Experian's auto finance analysis has surprises
Experian Automotive's Melinda Zabritski said that despite conventional wisdom, it's too soon to say auto finance is all the way back, especially in some states that were hit hard when the housing bubble burst.
For the fourth quarter of 2012 vs. the fourth quarter of 2006, total outstanding auto loan balances were down 15 percent for California, 19 percent for Nevada and 9 percent for Florida, she said.
Experian's analysis turned up another surprise, a more pleasant one: Despite what you read about the aging U.S. fleet, new-vehicle buyers actually traded in or otherwise disposed of their vehicles at a faster rate in 2012 than they did in 2011.
That's good news for the industry. Zabritski said the average length of ownership for vehicles bought new was 66.2 months in 2012, down from 68.1 months in 2011.
Zabritski is director of automotive credit for Experian Automotive in Schaumburg, Ill. She spoke with Special Correspondent Jim Henry here during the American Financial Services Association Vehicle Finance Conference.
There has been so much positive news about auto lending it's a little surprising to see that so many big markets are still so far below prerecession numbers.
There's a lot going on. Even though the overall numbers are improving, there are a lot of reasons you see fluctuation from region to region. For instance, some major lenders simply moved out of some markets when the recession hit -- some large, national lenders actually pulled out.
Plus, now that those lenders are back in those markets, are they back all the way, writing loans in those states at a level like they were doing before?
What do those markets have in common? Are their problems because of the housing bubble?
That's part of it as well. There are a lot of other things going on in the economy.
I was also surprised at the notion of people getting rid of cars sooner. You read so much about the aging fleet. What's your measurement based on?
It's based on the same analysis as units in operation; it's strictly average age of a vehicle when it's disposed of.
So how can that number be going down? Is it going down primarily for those who bought new?
It is mostly for those who bought new. Those who bought used, that's where you're getting some of that [aging] trend from. You also have the phenomenon of cars just lasting longer, from a durability standpoint.