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Leasing, Below-Prime Originations Grow in Q3, Experian Automotive Reports

December 04, 2012

SCHAUMBURG, Ill. — Experian Automotive reported today that the share of auto loans made to credit-challenged consumers — nonprime, subprime and deep subprime — grew by 13.6 percent in the third quarter. The market intelligence firm also spotted a 7.53 percent year-over-year increase in new-vehicle leasing.

The analysis found that new-vehicle loans made to customers with nonprime, subprime or deep-subprime credit increased to 24.84 percent in the third quarter vs. the year-ago period. For used vehicles, the total subprime financing market increased 5.47 percent on a year-over-year basis to 54.43 percent in the third quarter.

“With leasing showing a continued upward trend, and lenders increasing their appetite for risk, consumers were in a good position to obtain a vehicle during the third quarter,” said Melinda Zabritski, director of automotive credit at Experian Automotive. “Expanding loans to lower-risk tiers opens the market for more car shoppers, while an increase in leasing means it is easier for consumers to get more vehicle for a lower monthly payment.

“Both of these trends are positive signs of a strong and recovering auto finance market, which ultimately benefits the consumer and the entire auto industry,” she added.

Experian also broke down each automaker’s share of third-quarter originations. Toyota lead with way with a 14.09 percent share of all new vehicles financed. Ford was second with 13.16 percent share, while Chevrolet was third with 11.10 percent.

Percentage of New Vehicles Financed in Q3 2012 by Make

Toyota:  14.09%

Ford: 13.16%

Chevrolet: 11.10%

Honda: 10.20%

Nissan: 8.28%

Hyundai: 6.06%

Kia: 5.32%

Jeep: 4.20%

Dodge: 3.21%

Volkswagen: 2.85%

Findings from the report also showed that lenders still are more risk averse than they were prior to the Great Recession. In the third quarter 2007, the average credit score for a new-vehicle loan was 749, compared with 755 in the third quarter 2012.

The analysis also included information on the average credit scores by make for new-vehicle loans financed in the third quarter. Consumers who financed a Volvo comprised the highest average credit scores (818), while those who purchased a Mitsubishi made up the lowest average credit scores (694).

Top-Scoring New Loans by Make

Make    Score

Volvo    818

Lexus 816

Acura 813

Audi 810

Infiniti 810

Jaguar 810

Porsche 810

Land Rover 802

Mercedes 802

Lincoln 801

Lowest-Scoring New Loans by Make

Make    Score

Mitsubishi 694

Suzuki 704

Dodge 718

Kia 721

Scion 723

Nissan 726

Chevrolet 737

Chrysler 737

Ram       737

Fiat         741

Here are other key findings:

• Average consumer credit scores for loans on new vehicles fell by eight points from a year ago to 755 in the third quarter. For used vehicles, the average consumer credit scores fell by eight points to 668.

• Credit unions and finance companies realized strong market share growth of 4.5 percent for overall automotive loans. Credit unions now have 18.22 percent share of the overall automotive loan market, while finance companies grew to 13.29 percent.

• Banks still have the highest market share at 40.98 percent, but the segment’s share share declined 2.9 percent from the third quarter 2011 to the third quarter 2012.

• The average amount financed for a new-vehicle loan grew from $25,873 in the third quarter 2011 to $25,963 in the third quarter 2012.

• The average amount financed for a used vehicle grew from $17,359 in the third quarter 2011 to $17,577 in the third quarter 2012.

• Thirty-day delinquencies fell from 2.78 percent in the third quarter 2011 to 2.67 percent in the third quarter 2012, marking the second consecutive year that third-quarter 30-day delinquencies stayed below the prerecession level of 2.81 percent recorded in the third quarter 2007.

• Sixty-day delinquencies fell from 0.71 percent a year ago to 0.69 percent. This marked the second consecutive year that third-quarter 60-day delinquencies stayed below the prerecession level of 0.74 percent recorded in the third quarter 2007.

• Quarterly repossession rates fell from 0.62 percent a year ago to 0.40 percent.

• Quarterly repossession rates for banks, credit unions, captives and finance companies all fell, with finance companies showing the sharpest decline, dropping from 2.36 percent in the year-ago period to 1.18 percent in Q3 2012.

• Overall charge-off amounts rose from $6,820 in the year-ago period to $7,026 in the third quarter.

 

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