Www.mediagrouponlineinc.com



Auto Lending

Business Profiler

Overview

▪ Companies in this industry provide auto loans to consumers and businesses.

▪ Auto loans are issued by vehicle dealers, large financial institutions and locally based financial institutions such as credit unions and community banks.

▪ Industry participants generate revenue through the interest and fees that are included in the installment payments of borrowers.

▪ The industry comprises 2,617 businesses that employ more than 123,000 people.

▪ Total auto loan volume increased by $23.9 billion in fourth quarter 2011 to $658 billion.

About the Competition

▪ The top 5 companies in the auto lending market are Ally Financial, Inc., Toyota Motor Credit Corporation, Ford Motor Credit Company, LLC, Volkswagen Bank GmbH and General Motors Financial Company, Inc.

▪ The top five of all 811 companies in the market account for nearly $20.7 billion in annual sales.

Customer Demographics

▪ The average length of car ownership has hit a record 52.2 months.

▪ New vehicle loans to nonprime, subprime and deep subprime customers (those with a history of credit problems such as late payments and charge-offs) increased by 13.8 percent from 2010 to 2011.

Marketing and Advertising

▪ With direct lending, personalized direct mail is the most cost-effective marketing channel for reaching qualified prospects.

▪ Direct mail marketers develop a mailing list based on the probability that targets will respond to customized offers, with information (such as a current car payment amount) taken directly from credit reports.

▪ Recapture specialists use customized direct mail offers, specifically to lower a buyer's monthly payments with a new car purchase.

Industry Trends

▪ The mortgage market crash resulted in U.S. sales of new vehicles sliding 21 percent in 2009.

▪ Funding availability issues are lessening.

▪ Collection effectiveness has led to a nearly 50 percent drop in charge-offs from 2010 to 2011, and significantly lower late-payment numbers industry-wide.

▪ Online dealer application portals make it possible to provide buyers with an immediate credit decision, and conditioned approvals are on the decline.

▪ The market has loosened credit standards, which makes it a good time to buy for those who are in the market.

Growth Areas

▪ In the second quarter of 2011, nonprime loans totaled 22 percent of new-car loans, up from 18 percent a year earlier.

▪ Dealers have begun to focus on value-added subprime financing and leasing and floor plan financing.

▪ Auto loan volume topped $100B in the third quarter of 2011, a level not seen since mid-2008.

▪ The length of time between when consumers pay off one loan and take out another is increasing, leading to a growing recapture market.

The Future of the Industry

▪ With 2011 seeing the lowest rates of charge-offs and delinquencies in 10 years, auto finance industry performance should remain stable for the remainder of 2012.

▪ Today’s automobiles on the road have hit an all-time high of 10.6 years of age. Consumers owning older cars will result in ever-increasing demand for newer and more reliable ones.

▪ The recession led to a tight credit market, high unemployment rates and depressed consumer spending, all of which affected consumers' auto purchases. The industry is just starting its recovery, but loosened credit standards will tighten in an effort to reduce risk to lenders as demand increases.

▪ Industry growth approximates overall United States economic growth, taking into account the losses of several major lenders during the recession.

▪ Revenue growth is forecast to meet the GDP at 2.1 percent annually through 2017.

Sources: star-, 9/11; , 3/12; , 6/11; decisionanalyticsblog., 2/12; , 6/11; , 3/12; , 5/12; , 5/12; , 5/12

Updated: 5/12

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download