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 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. 1

Session overview Market overview Outstanding balances Delinquency Repo and charge-off Originations New and Used financing Lender and transaction types Loan characteristics Score ranges Category Vantage Score Super prime 740+ Prime 680 739 Nonprime 620 679 Subprime 550 619 Deep subprime <550 2

INSERT PICTURE HERE Overall Automotive Finance Market Market overview and delinquency 3

Risk distribution of overall automotive portfolio How has the market been changing? Risk distribution of open loans YOY change in risk distribution 10 9 8 7 39.1% 38.1% 4. 3. 2.81% 6 5 4 25.3% 25.7% 2. 1. 0.69% 1.19% 1.51% 3 2 1 15.8% 16. 8.6% 8.6% 11.3% 11.6% 0. -1. -2. Deep Subprime Nonprime Prime Super subprime prime Deep Subprime Subprime Nonprime Prime Super Prime -3. -2.42% Source: Experian-Oliver Wyman Market Intelligence Reports 4

Billions Billions Total automotive balance Who holds the open loans? Total outstanding loan balance YOY change loan balance $900 $79b $30 $27 $800 $700 $600 $500 $96 $157 $116 $178 $25 $20 $15 $21 $20 $400 $300 $210 $221 $10 $11 $200 $100 $256 $283 $5 $- Bank Captive Credit Union Finance $- Bank Captive Credit Union Finance/ Other YOY Change Source: Experian-Oliver Wyman Market Intelligence Reports 5

YOY change in loan balances Source: Experian-Oliver Wyman Market Intelligence Reports 6

Recent automotive delinquency: 30 day delinquency How are delinquency rates changing? -3.8% 6. 5. Overall 9 bps decrease 5.61% 5.4 4. -3.1% -3.5% 3. 2. 2.35% -10.2% 2.11% 2.78% 2.7 5. 1.43% 1.5 2.72% 2.63% 1. 0. Bank Captive Credit Union Finance Total YOY Change Source: Experian-Oliver Wyman Market Intelligence Reports 7

30-day delinquency (unit) rate by state AK = 1.47% HI = 2.27% Source: Experian-Oliver Wyman Market Intelligence Reports 8

YOY change in 30-day delinquency loan rates Source: Experian-Oliver Wyman Market Intelligence Reports 9

Billions Recent automotive delinquency: 30 day delinquency What s at risk? $20 Balance of 30-day delinquent loans $2b 6. Percentage of balances 30-days delinquent $18 $16 $14 $12 $10 $8 $6 $4 $2 $5.0 $1.8 $5.9 $2.2 $4.8 $5.4 $4.4 $4.5 5. 4. 3. 2. 1. Overall 4 bps increase 1.72% 2.27% 1.59% 2.44% 1.16% 1.26% 5.21% 5.07% 2.26% 2.22% $- Bank Captive Credit Union Finance 0. Bank Captive Credit Union Finance Total YOY Change Source: Experian-Oliver Wyman Market Intelligence Reports 10

Recent automotive delinquency: 60 day delinquency How are delinquency rates changing? 2.5% 0.8% 2. Overall flat 1.96% 1.98% 1.5% -9.8% 1. 0.5% 0.66% 0.59% -4.9% 0.52% 0.5 16.8% 0.34% 0.4 0.74% 0.74% 0. Bank Captive Credit Union Finance Total YOY Change Source: Experian-Oliver Wyman Market Intelligence Reports 11

60-day delinquency by state AK = 0.41% HI = 0.62% Source: Experian-Oliver Wyman Market Intelligence Reports 12

YOY change in 60-day delinquency rates Source: Experian-Oliver Wyman Market Intelligence Reports 13

Millions Recent automotive delinquency: 60 day delinquency What s at risk? $5,000 Balance of 60-day delinquent loans $674m 1.8% Percentage of balances 60-days delinquent 1.71% $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $1,583 $407 $1,979 $546 $776 $875 $1,166 $1,207 1.6% 1.4% 1.2% 1. 0.8% 0.6% 0.4% 0.2% 0.45% 3 bps increase 0.43% 0.37% 0.4 0.26% 0.31% 1.66% 0.55% 0.58% $- Bank Captive Credit Union Finance 0. Bank Captive Credit Union Finance Total YOY Change Source: Experian-Oliver Wyman Market Intelligence Reports 14

Recent delinquency: quarterly repossession How are repo rates changing? 3. 2.84% 76.3% 2.5% Overall 19 bps increase 2. 1.5% 1.61% 1. 0.5% -4.9% 0.24% 0.23% -5.9% 0.36% 0.34% -7. 0.16% 0.15% 42.8% 0.65% 0.46% 0. Bank Captive Credit Union Finance Total YOY Change Source: Experian-Oliver Wyman Market Intelligence Reports 15

Repossession rates by lender type How have the lenders rates changed? 0.52% 0.6 0.51% 0.7 0.6 0.5 0.32% 0.1 0.18% 0.34% 0.23% 0.15% 0.4 0.3 0.2 0.1 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 0.0 Bank Captive Credit Union Source: Experian-Oliver Wyman Market Intelligence Reports 16

Repossession rates for finance companies How have finance companies changed? 2.59% 2.84% 3.0 2.5 2.0 1.42% 1.5 1.0 0.5 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 0.0 Source: Experian-Oliver Wyman Market Intelligence Reports 17

Average charge-off amount How have charge-offs changed? $1,167 $10,000 $9,500 $9,526 $1,549 $1,243 $9,000 $8,500 $786 $8,360 $929 $8,772 $8,520 $8,000 $7,500 $7,000 $6,500 $6,832 $7,618 $6,388 $7,317 $7,223 $7,277 $6,000 $5,500 $5,000 Bank Captive Credit Union Finance Total YOY Change Source: Experian-Oliver Wyman Market Intelligence Reports 18

Average charge-off versus whole sale values How have charge-offs compared to vehicle values? $18,000 $16,929 $16,000 $14,000 $12,000 $10,000 $11,307 $8,520 $8,000 $6,000 $4,000 $2,000 $- Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Average charge-off amount KBB avg auction actual all MY KBB Avg auction C+5MY Source: Kelley Blue Book Automotive Insights; Experian Automotive 19

INSERT PICTURE HERE New and Used Originations Automotive financing in the fourth quarter 2013 20

Automotive market by transaction type How are consumers purchasing vehicles? No lender on title Overall financing 5 45% 47.2% 46.5% 10 9 11.53% 13.58% 4 8 35% 7 3 6 25% 2 15% 17.9% 16.3% 5 4 3 88.47% 86.42% 1 2 5% 1 New Used Total Loan Total Lease Source: Experian Automotive 21

Share of total consumer finance units (loan and lease) 7% 6% 5% 5.8 5.16% 5.0 4.61% 4.61% 4.59% 52.8% of all financing 4% 3.58% 3.54% 3% 2% 1% 1.85% 1.72% 1.54% 1.49% 1.45% 1.36% 1.36% 1.12% 1.1 1.06% 0.91% 0.9 Source: Experian Automotive 22

Automotive market by transaction type How are consumers purchasing vehicles? Leasing by type New lease market share 10 3.23% 3.2 35% 9 3 28.84% 8 7 6 5 4 96.77% 96.8 25% 2 15% 24.79% 23.66% 23.13% 20.65% 20.3% 19.2% 19. 16.8% 24.2% 3 1 2 1 5% Q4 2009 Q4 2010 Q4 2011 New lease Used lease Share of new financing Share of all new Source: Experian Automotive 23

Top 10 new lessors Who s dominating in leasing? Share of new lease market 16% 14% 12% 14.2% 12.5% 11.6% 86% of all new leasing 1 9.6% 9.1% 8% 6% 7.3% 6.8% 5.9% 5.3% 4% 3.8% 2% TOYOTA FINANCIAL SERVICES AMERICAN HONDA FINANCE FORD MOTOR CREDIT NISSAN INFINITI FINANCIAL SERVICES ALLY HYUNDAI CAPITAL AMERICA VW CREDIT INC MERCEDES BENZ FINANCIAL BMW BANK OF NORTH AMERICA CCAP AUTO LEASE LTD Source: Experian Automotive 24

Average new lease credit scores How has leasing changed? 850 New lease credit distribution 750 650 735 719 10 9 8 7 51.29% 44.18% 6 550 450 350 250 5 4 3 2 1 18.82% 23.92% 18.49% 20.47% 9.52% 8.89% 1.87% 2.54% Deep subprime Subprime Nonprime Prime Super prime Source: Experian Automotive 25

Average score comparison on top new leased models 760 750 750 740 730 720 710 700 690 709 703 736 721 728 715714 715 712 708 727 702 712 732 719 716 692 735 728 680 670 660 Loan score Lease score Source: Experian Automotive 26

Average new lease characteristics What are the characteristics of leasing? Average monthly payment Term distribution $445 7 65.9% $435 $425 $426 $420 6 5 $415 4 $405 3 24.8% $395 2 $385 1 8.4% $375 0.7% 13-24 25-36 37-48 49-60 Source: Experian Automotive 27

Average payment comparison on top new leased models $700 $600 $500 $400 $300 $200 $416 $414 $427 $431 $420 $435 $413 $389 $349 $325 $334 $312 $329 $330 $337 $296 $287 $247 $611 $470 $100 $- Loan payment Lease payment Source: Experian Automotive 28

Market snapshot on vehicle loan financing What and where are consumers financing? Loans by vehicle type 10 Current +5 model year Used 62.48% New 37.52% 8 6 48.93% 48.9 Used financing by dealer type Independent Franchise 4 45.3% 2 54.7% YOY Change Source: Experian Automotive 29

Average credit scores by vehicle type How has financing on vehicles changed? 760 740 720 711 727 738 732 728 724 715 700 680 660 640 630 637 649 653 647 644 646 620 600 580 560 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 New Used YOY Change Source: Experian Automotive 30

Quarterly financing for new vehicles How has credit changed for new financing? Risk distribution of new loans YOY change in new financing 10 9 5 45.55% 8 7 6 48.65% 44.32% -1.9% 4 3 5 4 18.54% 21.59% 2 16.45% 3 2 18.71% 20.32% 3.9% 1 8.62% 1 12.07% 10.81% 2.03% 2.96% Deep subprime Nonprime Super prime Subprime Prime -1-2 Deep subprime Subprime -10.49% Nonprime Prime Super prime -8.88% YOY Change Source: Experian Automotive 31

Quarterly financing for used vehicles How has credit changed for used financing? 10 9 8 7 Risk distribution of used loans 21.72% 19.49% 14.46% 17.71% 2.82% 25% 2 15% YOY change in used financing 22.5 20.76% 6 5 22.11% 23.23% 1 5% 5.07% 4 3 2 1 27.11% 21.94% 14.6 17.63% Deep subprime Subprime Nonprime -1.6-5% -1-15% -2 Deep subprime Subprime -19.09% Nonprime Prime Super prime -10.28% Prime Super prime -25% YOY Change Source: Experian Automotive 32

Risk distribution by lender type How have the lenders shifted? 10 9 8 7 6 5 4 3 2 1 Risk distribution of market share 5.5% 5.2% 5.9% 5.2% 34.7% 12.1% 28.3% 42.8% 14.7% 25. 24.5% 23.5% 38.7% 20. 24.2% 28.6% 51.5% 20.8% 36.2% 13.8% 12.6% 14.5% 3.8% 3.9% 4.2% Bank BHPH Captive Credit Finance Union Deep subprime Subprime Nonprime 7% 6% 5% 4% 3% 2% 1% -1% YOY change in outside of prime distribution 6.03% 0.69% Bank BHPH Captive Credit Union Finance Prime Super prime -1.37% -2% -1.47% -1.61% Source: Experian Automotive 33

Automotive finance by lender type What lender types are gaining share? Automotive loan market share New loan market share 4 35% 3 25% 38.06% 14.5% 2 15% 1 45% 4 35% 3 25% 2 15% 1 5% 41.08% -12. 20.8% 0.18% 41.26% 14.2% 2.1% 12.8 Bank BHPH Captive Credit Union 3.8% 4.68% Finance 3 2 1-1 -2 2 15% 1 5% 8.57% -7.7% -6.7% 20.25% 18.78% 4.2% Bank BHPH Captive Credit Union Market share 3.2% 14.34% Finance 5% -5% YOY change in share -1 4 35% 3 25% 2 15% 1 5% 36.25% Market share YOY change in share Used loan market share 21.9% 22.37% 13.61% 7.64% 4.4% -7.9% -4.2% Bank BHPH Captive Credit Union Market share 20.13% 2.2% Finance YOY change in share 25% 2 15% 1 5% -5% -1 Source: Experian Automotive 34

Top 20 lenders by total loan (retail) market share Who gained or lost loan share? 7% 6% 5% 4% 3% 2% 9.5% 5.78% 0.3% 4.76% 4.58% 4.53% 4.1-15.1% -9. 10.8% 3.8% 9.1% 3.56% 3.42% 14.3% 2.67% -27.8% 48.2% of New Financing -19.7% -3.1% -5.8% -10.9% 8. 16.4% -14.5% 4.1% 1.67% 1.58% 1.56% 1.3 1.28% 1.21% 1.13% 1.05% 1.04% 1.03% 1.02% 0.97% 2 1-1 -2-3 1% -38. -31.7% -4-5 Q4 2013 Total Loan Share YOY change in share Source: Experian Automotive 35

Top 20 lenders by new loan (retail) market share Who gained or lost new loan share? 9% 8% 7% 6% 5% 4% 3% 2% 1% 8.34% 8.18% 7.99% -7.6% 20. 17.5% 9.9% 13.1% 15.5% 6.38% 6.31% 5.85% -3.4% -28.4% 4.4 4.04% 74.8% of New Financing 2.81% 2.52% -11.1% -9.6% 8.8% 1.91% 1.89% 1.86% 1.84% 1.71% 1.41% 1.39% 1.36% 1.27% 1.26% -48.9% -20.8% 34.5% -19.9% -10.7% -16.3% -19.5% -23.5% 4 3 2 1-1 -2-3 -4-5 -6 Q4 2013 New Loan Share YOY change in share Source: Experian Automotive 36

Top 20 lenders by used loan (retail) market share Who gained or lost used loan share? 8% 7% 6% 5% 4% 3% 2% 1% 6.83% 6.3% 5.3% 3.8% 5.2% 3.91% 3.81% 3.79% -9.7% -22.4% 2.24% 2.2 6.6% 3.5% -24.1% 37.7% of Used Financing -19.5% 2.3% -2.6% -0.6% 1.64% 1.53% 1.37% 1.23% 0.99% 0.98% 0.98% 0.98% 0.94% 0.93% 0.92% 0.85% 0.82% 0.78% -40.9% -5.4% -1.5% 8.2% -13.9% -17.2% 2 1-1 -2-3 -4-5 Q4 2013 Used Loan Market Share YOY change in share Source: Experian Automotive 37

Vehicle financing How has financing changed? $30,000 $25,000 $20,000 $15,000 Average amount financed $739 $26,691 $27,430 $17,629 $345 $17,974 $30,000 $29,000 $28,000 $27,000 $26,000 $25,000 $24,000 $23,000 $22,000 $24,874 Average new amount financed $25,428 $26,563 Deep subprime $27,828 $29,385 $27,831 $27,854 $28,802 $25,936 $25,880 Subprime Nonprime Prime Super prime $10,000 $5,000 $25,000 $20,000 $15,000 $10,000 $14,408 Average used amount financed $14,410 $15,858 $16,368 $17,712 $18,384 $19,316 $19,367 $19,023 $19,354 $ New Used $5,000 $ Deep subprime Subprime Nonprime Prime Super prime YOY Change Source: Experian Automotive 38

Loan-to-Value by lender type How do the lenders compare? Average LTV by lender YOY change in LTV (bps) 16 14 12 10 8 6 4 126.9% 128.6% 109.2% 108.8% 115.3% 135.8% 123.2% 152.4% 110.4% 133.8% 350 300 250 200 150 100 50-30 28 306 212 136 26 115 113 56 2 Bank Captive Credit Union Average LTV new Finance Market Totals Average LTV used (50) (18) Bank Captive Credit Union Finance YOY change in new LTV YOY change in used LTV Market Totals Source: NADA Used Car Guides; Experian Automotive 39

Loan-to-Value by risk segment How do the risk segments compare? 16 14 12 10 8 6 4 2 Average LTV by risk segment 149.2% 126. 125.5% Deep subprime 142.3% Average LTV new 122.2% 136.8% 114.3% 129.9% 98.8% 116.9% Subprime Nonprime Prime Super prime Average LTV used 400 300 200 100 - (100) (200) (300) 301 YOY change in LTV (bps) 220 Deep subprime 234 164 YOY change in new LTV 143 110 21 55 Subprime Nonprime Prime Super prime (208) (110) YOY change in used LTV Source: NADA Used Car Guides; Experian Automotive 40

Average loan payments How have payments changed? Average monthly payment Average new payment $500 $450 $400 $350 $300 $460 $11 $471 $348 $4 $352 $510 $500 $490 $480 $470 $460 $450 $440 $430 $485 $496 $499 Deep subprime $480 $464 $487 $471 $459 $455 $456 Subprime Nonprime Prime Super prime $250 $200 Average used payment $150 $100 $50 $ New Used $380 $370 $360 $350 $340 $330 $320 $310 $369 $372 Deep subprime $357 $366 $348 $337 $338 $340 $350 $346 Subprime Nonprime Prime Super prime YOY Change Source: Experian Automotive 41

Average loan terms How have terms changed? Average loan term Average new term 72 60 65 65 60 1 mo 61 72 60 48 70.91 70.62 69.65 70.25 69.88 69.03 Deep subprime 67.46 67.04 61.51 61.28 Subprime Nonprime Prime Super prime Average used term 72 48 New Used 60 48 55.31 56.73 Deep subprime 62.88 63.36 60.54 60.73 62.14 62.68 59.25 60.29 Subprime Nonprime Prime Super prime YOY Change Source: Experian Automotive 42

Distribution of loan term How have loan terms changed? 45% 4 New financing by term 41.2% 19. 25% 2 45% 4 Used financing by term 23.2% 39. 25% 2 35% 3 25% 2 15% 1 5% 1.3% -5.5% 4.5% 4.7% 28.5% -4.8% -3.9% 20.1% 15% 1 5% -5% 35% 3 25% 2 15% 1 5% 7.2% -5.8% 26.5% 12.7% -7. -8.2% 3.9% 12.5% 15% 1 5% -5% 25-36 37-48 49-60 61-72 73-84 -1 25-36 37-48 49-60 61-72 73-84 -1 % of new financing by term YOY change in term % of used financing by term YOY change in term Source: Experian Automotive 43

Average loan rate How have rates changed? 1 9% 8% 7% 6% 5% Average loan rate 8.48% 1 bps 4.36% 4.37% 23 bps 8.71% 14% 12% 1 8% 6% 4% 2% 11.8 12.12% Deep subprime Average new rate 8.88% 8.81% 5.33% 5.32% 3.72% 2.9 3.61% 2.72% Subprime Nonprime Prime Super prime 4% Average used rate 3% 2% 1% New Used 2 18% 16% 14% 12% 1 8% 6% 4% 2% 17.34% 18.14% Deep subprime 13.56% 14.04% 7.85% 8.13% 5.08% 5.12% 3.79% 3.52% Subprime Nonprime Prime Super prime YOY Change Source: Experian Automotive 44

In summary Overall, open portfolios continuing to experience growth Steady delinquency behavior Financing for consumers continues to expand as consumers rely upon the lending market for vehicle purchase Leasing continues to grow with decreasing scores and growth in lower prime market Loan amounts and payments inching up with slight increases in rates Loan-to-value and terms continue to expand 45

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