TransUnion: Auto Finance Registers Lowest Growth Rate Since Q1 2012
The firm attributed the slowdown to improvements in oil states and tightening underwriting guidelines, which have also helped stabilize delinquency rates.

CHICAGO — Tighter underwriting guidelines and better on-time payment in oil states had a positive effect on serious auto delinquency rates per borrower, according to TransUnion.
After growing 1.16% in the first quarter of 2015 to 130% in last year’s opening quarter, the serious delinquency rate — or loans more than 60 days delinquent — stayed relatively flat at 1.32% in the first quarter 2018.
“The first quarter of 2018 was relatively quiet in the auto finance space,” said Brian Landau, senior vice president and automotive business leader at TransUnion. “The most noteworthy change was the stabilization in the delinquency rate, likely due to shifts in the makeup of new auto loan borrowers and continued improvements in oil states.
“Gas prices, as measured by WTI crude, have increased more than 21% in the last year, which has provided a significant boost to the local economies of oil-producing states.”
The top six states with the largest annual decreases in delinquency rates in Q1 2018 — Alaska, Wyoming, Texas, New Mexico, Oklahoma, and North Dakota — are among the eight states where oil, gas, and mining account for 10% or more of gross domestic product. The other two states — Louisiana and West Virginia — also performed better than the national average in terms of annual changes in their serious delinquency rates, according to TransUnion.

The firm also observed a continued shift in the origination makeup of auto loan borrowers, as finance sources continued to migrate to higher credit tiers. This led to the lowest annual growth rate in auto loan balances since the first quarter of 2012. They rose 5.2% to $1.183 trillion.
Overall originations, viewed on quarter in arrears to account for reporting lag, declined 1.5% in the fourth quarter of 2017 — the sixth consecutive quarter of year declines, though the smallest such decrease in 2017.
“Origination mix continues to shift toward lower risk, with superprime and prime plus taking 1.8 points of share from prime, nearprime, and subprime on an annual basis,” Landau said. “This continues the trend from last year, where the shift to the two lowest risk tiers was 1.6 points.
“Finally, we believe the slowdown in auto loan balance growth is largely due to the decline in originations, as lenders continue to tighten their underwriting requirements and rising interest rates put a slight damper on demand.”
Originally posted on F&I and Showroom
More Dealer Ops

Ladies and Gentlemen, This Is a Dealership: Why the Fundamentals Still Decide Who Wins
A teaching moment by a legendary football coach happens to apply perfectly in the auto retail space. Learn what it is and how to use it to your store’s advantage.
Read More →
Timing the Market Can Hurt Long-Term Program Performance
For dealer-owned reinsurance entities, avoiding volatility entirely can mean falling behind inflation and missing market rebounds that drive long term surplus growth. Missing just a handful of strong market days can materially impact cumulative returns—an important reminder for long horizon trust and investment strategies.
Read More →
Dealer Ads and the FTC
The agency has made it clear in recent enforcement actions and warnings, in auto retail and other industries, that advertised prices must include all nonoptional costs to the consumer.
Read More →
Used Autos Supply Dwindles
The March shopping surge, despite high prices, cut into inventory by the most since the thick of the pandemic, Cox Automotive analysts calculated.
Read More →
Managing Risk Effectively Through Changing Times
The variables influencing risk pricing have changed significantly over the past five years. Being proactive and responsive to emerging trends is not optional but essential.
Read More →
Survey Reveals What Won't Fix What's Breaking Car Sales
AutoPayPlus says extra-long auto loans are trapping consumers and threatening the dealer trade-in cycle, and that the industry is leveraging the wrong tools to combat high MSRPs.
Read More →
IA American Appoints Two Execs
Senior vice presidents of the company's agent and dealer channels chosen to support general agents and help auto dealers with sales and performance.
Read More →
Cox Automotive Acquires Inspection Firm
Full ownership of Alliance Inspection Management, or AiM, meant to unlock growth for Manheim inspection capabilities
Read More →
Assurant Expands Partnership With Holman
Extended collaboration delivers training, products and performance development to 30 newly acquired Holman dealerships
Read More →
Franchises, Throughput Down in First Half
A handful of states see franchise growth through June, while EV sales per store boost overall business in U.S.
Read More →