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Tuesday, July 24 • 3:30pm - 4:15pm
How Vehicle Information Informs Credit Risk Measures

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In this presentation, we explore how vehicle choice can help predict probability of default, even after controlling for financial terms and borrower credit score. Our analysis suggests that vehicle information, including residual price forecasts, lifts the ability of traditional scores to classify borrowers from most likely to default to least likely. We will explore questions such as: Can vehicle information help assess the creditworthiness of borrowers? What vehicle types are associated with better credit performance? How economically significant is vehicle information?

Takeaways
  • We can distill the underlying propensity of owners of different vehicles to default after a range of lender and borrower characteristics are carefully controlled.
  • We suspect that this tendency to default measure may be an excellent new way to accurately assess cus­tomer satisfaction across vehicle brands.
  • Default carries severe consequences for car owners. If stressed borrowers fight to keep their cars in the wake of financial difficulties, this is perhaps the strongest possible signal of esteem for a particular brand or for a particular vehicle segment

Speakers
avatar for Michael Vogan

Michael Vogan

Lead Automobile Economist, Moody's Analytics
Michael Vogan is an assistant director with Moody’s Analytics. As Moody's lead auto economist, Michael produces research and discusses the impact of the economy on the auto industry and credit markets. He currently manages the Moody’s Analytics residual vehicle values forecast... Read More →


Tuesday July 24, 2018 3:30pm - 4:15pm
Salon F