auto financing · pdf fileconfidential and proprietary 3 1 2 the auto financing 3low oil...
TRANSCRIPT
Copyright Equifax Canada. All rights reserved. No part of this document may be reproduced, distributed, transmitted, transcribed, stored in a retrieval system, or translated into any language in any form by means, electronic, mechanical or otherwise, for any purpose, without the prior written consent of Equifax Canada.
Auto Financing
Credit Trends
Q1-2016
Equifax Canada Co.
1
Confidential and Proprietary
2
Automotive leases rebounding to pre-recession levels
Delinquency rates begin to rise after reaching historical lows
last year
Higher dollar amounts continue being lent to consumers
Regional Auto Delinquency Trends 60+ DPD rates (based on $)
Rising delinquency rates impacting Captives more than
Banks
Regional Auto Charge-off Trends (based on $)
Higher Charge-off rates for Captives while improvements for
Banks
Higher Bankruptcies impacting the Western region
Credit Trend Highlights
Details in Appendix – Slides 31-38
Confidential and Proprietary
3
1 2 3 Low oil prices and growing
consumer debt
Delinquency rates begin
trending higher
The auto financing
industry remains strong
• Canadian consumer debt near
all-time high: Debt totals over
$1.618 Trillion Dollars
• Credit growth steadily rose
4.8% YoY this quarter, but
slowed from the previous
quarter down 0.21%
• Consumer delinquency rate (90+
days past due) rose 3.2% YoY this
quarter
• Auto Finance delinquency rate ↑
13.5% YoY and ↑ 6.1% since last
quarter (Alberta: ↑ 31.5% YoY in
delinquency rate and ↑ 21.8% YoY
in Charge-off rate)
• Ontario Charge-off rate up 16.1%
YoY, while Quebec was flat
• Lenders continue to fund larger
amounts to consumers as
interest rates continue to remain
low
• Continued strong demand offset
by weakness in the Western
region
• Total Outstanding’s up 5.9% YoY
this quarter
Bank of Canada remains vocal about growing levels of
debt, as majority of Canadians continue to pay their
debt obligations responsibly
Source: Equifax Database
Confidential and Proprietary
4
Automotive leases rebounding to pre-
recession levels
Source: Equifax Database
Auto Leases
2015 2015 2015 2016
Total Debt Q2 Q3 Q4 Q1
Auto Loans -0.5% 0.2% 0.5% 0.8%
Auto Leases 20.5% 22.7% 23.7% 22.9%
Total Auto Financing 3.9% 5.1% 5.7% 5.9%
Year over Year
Consistent growth in Auto Financing as new vehicle sales continue to push Auto Leases to new levels
Strong growth in Ontario and Quebec, offset by a pull back in demand in Western Canada
Alberta and Saskatchewan saw Total Debt Balances drop 6% and 3.6% YoY, respectively this quarter
Auto Loans
Confidential and Proprietary
5
Recent growth stemming from the Silent
Generation
Source: Equifax Database (* Pre-work force (18-25), Millennials (26-35), Gen X (36-45), Baby Boomers (46-65), Silent Gen (65+))
Non-Bank Captive
balance distribution as
of Q1-2016
Non-Bank Captive – Y/Y % change in balance
Bank Installment
balance distribution as
of Q1-2016
Bank Installment – Y/Y % change in balance
Confidential and Proprietary
6
Banks see growth in Subprime, while
Captives chase Super Prime
Source: Equifax Database (* Deep Subprime (320-540), Subprime (541-620), Near Prime (621-680), Prime (681-740), Super Prime (741+))
Non-Bank Captive
balance distribution as
of Q1-2016
Non-Bank Captive – Y/Y % change in balance
Bank Installment
balance distribution as
of Q1-2016
Bank Installment – Y/Y % change in balance
Confidential and Proprietary
7
Delinquency rates begin to rise after
reaching historical lows last year
Auto Finance delinquency has risen faster and remains lower than Bank Installment credit products, but the gap is closing
Source: Equifax Database
Bank Installment
Bank Revolving
National Credit Card
Auto Finance
Overall 3.2% 5.5%
2016Q1 Q/Q
8.9%
4.0%
5.7%
6.1%13.5%
2016Q1 Y/Y
-0.1%
1.7%
2.3%
90+ Delinquency Rate
Confidential and Proprietary
8
Higher dollar amounts continue being lent
to consumers
Source: Equifax Database
+11%
Post-crisis, the combination of longer terms and increased affordability has allowed consumers to buy more expensive vehicles
Shift in consumer preference towards light utility vehicles over passenger cars; aided by low interest rate environment and favourable gas prices
Confidential and Proprietary
9
Regional Auto Delinquency Trends
60+ DPD rates (based on $)
Delinquency in Atlantic provinces
increased across the board.
Auto related delinquency increased
in Oil producing provinces.
Oil impacted regions are seeing higher increases in mid-stage delinquency
rates
Source: Equifax Database
Confidential and Proprietary
10
Rising delinquency rates impacting
Captives more than Banks
Source: Equifax Database
60+ Delinquency – Region
Automotive Financing, Non-Bank Captive
• Overall up 14.3% YoY
• YoY increase in delinquency rates
across every region with the Western
region ahead by 22.9% followed
closely by Ontario at 17.9%
• Overall up 5.8% YoY
• YoY improvements in almost every
region with the exception of the
Western region, up 24.6%
60+ Delinquency – Region
Automotive Financing, Bank Installment
Confidential and Proprietary
11
Regional Auto Charge-off Trends
Charge-off rates (based on $)
Auto related (gross) charge-off rates are increasing in Western and Eastern
provinces
Source: Equifax Database
Confidential and Proprietary
12
Higher Charge-off rates for Captives
while improvements for Banks
Charge-off – Region
Automotive Financing, Non-Bank Captive
• Overall up 10.3% YoY
• YoY Charge-off rates higher in every
region with the exception of Quebec
which saw a minor reduction of 1.2%
this quarter
• Overall down 9% YoY
• YoY improvements in losses for
Ontario and Quebec, -19.1% and -
13.2%, respectively
• The West was flat YoY with the East up
8.1% YoY
Charge-off – Region
Automotive Financing, Bank Installment
Source: Equifax Database
Confidential and Proprietary
13
Higher Bankruptcies impacting the
Western region
Bankruptcies – Region
Automotive Financing, Non-Bank Captive
• Bankruptcies up 11.8% YoY
• Western and Eastern regions leading
the way with increases of 24.3% and
21.2%, respectively
• Bankruptcies up 11.5% YoY
• Western region higher by 27.1% YoY,
followed by Quebec at 8.0%
Bankruptcies – Region
Automotive Financing, Bank Installment
Source: Equifax Database
Confidential and Proprietary
14
Regional Auto Delinquency Trends
30+ DPD rates (based on $)
Delinquency in Atlantic provinces
increased across the board.
Auto related delinquency increased
in Oil producing provinces.
Oil impacted provinces continue to see sharp increases in early stage
delinquency rates – West overtakes the East
Source: Equifax Database
Confidential and Proprietary
15
Rising delinquency rates impacting
Captives more than Banks
Source: Equifax Database
30+ Delinquency – Region
Automotive Financing, Non-Bank Captive
• Overall up 9.7% YoY
• Western region leading the way up
19.9% YoY, followed by Ontario up
9.2%
• Quebec remained flat down 1.1% YoY
• Overall up 7.0% YoY
• Western region up 24.2% YoY, while
Ontario and Quebec were both down
4.8% and 2.6%, respectively
30+ Delinquency – Region
Automotive Financing, Bank Installment
Confidential and Proprietary
16
Appendix
Confidential and Proprietary
17
Majority of consumer inquiries
traditionally been Near Prime or below
Source: Equifax Database
Risk Score Band
Definitions
Super Prime (741+)
Prime (681-740)
Near Prime (621-680)
Subprime (541-620)
Deep Subprime (320-540)
~46% of
inquiries are
Subprime
Confidential and Proprietary
18
If you would like to learn more about out auto insights, please contact:
Jeff Brubacher, Account Manager Russell Wicks, National Account Executive
Equifax Canada Co. Equifax Canada Co.
[email protected] [email protected]
416-303-1046 647-539-5381
Confidential and Proprietary
19
Disclaimer
All marks used herein are trademarks of Equifax Canada Co. This presentation is for informational purposed
only and is not legal advise and should not be used, or interpreted, as legal advise. The information is
provided as is without any representation, warranty or guarantee of any kind, whether express or implied.
Equifax will not under any circumstances be liable to you or to any other person for any loss or damage
arising from, connected with, or relating to the use of this presentation by you or any other person. Users of
this informational presentation should consult with their own lawyer for legal advice. No part of the contents of
this document may be reproduced or transmitted in any form or by any means for external usage without the
express written authorization of Equifax Canada Co.