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PIN: Captives Regaining Ground

January 3, 2006

WESTLAKE VILLAGE, Calif. -- After declining for three consecutive quarters, an uptick in the percentage of extended term loans offered by captives helped increase its market share for the fourth quarter, according to the Power Information Network (PIN).

However, PIN also pointed out that despite the increase, the captives’ share is still down 22 percent from a three-year peak of 65.1 percent in the fourth quarter of 2004.

In the fourth quarter, average term-lengths for the industry and captives climbed to 64 and 62 months, which PIN pointed out was the longest terms through the past 13 quarters. The trend is being driven by downward pressure on monthly payments as vehicle prices rise.

In addition, captive institutions have increased their offer of 66-, 72- and 84-month loans, while reducing 36-, 48- and 60-month loans, with 60-month loans reporting the greatest decline.

Captives have also increased their mix of 84-month loans to remain competitive with non-captives, which have recorded 5.8 percent of their business in 84-month loans during the fourth quarter of 2005.

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