Sourced From: AutoRemarketing, April 1, 2008
Situation
1. Recent Wachovia survey indicates 28% of dealers say used-vehicle sales "above expectations"
2. Represents significant increase from 22% in previous survey, up 6%
3. Dealers have "just enough" used-vehicle inventory: 82%, compared w/ 80% previously
4. This measurement climbed from 64% last year
5. Wachovia Capital Markets surveyed 40 dealers, GMs, sales managers from dealer network
6. Releases equity research papers 6 times / year; small sample size, representing only 16 states
Significant Points
1. Used-vehicle demand appears to be climbing; demand for new vehicles falling
2. Movement largely reflects seasonal trends
3. Automakers pushed new-vehicle sales in Nov and Dec
Wednesday, April 9, 2008
Dealers Report Higher Used Car Sales
Lenders Add Restrictions for Auto Loans
Sourced From: Wall Street Journal, April 2, 2008
Situation
1. Even as Fed cuts interest rates, getting tough for buyers to find attractive terms on auto loans
2. GMAC tightened lending standards 3 times in 2007
3. AmeriCredit and Sovereign Bancorp have recently raised minimum credit score
4. In 2008, 90% of auto-loan applications from prime borrowers approved, down from 92.5%
5. Among subprime applications, 57% have been approved in 2008, down from 68% early 2007
6. Delinquencies hit 10-year high in Jan, though they declined slightly in Feb
Significant Points
1. Many lenders making fewer loans; instituting stricter standards on loans they do approve
2. Often requiring higher credit scores, making smaller loans, bigger down payments
3. Some lenders applying tough standards for borrowers in states hard hit by housing crisis
4. Subprime borrowers will bear brunt of shifting lending standards
5. Even prime borrowers w/ good credit may be affected by some changes
6. Some consumers may not be able to get a car loan at all
Says
"We're trying to lend to people who will be able to pay us back." -- Thomas Kelly, spokesman, J.P. Morgan Chase & Co.'s Chase Auto Finance
