprime Subprime Deep subprime <550

3 What s on the Road What metal is moving and who s purchasing

4 What s on the road today Vehicles in Operation June M VIO Additions/Deletions : 28.1M (11.3%) VIO Total Changes: 66.1M (26.7%) Used Vehicle Sales (38.0M) Scrapped Vehicles (13.2M) Vehicles in Operation June M Change of Address 39.7M in 2012 Source: Experian Automotive

Millions Year to date registrations 30 25 24.9 25.9 27.3 28.

5 Millions Year to date registrations % 25% 27% 28% YTD 2010 YTD 2011 YTD 2012 YTD 2013 New Used Source: Experian Automotive as of June 30, 2013 (U.S. light duty vehicles only)

6 120% Licensed drivers as a percentage of their age-group population 100% 80% 60% 40% 20% 0% Source:University of Michigan, Transportation Research Institute. Michael Sivak & Brandon Schoettle. Report No UMTRI

7 Millions Vehicle purchase by generation % 43.6% 52.9% 59.5% Millennials Gen X Boomer Silent New Used Source: Experian Automotive, purchases made in Q1 2013

8 Overall Automotive Finance Market Market overview and delinquency

9 Billions Growth in lending balances $760 Total outstanding loan balance $751 $740 $720 $700 $680 $660 $640 $702 $712 $667 $636 $647 $682 $620 $600 $580 $560 Q Q Q Q Q Q Q Source: Experian Automotive

Billions Credit Union balances $180 $167 $160 $140 $133 $141 $143 $149 $142 $142 $148 $120 $100 $80 $60 $40 $20 $- Q2

10 Billions Credit Union balances $180 $167 $160 $140 $133 $141 $143 $149 $142 $142 $148 $120 $100 $80 $60 $40 $20 $- Q Q Q Q Q Q Q Q Source: Experian-Oliver Wyman Market Intelligence Reports

11 Automotive loan 30-dpd 3.5% 3.0% 2.5% 2.38% 2.0% 1.5% 1.28% 1.0% 0.5% 0.0% Q Q Q Q Q Q Q Q Bank Captive Credit Union Total Source: Experian-Oliver Wyman Market Intelligence Reports

12 Automotive loan 60-dpd 0.9% 0.8% 0.7% 0.6% 0.58% 0.5% 0.4% 0.3% 0.2% 0.27% 0.1% 0.0% Q Q Q Q Q Q Q Q Bank Captive Credit Union Total Source: Experian-Oliver Wyman Market Intelligence Reports

13 Quarterly repossession rates 0.7% 0.6% 0.5% 0.4% 0.36% 0.3% 0.2% 0.1% 0.0% 0.15% Q Q Q Q Q Q Q Q Bank Captive Credit Union Total Source: Experian-Oliver Wyman Market Intelligence Reports

14 $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 Average charge-off versus wholesale values $17,396 $11,537 $7,218 $- Q2 2006Q2 2007Q2 2008Q2 2009Q2 2010Q2 2011Q2 2012Q Average charge-off amount KBB avg auction actual all MY KBB Avg auction C+5MY Source: Kelley Blue Book Automotive Insights; Experian Automotive

15 New and Used Originations Automotive financing in the second quarter 2013

16 Automotive finance type No lender on title Overall financing 50% 45% 47.3% 47.1% 100% 90% 40% 80% 35% 70% 30% 25% 60% 50% 88.64% 87.04% 20% 15% 17.4% 15.5% 40% 30% 10% 20% 5% 0% New Used 10% 0% 11.36% 12.96% Q Q Q Q Total Lease Total Loan Source: Experian Automotive

62% 24.40% 20% 0% Q2 2012 Q2 2013 New lease Used lease New leasing by lender type 20% 15% 17.

17 Financing trends 100% 80% Leasing by type 3.13% 3.24% 30% New lease share of new consumer financing 27.64% 60% 40% 96.87% 96.76% 25% 23.79% 23.62% 24.40% 20% 0% Q Q New lease Used lease New leasing by lender type 20% 15% 17.68% Finance Other 5.2 Credit Union 0.4% Bank, 19.4% Captive 75.0% 10% 5% 0% Q Q Q Q Q Source: Experian Automotive

18 Average credit on new Average new lease score lease transactions Q Q % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% New lease credit distribution 63.29% 61.59% 16.40% 16.79% 12.64% 13.42% 6.33% 6.74% Q Q Deep subprime Nonprime Super prime Subprime Prime Source: Experian Automotive

19 Average new lease attributes Average monthly payment Term distribution $445 70% 66.2% $435 $425 $415 $405 $416 $408 60% 50% 40% 30% 23.9% Average term 35 $395 20% $385 10% 9.2% $375 Q Q % 0.6% Source: Experian Automotive

20 Market snapshot on vehicle loan financing -1.06% Independent Franchise YOY Change Source: Experian Automotive

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

1991 1990 14% 12% 10% Used vehicle financing by model year

21 % 12% 10% Used vehicle financing by model year 38.7% are MY % 6% 4% 2% 0% Source: Experian Automotive

Loan share by lender Automotive loan market share New loan market share 40% 35% 30% 25% 36.14% 40.6% 25.

9% Bank BHPH Captive Credit Finance Union 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% 20% 15% 10% 5% 0% -10.7% 8.38% -12.

35% Market share 15.20% 6.10% YOY change in share Used loan market share -1.4% -2.1% Bank BHPH -7.

22 Loan share by lender Automotive loan market share New loan market share 40% 35% 30% 25% 36.14% 40.6% 25.24% 50% 40% 30% 20% 60% 50% 40% 30% 20% 10% 0% 35.88% 20.1% 48.30% 34.0% 41.7% -22.3% 0.17% 8.62% 7.03% -31.9% Bank BHPH Captive Credit Finance Union 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% 20% 15% 10% 5% 0% -10.7% 8.38% -12.7% 15.31%14.93% -13.9% Bank BHPH Captive Credit Union 4.9% Finance 10% 0% -10% -20% 40% 35% 30% 25% 20% 15% 10% 5% 0% 36.35% Market share 15.20% 6.10% YOY change in share Used loan market share -1.4% -2.1% Bank BHPH -7.9% Captive Credit Union 20.86% 21.49% -0.6% 7.3% Finance 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% Market share YOY change in share Market share YOY change in share Source: Experian Automotive

23 Average credit scores by vehicle type -4-2 YOY Change Source: Experian Automotive

24 Average scores by lender type 900 Average score on new loans 900 Average score on used loans Bank Captive Credit Union Finance 400 Bank BHPH Captive Credit Union Finance Q Q Q Q Source: Experian Automotive

25 Average amount financed

26 Average monthly payment

Loan-to-Value by lender type Average LTV by lender YOY change in LTV (bps)

Captive Credit Union Average LTV new Finance Market Totals Average LTV used

27 Loan-to-Value by lender type Average LTV by lender YOY change in LTV (bps) 160% 140% 120% 100% 125.1% 123.7% 109.2% 108.3% 114.3% 132.9% 121.6% 148.1% 110.5% 131.1% % 60% % 20% 0% Bank Captive Credit Union Average LTV new Finance Market Totals Average LTV used Bank Captive Credit Union 47 Finance YOY change in new LTV YOY change in used LTV 91 Market Totals Source: NADA Used Car Guides; Experian Automotive

28 Distribution of loan term

29 Average rates

lending market for vehicle purchase Leasing continues to grow with slight decrease in scores and payments $49 lower than the loan

30 In summary Strong market growth but a changing consumer dynamic Overall, open portfolios continuing to experience growth, reaching over $751B Delinquencies remain at historic lows Financing for consumers continues to expand as consumers rely upon the lending market for vehicle purchase Leasing continues to grow with slight decrease in scores and payments $49 lower than the loan market Scores continue slight decline with growth in the subprime market Loan-to-value and terms expand as payments remain relatively flat

State of the Automotive Finance Market Fourth Quarter 2013

State of the Automotive Finance Market Fourth Quarter 2013 Melinda Zabritski Sr. Director, Experian Automotive Experian and the marks used herein are service marks or registered trademarks of Experian