Industry Shows Signs of Stabilization, Says Experian
Despite continued economic struggles, the automotive lending industry in the U.S. showed signs of stabilization during the third quarter 2009, according to a quarterly analysis of automotive credit by Experian Automotive.
SCHAUMBURG, Ill. — Despite continued economic struggles, the automotive lending industry in the U.S. showed signs of stabilization during the third quarter 2009, according to a quarterly analysis of automotive credit by Experian Automotive.
The growth rate for 30-day delinquencies, while still rising, has slowed significantly. The 30-day delinquency rate rose 5.8 percent from the third quarter 2008 to the third quarter 2009 (3.14 percent to 3.32 percent delinquencies). The growth rate from third quarter 2007 to third quarter 2008 was 9.5 percent.
“We are seeing signs of stabilization in the automotive lending market that could spell good overall health for the auto industry in the long run,” said Scott Waldron, president of Experian Automotive. “Lending institutions are making less risky loans right now. As some of the higher-risk loans from a few years ago come off the books, lenders will be in a much better position to serve the automotive market.”
The average credit score for new vehicle loans in the third quarter of 2009 was 775, up from 762 in the third quarter of 2008, showing that lenders are pulling back from riskier loans. Average credit scores for used vehicle loans also rose to 684 in the third quarter of 2009 from 670 in the third quarter of 2008.
In addition, the average new vehicle loan dropped from 63 months in the third quarter of 2008 to 62 months in the third quarter of 2009, and the average used vehicle loan dropped from 59 months in the third quarter of 2008 to 57 months in the third quarter of 2009.
“While higher-than-average delinquency rates are still with us, and may be for some time, the fact that the rate of increase is slowing is definitely some positive news for an industry that hasn’t had much as of late,” said Melinda Zabritski, director of Automotive Credit for Experian Automotive. “These slowing delinquency rates, along with several other trends we are now seeing, should provide some cautious optimism for the market.”
In other findings:
Loans 60 days past due were up 13.4 percent year over year in the third quarter of 2009. Automotive loans 60 days past due rose to 0.95 percent from 0.84 percent.
Toyota Financial Services had the highest market share for new vehicle loans (11.2 percent), followed by Chase Auto Finance (11.1 percent), GMAC (9.1 percent) and Ford Motor Credit (7.1 percent).
Wachovia Dealer Services (5.7 percent), Chase Auto Finance (4.5 percent), Toyota Financial Services (3.0 percent) and Capital One Auto Finance (1.8 percent) have the highest market share for used vehicle loan originations.
The states with the highest average credit score for new vehicle loans were Minnesota (804), Wisconsin (796), Washington (793), Iowa (792) and Connecticut (789).
The states with the highest average credit score for used vehicle loans were Wisconsin (733), New Hampshire (731), Minnesota (731), Connecticut (730) and North Dakota (729).
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