Last post on Dec 04, 2013 at 7:56 AM
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Volkswagen, Toyota, Automotive News
Jan 13, 2013 (5:38 pm)
"The Volkswagen brand had its best year since 1973, selling 438,133 vehicles, including more than 117,000 Passat cars built in Chattanooga, Tenn., and 170,424 Jettas.
Audi brand sales totaled 139,310 vehicles, a 68 percent increase since 2009. Bentley and Bugatti also reported higher sales."
VW Group posts record U.S. sales in 2012 (Detroit News)
Apr 29, 2013 (5:55 pm)
"Volkswagen joins a growing roster of foreign and United States automakers that are struggling in Europe, where car sales dropped 10 percent during the first quarter, including double-digit decreases in France, Germany and Spain.
Most automakers are banking on surging sales in the United States to offset some of these losses.
And VW’s chairman, Martin Winterkorn, cautioned that the company expected little improvement any time soon in Europe."
Even VW Now Feels the Weight of Europe’s Economic Troubles (NY Times)
What a difference a quarter makes.
#252 of 453 Re: eww in the EU [steve_]
Apr 29, 2013 (6:26 pm)
Only reason sales are good in the US is creative subprime auto loans. Average auto loan in the USA is $486 per month on 84 month loan. That is unsustainable. Look for another crash when the foreclosed cars start coming in.
#253 of 453 Re: eww in the EU [gagrice]
Apr 29, 2013 (6:40 pm)
The average auto loan is 84 months? Huh? Where did that come from? I haven't seen any credible economic analysis equating subprime car loans to the mortgage disaster,either. There's no manipulated bubble for new car pricing, and cars can be repossessed a lot easier than houses. Even if it does sputter, this can't and won't cause a crash. And I'll wager it won't even sputter. People will put off a lot to keep their car. Worst thing it will do is maybe delay future sales as terms are longer (but more like 65 months rather than 84)
A big reason sales are up is because they were low for many quarters, and the fleet is getting old and worn.
#254 of 453 Re: eww in the EU [fintail]
Apr 30, 2013 (6:25 pm)
GM is offering loans on new cars over the MSRP to cover the trade-in. While out on the road I heard this financial guy Dave Ramsey, and that was his statement of 84 month loans and $486 payments.
Welcome to the start of the next subprime crisis: Subprime auto loans.
The Auto Subprime Bubble
Banks have once again cast a greedy eye to the lower middle class - who are already leveraged up to their collective eyeballs. This demographic, call it the "easy prey class," is being targeted for auto loans at usurious prices, in most cases north of 20%.
Reuters recently reported the all-too-familiar story of a school bus driver in Alabama who fell into precisely this trap.
Jeffrey Nelson, of Jasper, AL, had one car repossessed, along with serious medical bills. His credit history was checkered indeed.
Yet, he was able to put up his Mossberg shotgun, worth about $700, along with $300 in cash, to come up with the $1,000 down payment that Maloy Chrysler Dodge Jeep said was needed to get him behind the wheel.
The car was not flashy - it was Japanese and had four wheels. According to Reuters, Nelson took out a $10,294 loan to buy a 2007 Suzuki Grand Vitara.
But that $10,294 loan carried a sky-high interest rate, at 21.9%. The true cost was over $12,500.
#255 of 453 Re: eww in the EU [gagrice]
Apr 30, 2013 (6:29 pm)
How the Next Subprime Bubble is Forming
A riskier loan means a higher yield for speculators, so they're loading up on the riskiest tranches. In most cases, after demand works itself out and drives yields south of 2%, two-year subprime auto ABSs yield 1%.
That looks very attractive compared with 0.5% on prime auto loan ABSs and 0.3% on two-year Treasuries.
Investors can't get enough of these subprime ABSs, so the market for them has grown.
From 2011 through today, close to $36 billion worth of these securities have been sold on the market. Just this week, a few Wall Street banks announced a subprime auto loan securities deal worth $1.6 billion.
And on and on it goes until the music stops, just like it did in 2008. Just like the toxic mortgage-backed securities of the last decade, these are spreading all over, and spreading fast.
As with nearly all the I-can't-believe-this-is-legal financial shenanigans, you have the Federal Reserve to thank for it.
Ever since QE Infinity, when the Fed took interest rates to near zero, investors large and small have been clamoring for something - anything - with a yield above, well, zero.
#256 of 453 Re: eww in the EU [gagrice]
Apr 30, 2013 (6:55 pm)
Both of those links seem to do nothing more than parrot the Reuters piece. The key to which is this line from the original piece:
"A bust in the subprime auto market wouldn't have consequences nearly as devastating for lenders, investors or the broader economy as the housing bust did."
Ramsay is entertaining, but I wouldn't stake my future in him. The average car loan is not near 84 months. Loans above MSRP are nothing new. High risk high interest financing has existed longer than I have - of course there will be more in it during socio-economic decay that is greater than at any time since I have been around.
#257 of 453 Re: eww in the EU [fintail]
by Stever@Edmunds HOST
Apr 30, 2013 (7:25 pm)
There were two posts over in Edmunds Answers the last day or two where people who were underwater on their car loans both had interest rates higher than 21% - one was 29%!
Too bad usury laws went away.
#258 of 453 Re: eww in the EU [steve_]
Apr 30, 2013 (7:41 pm)
Indeed. FIRE cabal people once again getting the laws they paid for. One won't be in the black on such a loan until the end. And if made on a used car, the risk is huge.
#259 of 453 Re: eww in the EU [fintail]
by Stever@Edmunds HOST
Apr 30, 2013 (8:15 pm)
How else are the high risk/poor credit score people going to be able to afford a car so they can get to work though? (And don't say take the bus - this ain't Seattle).