# Stabilizing instability

## Derivative hedging strategies for subprime lenders

### Volatility does not equate to instability

The automotive revolution creates exciting opportunities for the industry. It also carries significant risks.

For subprime lenders, who rely on accurate estimations of default expectations to ensure profitability, the increasing price volatility caused by the transformational changes occurring in the automotive space presents a serious concern. Inaccurate credit loss estimates can lead to cash flow and profitability implications and elongated periods of high used vehicle volatility can be detrimental for subprime lenders.

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### Legacy solutions no longer work

Existing solutions, like residual value insurance aren’t economically or operationally feasible for many companies. And doing nothing is not a viable option either, as it could lead to deteriorating cash flow and profitability.

Navigating this complex landscape requires an innovative new solution.

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### From risk to opportunity

With over 100 years of experience in the automotive and finance industries, we have a deep understanding of the risks and their implications. We’ve created a solution that not only helps manage risk in this volatile landscape, but brings new opportunities.

Our products offer stability in this new world of uncertainty. We offer you a solution where used vehicle price volatility does not have to translate to business instability.

Exponential Markets Used Vehicle Derivatives allow companies to lock-in wholesale vehicle prices and transfer the risk to financial market participants. We enable large automotive fleets to hedge residual value risk.

# Protection

Against unexpected used vehicle market shocks

# Efficiency

Improve capital efficiency across your capital stack

# Stability

Mitigating earnings volatility

# Value

Improve enterprise valuations for lenders through improved discount rates and trading multiples

# Why derivatives?

Derivatives have been used for decades in industries as diverse as energy, finance, agriculture and manufacturing. And used vehicle derivatives are already being used to successfully manage interest rate risks and currency exposure.

Used vehicle price volatility is also a critical risk - and opportunity.

Interested in learning more about derivatives?

[Learn more](/content/education/derivatives/index.html)

# How it works

01  Get in touch  
02  We collaborate with you to optimize your risk management goals  
03  Balance your organization's risk management appetite with your company's asset exposure

#### Ready to **take back control?**

[Get in touch](/content/contact-us/contact/index.html)

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#### EDUCATION

### Frequently asked questions about our solutions

- [**Indices** Learn more](/content/education/indices/index.html)
- [**Derivatives** Learn more](/content/education/derivatives/index.html)