Majority of Lenders Are Focused on Remarketing of Used Vehicles; Few Are Leveraging Residual Data
LAWRENCEVILLE, GA (September 26, 2016) – A large number of auto lenders say they don’t leverage residual data for their portfolio, despite the majority admitting that portfolio risk assessment and remarketing remains at the top of their portfolio strategy for a growing number of used vehicles. The new data is from a recent online survey from Black Book Lender Solutions, which asked more than 500 auto lender executives questions about their portfolio strategies.
Black Book, a division of Hearst Business Media that provides new- and used-vehicle valuation services and custom data licensing solutions, found through its survey that 64% of lenders do not leverage residual data when evaluating their portfolio, yet most (39%) said remarketing, which relies heavily on collateral insight, is their largest strategy for dealing with the increased volume of lease returns.
The online survey, which took place during early September, 2016, also ironically revealed that 74% of lenders believe residual data is either critical or valuable in key areas to their business.
Given forecasts of increased supply and accelerating vehicle depreciation, most lenders (52%) said they’ll be focused on tightening underwriting criteria as a way to better manage their portfolio risk in the future.
“Residual forecast and collateral data can play an instrumental role in managing risk and increasing profit potential for any lender portfolio,” said Anil Goyal, Senior Vice President of Automotive Valuation and Analytics at Black Book. “Not all vehicles depreciate alike, and residuals can help determine how certain vehicles will perform in a portfolio, particularly as lenders become more curious as to new strategies for off-lease supply.”
How are auto lenders utilizing residuals for their portfolios (some lenders chose more than one)?
- Portfolio risk assessment (49%)
- Remarketing strategies (42%)
- Mark-to-market analysis (39%)
- Used loan originations (39%)
- New loan originations (35%)
- Lease return strategy (26%)
- New lease originations (26%)
- Used lease originations (19%)
Lenders remain curious about the prospects of used leasing. The survey revealed that 52% of lenders believe used leasing is something worth exploring given current market conditions. Black Book’s latest white paper, “How To Grow A Profitable Used Leasing Portfolio”, helps lenders identify which vehicles make good used leasing candidates for their portfolio, and is available for download by clicking here.
About Black Book
Black Book® is best known in the automotive industry for providing timely, independent and accurate vehicle pricing information, and is available to industry-qualified users through online subscription products, mobile applications and licensing agreements. A leading provider since 1955, Black Book has continuously evolved to ensure that it achieves its goal of delivering mission-critical information to its customers, along with the insight necessary to successfully buy, sell, and lend. Black Book data is published daily by National Auto Research, a division of Hearst Business media, and the company maintains offices in Georgia, Florida, and Maryland as well as the Canadian Black Book in Toronto. For more information, please visit BlackBook.com or call 800.554.1026.
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