Last quarter, auto borrowers' total loan balance outstanding grew at the lowest rate since the second quarter of 2012, while delinquency rates plateaued, according to TransUnion's Q4 2017 Industry Insights Report.
The total auto loan balance outstanding reached $1.179 trillion in the fourth quarter of 2017, up 5.5 percent compared with the year-earlier period. In the second quarter of 2012, the balance rose 5.3 percent vs. the year-earlier period.
Consistent origination declines have caused the slower growth rate, Brian Landau, automotive business leader at TransUnion, told Automotive News.
"We have had five consecutive quarters of year-over-year [origination] declines," Landau said. The average new-vehicle loan balance growth rate is also rising at a weaker pace year over year, which has contributed to a slowdown in total balance growth, he said.
But other factors are supporting the increase in auto loan balance, he said. For example, "Because many consumers have had extended terms, you're seeing those loans are staying on books a little bit longer."
Superprime shift
The number of originations fell 4.8 percent in the third quarter vs. a year earlier to 7.1 million, according to TransUnion, which measures loan originations one quarter in arrears. The decline was largely the result of a pullback in subprime, near prime and prime segments, which together posted a year-over-year decline of 8.2 percent.
With lenders tightening their credit standards, there has been a share shift in originations from the subprime, near prime and prime segments to theprime-plus and superprime segments, Landau said. That's pushing down the delinquency rate.
Delinquencies plateau
In the fourth quarter, the 60-day delinquency rate dropped slightly year over year to 1.43 percent of auto loans, from 1.44 percent a year earlier.
Because "2017 originations are not growing any more than they were in 2016, there is a settling going on with delinquencies," Landau said.
Still, TransUnion will continue to monitor delinquencies over the next few quarters, he said.
"I think there will be some continuation of what we are seeing right now; lenders will continue to be prudent, at least for the next few quarters."
You can reach Hannah Lutz at hlutz@crain.com
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