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Auto loan extensions are gravitating back toward pre-pandemic rates, dropping by an average of 55% in May for each of the seven auto asset-backed securitization shelves that reported updated figures, according to an S&P report. The seven shelves represent one-third of the auto ABS shelves’ S&P rates.
Investors should welcome the drops in extension rates, according to the rating agency, which have come months sooner than forecasts predicted. In early May, S&P expected extensions to run higher than normal into June and July.
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While the automotive market is still tracking behind all prior-year sales metrics, franchise dealer sentiment is optimistic about the coming summer, according to a Cox Automotive report released today. Independent dealers, on the other hand, said their top priority is just keeping their showroom doors open.
German auto manufacturer Porsche AG has its eyes set on the expansion Porsche Drive, its short-term rental and vehicle subscription program package, a Porsche spokeswoman told Auto Finance News.
“After successfully expanding our vehicle subscription and rental programs, our key learning is there’s a market for shorter-term access to our vehicles,” said spokeswoman Jade Logan. Subprime lender Nicholas Financial has ramped up its direct loan originations 150.3% year over year, according to the company’s earnings report for fiscal year 2020. Direct originations jumped to $12.6 million from $7.7 million in the prior year to follow through on previous direct loan growth trajectory goals.
The lender’s focus has recently been on marketing its direct loan product to current and former customer bases, according to Doug Marohn, president and chief executive of Nicholas. “The product is available to new customers too, but our efforts are focused on our core customer base,” he said. Wholesale used-vehicle prices are on the rise, increasing 6.6% in the first 15 days of June compared with May, bumping Manheim’s mid-month used vehicle value index to 146.1. The index is forecast to hit an all-time high if the value holds through the rest of the month, according to Manheim’s mid-month index. Manheim first issued a mid-month index report in April as a response to the COVID-19 economic crisis.
Fraudulent auto loan applications have shot up $2 million per month since the beginning of the coronavirus pandemic, despite an overall decline in applications, according to PointPredictive.
“People are more desperate now than they’ve been in a long time,” said Frank McKenna, chief strategist at the risk management company. “They’re out of a job, dealerships are trying to sell cars because they’ve been locked down. In order to survive, there’s more desperation.” Fraudulent auto loan applications have shot up $2 million per month since the beginning of the coronavirus pandemic, despite an overall decline in applications, according to PointPredictive.
“People are more desperate now than they’ve been in a long time,” said Frank McKenna, chief strategist at the risk management company. “They’re out of a job, dealerships are trying to sell cars because they’ve been locked down. In order to survive, there’s more desperation.” Delinquency rates in the first quarter fell despite the coronavirus pandemic ravaging the auto industry in late March, according to Experian’s quarterly report on the state of the auto finance market.
However, those numbers may not indicate the full effect of the pandemic on consumers and their ability to pay their auto loans, said Melinda Zabritski, senior director of automotive financial solutions at Experian. Major OEMs scaled back incentive programs on new trucks, SUVs and crossovers in June, which will likely lead to fewer vehicle purchases in those segments and spur consumer migration to the used-vehicle market, according to J.D. Power.
With potential constraints on vehicle inventories and lower incentive programs, the industry may see a slower recovery in June following late-May growth, said Tyson Jominy, vice president of data and analytics at J.D. Power.  © Can Stock Photo / happyalex After a historic plunge in April used-vehicle values, the market is tracking on a positive trajectory, according to Manheim‘s monthly used-vehicle value index, which rose to 137.0 in May from 125.8 in April.
Wholesale used-vehicle prices saw a 9% month-over-month increase in May, but are still tracking 1.9% behind the same prior-year period’s figures. |
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