Full Block Accessibility Test

By: Mike Horrocks Have you ever been struck by a turtle or even better burnt by water skies that were on fire?  If you are like me, these are not accidents that I think will ever happen to me and I’m not concerned that my family doctor didn’t do a rotation in medical school to specialize in treating them. On October 1, 2013, however, doctors and hospitals across the U.S. will have ability to identify, log, bill, and track those accidents and thousands of other very specific medical events.  In fact the list will jump from a current 18,000 medical codes to 140,000 medical codes.  Some people hail this as a great step toward the management of all types of medical conditions, whereas others view it as a introduction of noise in a medical system already over burdened.  What does this have to do with credit risk management you ask? When I look at the amount of financial and non-financial data that the credit industry has available to understand the risk of our consumer or business clients, I wonder where we are in the range of “take two aspirins and call me in the morning” to “[the accident] occurred inside a chicken coop” (code: Y9272).   Are we only identifying a risky consumer after they have defaulted on a loan?  Or are we trying to find a pattern in the consumer’s purchases at a coffee house that would correlate with some other data point to indicate risk when the moon is full? The answer is somewhere in between and it will be different for each institution.  Let’s start with what is known to be predictable when it comes to monitoring our portfolios – data and analytics, coupled with portfolio risk monitoring to minimize risk exposure – and then expand that over time.  Click here for a recent case study that demonstrates this quite successfully with one of our clients. Next steps could include adding in analytics and/or triggers to identify certain risks more specifically. When it comes to risk, incorporating attributes or a solid set of triggers, for example, that will identify risk early on and can drill down to some of the specific events, combined with technology that streamlines portfolio management processes – whether you have an existing system in place or in search of a migration – will give you better insight to the risk profile of your consumers. Think about where your organization lies on the spectrum.    If you are already monitoring your portfolio with some of these solutions, consider what the next logical step to improve the process is – is it more data, or advanced analytics using that data, a combination of both, or perhaps it’s a better system in place to monitoring the risk more closely. Wherever you are, don’t let your institution have the financial equivalent need for these new medical codes W2202XA, W2202XD, and W2202XS (injuries resulting from walking into a lamppost once, twice, and sequentially).

The rash of large-scale data breaches in the news begs many questions, one of which is this: how do hackers select their victims?

By: Mike Horrocks Let’s all admit it, who would not want to be Warren Buffet for a day?  While soaking in the tub, the “Sage of Omaha” came up with the idea to purchase shares of Bank of America and managed to close the deal in under 24 hours (and also make $357 million in one day thanks to an uptick in the stock). Clearly investor opinions differ when picking investments, so what did Buffet see that was worth taking that large of a risk? In interviews Buffet simply states that he saw the fundamentals of a good bank (once they fix a few things), that will return his investment many times over. He has also said that he came to this conclusion based on years of seeing opportunities where others only see risk. So what does that have to do with risk management? First, ask yourself as you look at your portfolio of customers what ones are you  “short-selling”  and risk losing and what customers are you investing into and expect Buffet-like returns on in the future? Second, ask yourself how are you making that “investment” decision on your customers? And lastly, ask yourself how confident you are in that decision? If you’re not employing some mode of segmentation today on your portfolio stop and make that happen as soon as you are done reading this blog. You know what a good customer looks like or looked like once upon a time. Admit to yourself that not every customer looks as good as they used to before 2008 and while you are not “settling”, be open minded on who you would want as a customer in the future. Amazingly, Buffet did not have Bank of America’s CEO Brian Moynihan’s phone number when he wanted to make the deal. This is where you are heads and shoulders above Garot’s Steak House’s favorite customer.  You have deposit information, loan activity and performance history, credit data, and even the phone number of your customers. This gives you plenty of data and solutions to build that profile of what a good customer looks like – thereby knowing who to invest in. The next part is the hardest. How confident are you in your decision that you will put your money on it? For example, my wife invested in Bank of America the day before Warren put in his $5 billion. She saw some of the same signs that he did in the bank. However, the fact that I am writing this blog is an indicator that she clearly did not invest to the scale that Warren did. But what is stopping you from going all in and investing in your customers’ future? If the fundamentals of your customer segmenting are sound, any investment today into your customers will come back to you in loyalty and profits in the future. So at the risk of conjuring up a mental image, take the last lesson from Warren Buffet’s tub soaking investment process and get up and invest in those perhaps risky today, yet sound tomorrow customers or run the risk of future profits going down the drain.

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With the National Automobile Dealers Association (NADA) Show set to kickoff later this week, it seemed fitting to explore how the shifting dynamics of the used vehicle market might impact dealers and buyers over the coming year. Shedding light on some of the registration and finance trends, as well as purchasing behaviors, can help dealers and manufacturers stay ahead of the curve. And just like that, the Special Report: Automotive Consumer Trends Report was born. As I was sifting through the data, one of the trends that stood out to me was the neck-and-neck race between Millennials and Gen X for supremacy in the used vehicle market. Five years ago, in 2019, Millennials were responsible for 33.3% of used retail registrations, followed by Gen X (29.5%) and Baby Boomers (26.8%). Since then, Baby Boomers have gradually fallen off, and Gen X continues to close the already minuscule gap. Through October 2024, Millennials accounted for 31.6%, while Gen X accounted for 30.4%. But trends can turn on a dime if the last year offers any indication. Over the last rolling 12 months (October 2023-October 2024), Gen X (31.4%) accounted for the majority of used vehicle registrations compared to Millennials (30.9%). Of course, the data is still close, and what 2025 holds is anyone’s guess, but understanding even the smallest changes in market share and consumer purchasing behaviors can help dealers and manufacturers adapt and navigate the road ahead. Although there are similarities between Millennials and Gen X, there are drastic differences, including motivations and preferences. Dealers and manufacturers should engage them on a generational level. What are they buying? Some of the data might not come as a surprise but it’s a good reminder that consumers are in different phases of life, meaning priorities change. Over the last rolling 12 months, Millennials over-indexed on used vans, accounting for more than one-third of registrations. Meanwhile, Gen X over-indexed on used trucks, making up nearly one-third of registrations, and Gen Z over-indexed on cars (accounting for 17.1% of used car registrations compared to 14.6% of overall used vehicle registrations). This isn’t surprising. Many Millennials have young families and may need extra space and functionality, while Gen Xers might prefer the versatility of the pickup truck—the ability to use it for work and personal use. On the other hand, Gen Zers are still early in their careers and gravitate towards the affordability and efficiency of smaller cars. Interestingly, although used electric vehicles only make up a small portion of used retail registrations (less than 1%), Millennials made up nearly 40% over the last rolling 12 months, followed by Gen X (32.2%) and Baby Boomers (15.8%). The market at a bird’s eye view Pulling back a bit on the used vehicle landscape, over the last rolling 12 months, CUVs/SUVs (38.9%) and cars (36.6%) accounted for the majority of used retail registrations. And nearly nine-in-ten used registrations were non-luxury vehicles. What’s more, ICE vehicles made up 88.5% of used retail registrations over the same period, while alternative-fuel vehicles (not including BEVs) made up 10.7% and electric vehicles made up 0.8%. At the finance level, we’re seeing the market shift ever so slightly. Since the beginning of the pandemic, one of the constant narratives in the industry has been the rising cost of owning a vehicle, both new and used. And while the average loan amount for a used non-luxury vehicle has gone up over the past five years, we’re seeing a gradual decline since 2022. In 2019, the average loan amount was $22,636 and spiked $29,983 in 2022. In 2024, the average loan amount reached $28,895. Much of the decline in average loan amounts can be attributed to the resurgence of new vehicle inventory, which has resulted in lower used values. With new leasing climbing over the past several quarters, we may see more late-model used inventory hit the market in the next few years, which will most certainly impact used financing. The used market moving forward Relying on historical data and trends can help dealers and manufacturers prepare and navigate the road ahead. Used vehicles will always fit the need for shoppers looking for their next vehicle; understanding some market trends will help ensure dealers and manufacturers can be at the forefront of helping those shoppers. For more information on the Special Report: Automotive Consumer Trends Report, visit Experian booth #627 at the NADA Show in New Orleans, January 23-26.

The automotive industry is constantly changing. Shifting consumer demands and preferences, as well as dynamic economic factors, make the need for data-driven insights more important than ever. As we head into the National Automobile Dealers Association (NADA) Show this week, we wanted to explore some of the trends in the used vehicle market in our Special Report: State of the Automotive Finance Market Report. Packed with valuable insights and the latest trends, we’ll take a deep dive into the multi-faceted used vehicle market and better understand how consumers are financing used vehicles. 9+ model years grow Although late-model vehicles tend to represent much of the used vehicle finance market, we were surprised by the gradual growth of 9+ model year (MY) vehicles. In 2019, 9+MY vehicles accounted for 26.6% of the used vehicle sales. Since then, we’ve seen year-over-year growth, culminating with 9+MY vehicles making up a little more than 30% of used vehicle sales in 2024. Perhaps more interesting though, is who is financing these vehicles. Five years ago, prime and super prime borrowers represented 42.5% of 9+MY vehicles, however, in 2024, those consumers accounted for nearly 54% of 9+MY originations. Among the more popular 9+MY segments, CUVs and SUVs comprised 36.9% of sales in 2024, up from 35.2% in 2023, while cars went from 44.3% to 42.9% year-over-year and pickup trucks decreased from 15.9% to 15.6%. 2024 highlights by used vehicle age group To get a better sense of the overall used market, the segments were broken down into three age groups—9+MY, 4-8MY, and current +3MY—and to no surprise, the finance attributes vary widely. While we’ve seen the return of new vehicle inventory drive used vehicle values lower, it could be a sign that consumers are continuing to seek out affordable options that fit their lifestyle. In fact, the average loan amount for a 9+MY vehicle was $19,376 in 2024, compared to $24,198 for a vehicle between 4-8 years old and $32,381 for +3MY vehicle. Plus, more than 55% of 9+MY vehicles have monthly payments under $400. That’s not an insignificant number for people shopping with the monthly payment in mind. In 2024, the average monthly payment for a used vehicle that falls under current+3MY was $608. Meanwhile, 4-8MY vehicles came in at an average monthly payment of $498, and 9+MY vehicles had a $431 monthly payment. Taking a deeper dive into average loan amounts based on specific vehicle types—as of 2024, current +3MY cars came in at $28,721, followed by CUVs/SUVs ($31,589) and pickup trucks ($40,618). As for 4-8MY vehicles, cars came in with a loan amount of $22,013, CUVs/SUVs were at $23,133, and pickup trucks at $31,114. Used 9+MY cars had a loan amount of $19,506, CUVs/SUVs came in at $17,350, and pickup trucks at $22,369. With interest rates remaining top of mind for most consumers as we’ve seen them increase in recent years, understanding the growth from 2019-2024 can give a holistic picture of how the market has shifted over time. For instance, the average interest rate for a used current+3MY vehicle was 8.0% in 2019 and grew to 10.2% in 2024, the average rate for a 4-8MY vehicle went from 10.3% to 12.9%, and the average rate for a 9+MY vehicle increased from 11.4% to 13.8% in the same time frame. Looking ahead to the used vehicle market It’s important for automotive professionals to understand and leverage the data of the used market as it can provide valuable insights into trending consumer behavior and pricing patterns. While we don’t exactly know where the market will stand in a few years—adapting strategies based on historical data and anticipating shifts can help professionals better prepare for both challenges and opportunities in the future. As used vehicles remain a staple piece of the automotive industry, making informed decisions and optimizing inventory management will ensure agility as the market continues to shift. For more information, visit us at the Experian booth (#627) during the NADA Show in New Orleans from January 23-26.