Experian Automotive Sees Some Positive Signs in Auto Lending Marketplace
SCHAUMBURG, Ill. — In Experian Automotive's latest credit analysis of the auto industry, the company discovered that credit appears to be loosening via auto lenders from the second quarter of last year to the same quarter of this year.
More specifically, the company reported Wednesday that super prime now accounts for 37.1 percent of the market, down 8 percent from the second quarter of 2008. Meanwhile, prime makes up 23.8 percent, up 2.1 percent. Non-prime accounts for 15.2 percent, up 6.2 percent. The subprime market stands at 58.8 percent, up 5.1 percent and deep subprime has grown 10.4 percent over last year to 15 percent.
When comparing the first half of last year to the same time frame of this year, Experian found another round of changes. Super prime is up 11.1 percent to 47.06 percent, while prime is down 4.9 percent to 12.84 percent. The non-prime market is down 12.5 percent to 12.34 percent and subprime is down 18.6 percent to 12.02 percent. Finally, deep subprime is up 3.2 percent to 15.74 percent.
The company defines the credit tiers in two ways:
Scorex Plus
Super Prime: 740 plus
Prime: 680-739
Non-prime: 620-679
Subprime: 550-619
Deep Subprime: less than 550
VantageScore
Super Prime: 801-990
Prime: 701-800
Non-prime: 641-700
Subprime: 601-640
Deep Subprime: 601-600
Next up, the company reviewed average credit score for vehicle type from the first half of last year to the first half of this year and found that overall average credit score on new and used vehicles is 703, up 8 points. For new vehicles, the median score is 773, up 19 points. And for used vehicles, the average score is up 8 points to 668.
In a similar year-over-year comparison, Experian said that used vehicles now account for 66.06 percent of market distribution, up 5.31 percent, while new vehicles make up 33.94 percent, down 8.93 percent.
Experian analysis shows that market conditions were pushing a higher percentage of vehicle shoppers into used-vehicle financing. This shift in used market share did bring increased market share to independent used-vehicle retailers, who saw their financing share rise by more than 7 percent year over year (30.88 percent in the first half of 2008 to 33.11 percent in the first half of 2009), officials highlighted.
Breaking the data down even further to look specifically at used vehicles, the company reported that deep subprime came in at 23 percent, compared to 22.53 percent in the first half of last year. Subprime now accounts for 15.10 percent, as opposed to 18.03 percent. Non-prime stands at 13.46 percent, compared to 14.96 percent. Prime makes up 12.49 percent, versus 12.77 percent and super prime accounts for 35.95 percent, compared to 31.71 percent in the first half of 2008.
Top 20 lenders overall represented 42 percent of all loans originating in the first half of 2009, according to Experian. This was a 5.38 percent decrease from the same time the prior year.
The company reported top lenders by overall market share:
Chase: 6.7 percent
Wachovia: 4.7 percent
Toyota: 4.6 percent
Ford: 3.2 percent
Honda: 3.1 percent
GMAC: 3 percent
Bank of America: 2.4 percent
Capital One: 2.2 percent
Chrysler: 1.4 percent
Nissan Infiniti: 1.3 percent
5th Third Bank: 1.3 percent
BMW Bank: 1.3 percent
Citizens Auto: 1.2 percent
US Bank: 1.2 percent
BB&T Bank: 0.8 percent
Credit Accepetance: 0.8 percent
USAA: 0.8 percent
Suntrust Bank: 0.8 percent
CarMax: 0.7 percent
Volkswagen: 0.7 percent
The company then shared the top 20 lenders by market share on used vehicles:
Wachovia: 5.5 percent
Chase: 4.4 percent
Toyota: 2.7 percent
Capital One: 2.3 percent
Ford: 1.5 percent
Bank of America: 1.5 percent
Credit Acceptance: 1.2 percent
BMW Bank: 1.2 percent
CarMax: 1.1 percent
US Bank: 1.1 percent
GMAC: 1.1 percent
5th Third Bank: 1.1 percent
Citizens Auto: 1 percent
Honda: 0.9 percent
BB&T Bank: 0.9 percent
USAA: 0.9 percent
Navy FCU: 0.7 percent
Drive Financial: 0.7 percent
TD Banknorth: 0.7 percent
CitiFinancial Auto: 0.7 percent
Experian also took a look at average interest rate by credit score and found that in a year over-year-comparison, across the board on new vehicles, it appears that APRs are creeping downward.
New vehicles
Deep Subprime: 13.63 percent from 13.82 percent
Subprime: 11.39 percent from 11.49 percent
Non-prime: 8.28 percent from 8.47 percent
Prime: 6.63 percent from 6.57 percent
Super Prime: 4.87 percent from 5.19 percent
On the used-vehicle side of the market, APRs appear to be following the same downward trend.
Used Vehicles
Deep Subprime: 15.57 percent from 16.26 percent
Subprime: 14.15 percent from 14.56 percent
Non-prime; 10.81 percent from 11.16 percent
Prime: 8.44 percent from 8.64 percent
Super Prime: 6.63 percent from 6.80 percent
Moreover, Experian said that auto loans that are 60 days past due rose by 21.7 percent from the second quarter of 2008 to the second quarter of 2009.
During its quarterly State of the Auto Finance Market Webinar, the company also indicated that for second quarter of 2009, 0.80 percent of all auto loans were 60 days past due, compared with 0.66 percent for the same time period in 2008.
Thirty-day delinquencies, meanwhile, also rose by 14.6 percent in the second quarter to 3.06 percent, up from 2.67 percent the year before. Combined, 30- and 60-day delinquencies accounted for $25.5 billion in at-risk loans.
"Challenging economic times continue to take a toll on the automotive finance world," said Scott Waldron, president of Experian Automotive. "As the recession continued to drag on during the second quarter, the rate of delinquency rose much faster from the first to second quarter than it did the previous year. This caused lenders to tighten criteria and push some consumers out of the new-vehicle market."
There were other positive signs in the market based on loan attributes. The average length of newly originated loans for new vehicles dropped from 63 months in the first half of 2008 to 62 months in the first half of 2009.
In addition, the average loan amount rose by $105 to $24,265 in the first half of 2009, up from $24,160 in the first half of 2008. Despite the rise in total loan amounts, Experian said that the average monthly payments on new-car loans dropped from $458 in the first half of 2008 to $453 in the first half of 2009.
"Consumers were financing larger amounts for new vehicles in the first half of 2009 compared with the first half of 2008, which could be a sign that overall consumer confidence is starting to rebound," explained Melinda Zabritski, director of Automotive Credit for Experian Automotive. "If new vehicle loan amounts continue to see increases into the third quarter, it will be a very positive sign for the auto industry."
Other findings:
—Three states had a reduction in 30-day delinquencies: Alaska (15 percent), Nebraska (3 percent) and Michigan (2 percent).
—The states with the largest percentage increase in 30-day delinquencies were Idaho (61 percent), Montana (38 percent), Hawaii (32 percent), Washington (28 percent) and Utah (27 percent).