The Auto Finance Coalition has been meeting with the Federal Trade Commission to discuss changes to the Fair Credit Reporting Act, said Todd Wolf, chairman of the Auto Finance Coalition in the first session of the Auto Finance Risk Summit webinar series. He said the AFC hopes to secure an extended window to investigate claims of identity fraud.
“We’ve had a lot of meetings within the last 12 months about the issues and [the FTC has] had open dialogues with us,” Wolf said. “They are now recognizing that there’s a gap that they might have to fill.”
The coronavirus pandemic has stimulated an avid interest in shopping alternatives, spurring automotive consumers toward an online experience. Despite the pivot, digital auto advertising is projected to take a 48.8% hit in market spending from March to December, compared to last year, according to a June Marketing Charts survey.
Yet, that projection has not stopped auto manufacturers and their captives from injecting millions into television and online ads to boost consumer interest. Featured here are the ad campaigns and spends by top auto industry players, which highlight financing initiatives since the pandemic crisis began in March, according to iSpot.tv, a media measurement company.
Flagship Credit Acceptance’s July 23 securitization, which funneled $213 million into the ABS market, saw a rise in the APR and concentrations of direct loans, offsetting the need for increased credit enhancement even as the company’s projected losses increased, according to a S&P Global presale report.
“In our view, the greater proportion of direct loans, which historically performed better than the indirect loans — coupled with lower debt-to-income (DTI) and payment-to-income (PTI) ratios and a reduction in the percentage of loans with terms greater than 60 months — offset the decline in called collateral and seasoning,” according to the report.
The number of auto loan accounts in financial hardship finally leveled off in June, according to TransUnion’s Monthly Industry Snapshot report released July 23. The growth rate, while still ticking upward, has slowed from previous months, said Satyan Merchant, senior vice president and automotive business leader at the credit reporting agency.
In 2019, there was a reported $7 billion worth of fraudulent transactions in the auto finance industry. Desperation spurred by the pandemic in the second quarter has only exacerbated the issue, sparking an additional $2 million per month in fraudulent auto loan applications from the time the COVID-19 crisis began affecting the industry in March until mid-June.
Mazda Financial Services will launch a new bundled insurance product Aug. 1, President Pete Carey told Auto Finance News.
Customers can choose to wrap the new Mazda Protection Product services into the finance contract or purchase them separately from the dealership. The new product services include: vehicle service agreements, guaranteed asset protection, prepaid maintenance, tire and wheel, key replacement and excess wear and use. The service, however, will not include collision or liability insurance, Carey said.
Wholesale used-vehicle values have continued to outpace past reporting periods, evidenced by a spike to 155.9 in Manheim’s mid-July used-vehicle value index. The increase, which rose 6.3% from the first half of June, can be attributed to dwindling used retail and wholesale inventories, said Cox Automotive Chief Economist Jonathan Smoke in a quarterly conference call.
The index could hit record highs for the second consecutive month if this trend follows through the rest of July, according to Manheim. The mid-month index was first released in April when it recorded one of the largest falls since November 2008, plummeting 11.8% to 125.2.
Ally Financial forecasts its retail auto net charge-offs (NCO) to be between 1.8% and 2.1% of its portfolio by the end of its fiscal year, Chief Financial Officer Jennifer LaClair said in the company’s earnings call today. Along with shoring up its allowance for credit losses, the auto lender reported a strong second quarter with surging used-vehicle originations.
A squeeze in vehicle inventories could affect budding car sales across the U.S. following pandemic-spurred shutdowns, the Federal Reserve System (FRS) reported in the July edition of its Beige Book.
The FRS Beige Book tracks 12 different U.S. districts and categorizes them by cities with corresponding federal reserve banks in each region.
Auto repossessions are expected to surge above pre-pandemic levels as lender deferral programs begin to peter out in the coming months, said Cox Automotive Chief Economist Jonathan Smoke in a quarterly conference call. The agencies responsible for repossessing vehicles on behalf of lenders, however, may not be primed for the upsurge of defaulted accounts.