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FOCUS PSB F&I 20 • August 11, 2014 • Powersports Business www.PowersportsBusiness.com ADP Lightspeed study is first of its kind to show lending trends New Mexico and Nevada lead the nation in retail finance with 70 percent of each state's unit sales settled with borrowed funds. Nebraska and North Dakota have the lowest percentage of units financed, at 31 percent and 37 percent, respectively. These are among the findings of a recent study conducted by ADP Lightspeed for Powersports Business readers on financing practices of major unit buy- ers. More than 573,000 unit sales across the U.S. from the last 12 months were gathered and analyzed for lender presence. The analysis was conducted both on the state level and the regional level. Both new and used sales of all types of major units were included. Strong differences were found in the way sales are handled in different states. While the differences are sometimes easily explained — such as cash sales in oil rich North Dakota — not all are so obvious and remain unexplained at this time. Chart D on Page 21 presents the state aver- ages for percent of units financed. New Mex- ico leads the nation in financed units with 70.2 percent (4,023 out of 5,733) sold on paper. Nevada is a close second at 69.5 per- cent with 5,130 financed out of 7,381. On the opposite end, we find Nebraska at only 31.1 percent financed, and North Dakota financing just 37.6 percent. The average for all states combined is 57.1 percent financed. Where a sale is financed, we find that the lenders fall in to two distinct categories: First are the large national lenders and second are the many local or regional lenders. Looking at regions in Chart A, we see that dealers in the Midwest sell for cash 49 percent of the time; national lenders finance 23 percent of all Mid- west unit sales, and local or regional lenders purchase 27 percent of Midwest paper (Total: 100 percent of Midwest sales including cash). In a totally different approach to the mar- ket, we see that the California region (Califor- nia and Hawaii) sells only 36 percent for cash, uses national lenders just over half the time, and local lenders pick up just 13 percent of the business (again, the total is 100 percent of the region's sales including cash). The identities of individual institutions purchasing motorcycle paper were included in this study, and it was quickly apparent that there are two lev- els of national lenders that collectively financed a total of 211,461 units (see Chart B, where the top five individual lender percentages are express as a percent of 211,461 units financed by the 10 institutions). The chief national lenders are Eaglemark, American Honda Finance Corp., Sheffield, Capital One and GE Money Bank. These five lenders ranged from 23 percent funded by Eaglemark to 11 per- cent financed by GE Money Bank. The five institutions in the second tier of national lenders includes Freedom Road, HSBC, MBNA, BMW Finance and Navy Federal Credit Union. This group captures from 1.3 percent up to 3.1 percent of the national lender group paper purchases, as shown in Chart C. Regional lenders show more than 500 insti- tutions currently buying contracts on motor- cycle purchases. Among these 500, eight stand out as especially active, each financing more than 1,000 units during the 12-months ended June 2014. They are as follows: Northwest region: Alaska USA Federal Nevada, New Mexico on top for financing Chart A Count of Units Sold Sold for Cash, Financed by National Lender, or Financed by Regional Lender 573,000 units sold during 12 months ended June 2014 49% 46% 44% 43% 40% 36% 23% 34% 29% 38% 43% 51% 27% 20% 27% 19% 17% 13% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Midwest Northeast Northwest West South California Cash Deals National Lenders Regional Lenders Chart B Units Financed by 10 Top Tier National Lenders First 5 of Top 10 National Lenders 211,461 units financed by Top 10 National Lenders 23.0% 21.1% 18.3% 13.7% 11.0% 0% 5% 10% 15% 20% 25% Eaglemark Savings Bank American Honda Finance Sheffield Financial Capital One GE Money Bank Chart C Units Financed by 10 Top Tier National Lenders Second 5 of Top 10 National Lenders 3.13% 2.15% 2.01% 1.39% 1.30% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Freedom Road HSBC MBNA BMW Finance Navy Federal Credit Union HAL ETHINGTON DOLLARS & SENSE See Ethington, Page 21 COUNT OF UNITS SOLD 573,000 units sold during 12 months ended June 2014 CHART A UNITS FINANCED BY 10 TOP TIER NATIONAL LENDERS First 5 of Top 10 National Lenders 211,461 units financed by Top 10 National Lenders CHART B UNITS FINANCED BY 10 TOP TIER NATIONAL LENDERS Second 5 of Top 10 National Lenders CHART C Source: ADP Lightspeed