LAS VEGAS — Motorcycle originations were heavily concentrated in the subprime and near-prime credit tiers between the third quarter of 2016 to the first quarter this year, said Brian Landau, senior vice president of financial services and auto business leader at TransUnion.
The concentration of subprime and near-prime motorcycle originations were 18% and 26%, respectively, he told attendees at PowerSports Finance 2017 yesterday. That’s up compared to auto finance, where 15% of originations are subprime and 20% near-prime.
However, Landau is not concerned because “many lenders are embracing alternative data to get a better understanding of credit behavior,” he said. “That’s going to be paramount in the next few years.”
“I’m a big fan of using alternative data [for credit decisioning],” Landau said. “You can see there are a number of applications for that. Having that information is very useful in terms of having a better dealer and consumer experience.”
TransUnion pulled the originations data from a select number of lenders and found that overall, 25% of originations are concentrated in prime, 19% in prime-plus and 12% in super-prime. Based on VantageScore 3.0, TransUnion defines subprime 300 to 600; near-prime as 601 to 660; prime as 661 to 720; prime-plus as 721 to 780; and super-prime as 781 and above.
Motorcycle originations percentage in the upper credit tiers is lower than auto. For example, 22% of auto originations were concentrated in super-prime compared to only 12% in motorcycles.