Experian Reveals Late-Model Used Financing Trends
SCHAUMBURG, Ill. — Along with determining the top 20 lenders by market share, Experian Automotive revealed it has started to track a new piece of data for its quarterly analysis of vehicle financing. It is now taking a deeper look into used financing by model year.
Experian discovered that franchise dealer financing activity for used units from the 2005 through 2011 model years constituted about 86 percent of all used-vehicle financing during the first quarter of this year.
Analysts also learned 2008 model-year units were involved in the most financing activity at franchise stores, representing 23.9 percent of all used financing. Next was 2007 model-year vehicles at 17.8 percent.
Other years that registered double digits include 2009 models (12.3 percent), 2010 models (13.4 percent) and 2006 models (10.2 percent).
Melinda Zabritski, Experian's director of automotive credit, explained, "One of the reasons we're going to start monitoring this is with the reduced sales of new vehicles toward the end of 2008 into 2009 and 2010, will that have an impact on consumer availability and resulting financing of older models?"
Late-model financing penetration by franchise dealers actually has slipped year-over-year. Zabriski noted that during the first quarter of 2010, about 88 percent of all used-vehicle financing included units 6 years old and newer.
"We're seeing the industry finance slightly older vehicles," Zabritski said last week. "It will be interesting to monitor how this might shift."
When looking at late-model vehicle financing at independent stores, the amounts are considerably less.
Experian showed only a little more than 40 percent of the financing done at independent dealerships were for models 6 years old and newer.
The model year with the highest level of independent dealer financing was 2005 at 8.9 percent.
Models right around the 6-year mark were next, with 2007 models settling at 8.7 percent, 2006 models at 8.2 percent and 2008 models at 7.5 percent.
Delinquency Rates Drop & Other Industry Trends
Returning to auto financing trends that Experian regularly reports, Zabritski reported that both 30- and 60-day delinquency rates dipped during the first quarter.
Contracts delinquent by 30 days or more ticked down by 7.95 percent to 2.52 percent of all vehicle loans. A year ago, the level stood at 2.74 percent.
Experian discovered commercial banks and captive finance companies made the strongest improvements in 30-day delinquencies. Captive finance companies improved by 10.32 percent from 2.98 percent to 2.67 percent, while banks bettered their situation by 10.17 percent from 2.5 percent to 2.25 percent.
The outstanding balance of 30-day delinquencies dropped by about $2.3 billion year-over-year, according to Experian.
The improvement in 60-day delinquencies was even better as analysts indicated these sunk by 13.45 percent year-over-year.
Again, captive finance companies and banks led the way. Captives watched their 60-day delinquencies plummet 22.63 percent from 0.65 percent to 0.50 percent. Banks saw them sink 17.76 percent from 0.73 percent to 0.60 percent.
Experian also noticed credit unions made a double-digit improvement in this area, too, as their first-quarter 60-day delinquencies dropped 11.01 percent from 0.40 percent to 0.35 percent.
All told, 60-day delinquency balances dropped by about $1 billion from the first quarter of last year.
With delinquencies dropping, Experian revealed how both repossessions and charge-off amounts are down year-over-year as well.
The first-quarter repo rate ticked down 4.3 percent as 27-percent repossession rate drop enjoyed by banks overcame a 3.7-percent climb in credit union repos.
Experian also mentioned banks had the greatest year-over-year improvement in charge-offs as they dropped by $1,566 from $8,295 to $6,729.
As an industry, analysts said first-quarter charge-offs sunk $1,312 from $8,371 to $7,059.
In other Experian findings:
—The average amount financed for a used vehicle rose $397 in the first quarter from $16,239 to $16,636.
—The average monthly payment and term on used-vehicle contracts ticked up slightly. The monthly payment edged up $2 to $343 while the loan length moved up a month to 58 months.
—The average interest rate for used-vehicle financing fell 43 bps in the first quarter from 9.51 percent to 9.08 percent.
Top Lenders by Market Share
Experian also revealed the top 20 lenders by market share as of the first quarter:
Ally: 9.44 percent
Wells Fargo: 6.07 percent
Toyota: 5.23 percent
Chase: 4.27 percent
Honda: 3.80 percent
Ford: 3.44 percent
Capital One: 2.80 percent
Bank of America: 1.91 percent
Nissan/Infiniti: 1.80 percent
Fifth Third: 1.57 percent
Santander: 1.56 percent
AmeriCredit: 1.28 percent
BMW Bank: 1.23 percent
Hyundai: 1.18 percent
US Bank: 1.08 percent
Credit Acceptance: 1.02 percent
Huntington: 0.92 percent
SunTrust: 0.91 percent
USAA: 0.84 percent
BB&T: 0.83 percent
Moving on, top used-vehicle lenders include:
Wells Fargo: 7.18 percent
Ally: 3.85 percent
Chase: 3.30 percent
Capital One: 3.03 percent
Toyota: 2.91 percent
Honda: 2.68 percent
Santander: 2.09 percent
Credit Acceptance: 1.58 percent
Fifth Third: 1.38 percent
AmeriCredit: 1.32 percent
Bank of America: 1.31 percent
CarMax: 1.11 percent
BMW Bank: 0.99 percent
USAA: 0.97 percent
Huntington: 0.94 percent
Westlake: 0.93 percent
US Bank: 0.88 percent
Ford: 0.83 percent
BB&T: 0.75 percent
Navy FCU: 0.67 percent
Finally, top new-vehicle lenders include:
Ally: 14.49 percent
Toyota: 9.43 percent
Honda: 8.71 percent
Ford: 8.14 percent
Chase: 6.02 percent
Nissan/Infiniti: 4.44 percent
Wells Fargo: 4.06 percent
Hyundai: 3.18 percent
Bank of America: 2.98 percent
Capital One: 2.39 percent
Fifth Third: 1.91 percent
World Omni: 1.69 percent
BMW Bank: 1.67 percent
US Bank: 1.44 percent
SunTrust: 1.34 percent
Volkswagen: 1.27 percent
AmeriCredit: 1.22 percent
Citizens: 1.09 percent
BB&T: 0.98 percent
Huntington: 0.90 percent