The Truth About Cars » High Finance http://www.thetruthaboutcars.com The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Thu, 11 Sep 2014 17:31:41 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.2 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars editors@ttac.com editors@ttac.com (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » High Finance http://www.thetruthaboutcars.com/wp-content/themes/ttac-theme/images/logo.gif http://www.thetruthaboutcars.com/category/news-blog/high-finance/ Nevada Legislature Deliberates Tesla Tax Package In Special Session http://www.thetruthaboutcars.com/2014/09/nevada-legislature-deliberates-tesla-tax-package-special-session/ http://www.thetruthaboutcars.com/2014/09/nevada-legislature-deliberates-tesla-tax-package-special-session/#comments Thu, 11 Sep 2014 10:00:24 +0000 http://www.thetruthaboutcars.com/?p=910626 Last week, Tesla and Nevada governor Brian Sandoval jointly announced the automaker would be bringing its Gigafactory to Reno. Now, it’s up to both houses of the state’s legislature to pull it all together with a $1.3 billion tax break. Reuters reports the Nevada Legislature gathered in Carson City for a special session at noon […]

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Tahoe Reno Industrial Center

Last week, Tesla and Nevada governor Brian Sandoval jointly announced the automaker would be bringing its Gigafactory to Reno. Now, it’s up to both houses of the state’s legislature to pull it all together with a $1.3 billion tax break.

Reuters reports the Nevada Legislature gathered in Carson City for a special session at noon Wednesday to hammer the details of the package, which Sandoval believes will spur $100 billion worth of economic benefits for his state during the next two decades at an investment payoff of 80:1.

The package would provide the following for Tesla in exchange for hosting the Gigafactory:

  • $725 million in tax exemptions through 2034
  • $300 million in various tax savings through 2024
  • $120 million in tax credits for meeting the state’s investment threshold of $3.5 billion
  • $75 million in tax credits for up to 6,000 jobs created
  • Reduced utility rates

In turn, Tesla will invest over $37 million into Nevada’s education systems during the next five years, and will bring a total of 25,500 jobs to the state, from construction to indirect employment.

As of this writing, both houses are set to return for a second day of deliberation Thursday morning. Until then, this is the tax break bill as established during Wednesday’s session.

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Edmunds: 2014 SAAR May Best 2006 Peak http://www.thetruthaboutcars.com/2014/09/edmunds-2014-saar-may-best-2006-peak/ http://www.thetruthaboutcars.com/2014/09/edmunds-2014-saar-may-best-2006-peak/#comments Wed, 10 Sep 2014 11:00:18 +0000 http://www.thetruthaboutcars.com/?p=910034 The surge in United States auto sales last month could push the final figures to a height not seen since 2006 when January 2015 rolls around. According to Automotive News, Edmunds chief economist Lacey Plache said that though the publication is holding at 16.4 million SAAR (Seasonally Adjusted Annual Rate) for 2014, “there is definite […]

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Couple + Salesman Sign The Contract Of Blood

The surge in United States auto sales last month could push the final figures to a height not seen since 2006 when January 2015 rolls around.

According to Automotive News, Edmunds chief economist Lacey Plache said that though the publication is holding at 16.4 million SAAR (Seasonally Adjusted Annual Rate) for 2014, “there is definite potential for numbers to hit higher than that.”

At present, the SAAR for 2014 is expected to hit 17.5 million, much higher than the previous peak of 16.6 million in 2006. August’s SAAR was fueled by strong Labor Day sales, which may have dinged September’s SAAR as consumers opted to make their purchases before summer drew to a close.

Meanwhile, Plache expects 2015′s SAAR to fall just short of 17 million, fueled by expiring leases. However, she and Edmunds senior analyst Jessica Caldwell warn a rise in interest rates in 2016 may put a drag on sales. Caldwell adds that automakers’ finance wings could counter this “by subsidizing lower rates.”

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Nissan Declined Stake In Aston Martin As Early As 2012 http://www.thetruthaboutcars.com/2014/09/nissan-declined-stake-aston-martin-early-2012/ http://www.thetruthaboutcars.com/2014/09/nissan-declined-stake-aston-martin-early-2012/#comments Tue, 09 Sep 2014 10:00:27 +0000 http://www.thetruthaboutcars.com/?p=909066 Prior to becoming Aston Martin’s new CEO, former Nissan senior exec Andy Palmer proposed to the automaker to buy a stake in AM, only for Nissan to decline. Reuters reports Palmer brought up the issue Renault-Nissan CEO Carlos Ghosn in 2012 and 2013, with one insider claiming the company “looked carefully at the proposal” before […]

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Aston Martin Lagonda Prototype

Prior to becoming Aston Martin’s new CEO, former Nissan senior exec Andy Palmer proposed to the automaker to buy a stake in AM, only for Nissan to decline.

Reuters reports Palmer brought up the issue Renault-Nissan CEO Carlos Ghosn in 2012 and 2013, with one insider claiming the company “looked carefully at the proposal” before rejecting the idea. Said insider declined to explain the proposal or the reasoning behind the rejection, as did a representative for the company.

Meanwhile, Palmer’s new role as AM’s CEO may lead to more cooperation between the premium automaker and Daimler AG, the latter already in possession of a 4 percent stake in the former while also providing engines and electronics to Aston’s offerings. Palmer helped Daimler and Nissan’s Infiniti develop a similar relationship, resulting in a joint-venture on a plant in Mexico, as well as a family of engines to be shared with the Q50 and the Mercedes-Benz C-Class.

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Sandoval, Musk Announce Tesla Gigafactory To Be Built In Nevada http://www.thetruthaboutcars.com/2014/09/sandoval-musk-announce-tesla-gigafactory-built-nevada/ http://www.thetruthaboutcars.com/2014/09/sandoval-musk-announce-tesla-gigafactory-built-nevada/#comments Fri, 05 Sep 2014 14:00:17 +0000 http://www.thetruthaboutcars.com/?p=907097 It’s official: Tesla will build its Gigafactory in Nevada pending legislative approval. KOLO-TV reports the battery factory will bring its 6,500 jobs to Reno, along with $100 billion dollars and up to 22,000 jobs over the next two decades. In turn, Governor Brian Sandoval will ask the state for $1.3 billion in tax breaks and […]

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Elon Musk and Brian Sandoval

It’s official: Tesla will build its Gigafactory in Nevada pending legislative approval.

KOLO-TV reports the battery factory will bring its 6,500 jobs to Reno, along with $100 billion dollars and up to 22,000 jobs over the next two decades.

In turn, Governor Brian Sandoval will ask the state for $1.3 billion in tax breaks and incentives at a special legislative session next Wednesday at the earliest. The package is meant to last for 20 years.

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NEVS Gains Creditor Protection, Loses Saab Name http://www.thetruthaboutcars.com/2014/09/nevs-gains-creditor-protection-loses-saab-name/ http://www.thetruthaboutcars.com/2014/09/nevs-gains-creditor-protection-loses-saab-name/#comments Tue, 02 Sep 2014 13:00:35 +0000 http://www.thetruthaboutcars.com/?p=904905 First, National Electric Vehicle Sweden was going to be taken to district court and forced to file bankruptcy. Then, it was spared. Then, it saw its application for creditor protection denied due to being “vague.” Now? The application has moved forward, but at the price of the Saab name. Autoblog reports NEVS — who owes […]

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First, National Electric Vehicle Sweden was going to be taken to district court and forced to file bankruptcy. Then, it was spared. Then, it saw its application for creditor protection denied due to being “vague.”

Now? The application has moved forward, but at the price of the Saab name.

Autoblog reports NEVS — who owes over 90 creditors kr400 million ($57.56 million USD) — gained protection from the district court in Vänersborg August 29 while the Chinese-owned company continues negotiates with two unknown companies to obtain more funding.

However, the move by the court allowed SAAB AB — whose Viggens birthed many a 99 Turbo and 900S way back when — to pull the naming rights from NEVS. The latter only bought the beleaguered automaker’s physical assets, and had to seek permission from SAAB to use the brand name. Thus, it may now be finally safe to say, “Rest in peace.”

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North Korea Owes Sweden $428M For 1,000 Volvos Swindled In 1974 http://www.thetruthaboutcars.com/2014/09/north-korea-owes-sweden-428m-1000-volvos-swindled-1974/ http://www.thetruthaboutcars.com/2014/09/north-korea-owes-sweden-428m-1000-volvos-swindled-1974/#comments Tue, 02 Sep 2014 11:00:34 +0000 http://www.thetruthaboutcars.com/?p=904857 Forty years ago, the North Koreans and the Swedes entered into an agreement where the latter’s socialist and industrialist interests aimed to bring recognition to the former’s regime while filling its pockets from the country’s mining industry. Part of this agreement included 1,000 Volvo 144 GLs, which were meant to be paid in copper and […]

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Stolen Volvos in North Korea

Forty years ago, the North Koreans and the Swedes entered into an agreement where the latter’s socialist and industrialist interests aimed to bring recognition to the former’s regime while filling its pockets from the country’s mining industry. Part of this agreement included 1,000 Volvo 144 GLs, which were meant to be paid in copper and zinc.

But that was 40 years ago.

Newsweek reports North Korea, under Kim Il-sung’s regime, ultimately absconded with the Volvos and other Swedish goods during a Swedish-Korean trade fair in Pyongyang, all within the same year the vehicles were delivered.

Since then, the Swedish Export Credits Guarantee Board has calculated the interest owed on the debt linked to those goods. Total debt after inflation plus interest holds at kr3 billion ($428 million USD).

As for the Volvos, they were ordered for taxi service within the North Korean capital. As of 2008, those cars were not only still running, but, according to photographer and entrepreneur Tor Rauden Källstigen, were treated well:

I think I’ve never been inside such an old car even back home in Sweden. This taxi was very well maintained too, close to mint condition it seemed.

Were Il-sung’s grandson and current ruler, Kim Jong-un, to sell the vehicles at current book value, he would net $2.6 million — or 0.6 percent of the debt — for the trouble.

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Wiedeking Ordered To Stand Trial Over Market Manipulation Charges http://www.thetruthaboutcars.com/2014/08/wiedeking-ordered-stand-trial-market-manipulation-charges/ http://www.thetruthaboutcars.com/2014/08/wiedeking-ordered-stand-trial-market-manipulation-charges/#comments Wed, 27 Aug 2014 10:00:37 +0000 http://www.thetruthaboutcars.com/?p=901441 Former Porsche CEO Wendelin Wiedeking may be facing jail time in the future if convicted on charges of market manipulation recently revived by a German court. Bloomberg reports the Stuttgart Higher Regional Court ordered both Wiedeking and former Porsche CFO Holger Haerter to stand trial in criminal court over the charges, linked to the failed […]

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Wendelin-Wiedeking

Former Porsche CEO Wendelin Wiedeking may be facing jail time in the future if convicted on charges of market manipulation recently revived by a German court.

Bloomberg reports the Stuttgart Higher Regional Court ordered both Wiedeking and former Porsche CFO Holger Haerter to stand trial in criminal court over the charges, linked to the failed takeover of Volkswagen AG in October of 2008. The court proclaimed it found “numerous indications” of a possible hidden agenda to increase Porsche’s stake in Volkswagen from 74.1 percent to 75 percent “as they could suggest the opposite evaluation by the lower court.”

Both Porsche and attorneys for the two defendants believe the charges to be without merit, especially as they were overturned in a lower court back in April due to lack of sufficient evidence. The regional court, however, states that as far back as 2006, Wiedeking had plans to take over VW in secret.

In addition to the criminal case, a few civil suits are waiting in the wings in Braunschweig, Stuttgart and Hanover. The plaintiffs — investors who believed Porsche had planned to assimilate VW months before the October 2008 takeover attempt — are seeking over €5 billion ($6.6 billion USD) in damages.

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Repossessions, Delinquencies Up As Oustanding Auto Loan Balances Hit All-Time High http://www.thetruthaboutcars.com/2014/08/repossessions-delinquencies-oustanding-auto-loan-balances-hit-time-high/ http://www.thetruthaboutcars.com/2014/08/repossessions-delinquencies-oustanding-auto-loan-balances-hit-time-high/#comments Thu, 21 Aug 2014 15:49:31 +0000 http://www.thetruthaboutcars.com/?p=897458 The latest Q2 2014 data from Experian was released this week, and key metrics like repossessions, loan delinquencies and outstanding balances have all seen increases. Outstanding balances were up nearly 12 percent, rising to an all-time high of $839.1 billion dollars. 60-day delinquencies were up 7 percent to 0.62 percent in Q2, while 30-day delinquencies […]

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The latest Q2 2014 data from Experian was released this week, and key metrics like repossessions, loan delinquencies and outstanding balances have all seen increases.

Outstanding balances were up nearly 12 percent, rising to an all-time high of $839.1 billion dollars. 60-day delinquencies were up 7 percent to 0.62 percent in Q2, while 30-day delinquencies were up to 2.39 percent up from 2.38 percent year over year. Repossessions were up by 70 percent in the same time period, sitting at 0.62 percent.

Melinda Zabritski, Experian’s senior director of automotive finance, noted that ““The rosy glow of perfect payment performance in the automotive space is beginning to tarnish.” Despite Experian claiming that delinquencies were still at record lows, the total amount of loans that are 60-days delinquent has increased by $859-million, while 30 day delinquent loans have increased by $2.8 billion since Q2 2013.

A report by four analysts from the New York Fed acknowledged that while auto lending was growing rapidly, a sharp increase in subprime lending was due to the fact that this segment had been crippled during the 2008 financial crisis, when credit availability tightened.

Meanwhile, a change in the way FICO scores are calculated could make it easier for buyers to qualify for car loans. A report by Automotive News says that medical debt will be given less weight when calculating medical debts, while partial payment of debts will be taken into greater account. The new scores are also said to benefit those with little credit history, and should be rolled out by fall.

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Ford, Chevrolet Begin Labor Day Battle Weeks Early http://www.thetruthaboutcars.com/2014/08/ford-chevrolet-begin-labor-day-battle-weeks-early/ http://www.thetruthaboutcars.com/2014/08/ford-chevrolet-begin-labor-day-battle-weeks-early/#comments Tue, 19 Aug 2014 13:00:24 +0000 http://www.thetruthaboutcars.com/?p=895386 Hold onto your wallets: Ford and Chevrolet are getting the jump on Labor Day sales weeks in advance of what most consider the end of the summer season. Automotive News reports the two brands are bringing their A games to the showroom, ranging from 0 percent financing for 72 months across most of their respective […]

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Ford Labor Day Sale 2014

Hold onto your wallets: Ford and Chevrolet are getting the jump on Labor Day sales weeks in advance of what most consider the end of the summer season.

Automotive News reports the two brands are bringing their A games to the showroom, ranging from 0 percent financing for 72 months across most of their respective lines, to Chevrolet offering deferred payments for the first 90 days for select models. Rather than wait until closer to Labor Day, however, Ford launched the first attack back in late July; Chevrolet kicked off its campaign last week.

The end game? Regain lost ground in sales from the first half of 2014. Ford lost 1 percent of its share of the market, dropping to 14.8 percent in comparison to 2013. Meanwhile, Chevrolet fell from 12.9 percent to 12.5 percent in the same period comparison.

Other combatants in the end-of-summer sales battle include Toyota offering 0 percent APR for 60 months on a handful of models, Nissan presenting 0 percent between 36 and 72 months depending on the model chosen, and Dodge giving buyers 90-day deferments on 2014 and 2015 models through Labor Day weekend.

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NEVS “Not Insolvent,” Will Pay When Possible http://www.thetruthaboutcars.com/2014/08/nevs-insolvent-will-pay-possible/ http://www.thetruthaboutcars.com/2014/08/nevs-insolvent-will-pay-possible/#comments Tue, 19 Aug 2014 10:00:30 +0000 http://www.thetruthaboutcars.com/?p=895298 Remember when Saab’s new parent company was close to being taken to court and forced to declare bankruptcy by one of its suppliers? New information may have helped changed course. Autoblog reports National Electric Vehicle Sweden issued a brief statement proclaiming that while “the company does not have enough liquid cash as today to pay […]

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Remember when Saab’s new parent company was close to being taken to court and forced to declare bankruptcy by one of its suppliers? New information may have helped changed course.

Autoblog reports National Electric Vehicle Sweden issued a brief statement proclaiming that while “the company does not have enough liquid cash as today to pay all outstanding debt,” it is “not insolvent” thanks to having assets larger than its obligations.

The statement also states the supplier — Lado Labs — withdrew its petition to force bankruptcy upon NEVS next month due to not having been paid for testing procedures in February. That said, it doesn’t know when it will be able to pay all of its suppliers.

The funding issues came about when one of NEVS’ shareholders failed to deliver its investment to the company, bringing a halt to manufacturing of the 9-3. NEVS is holding ongoing conversations with two unnamed manufacturers with the aim to restart the line once funding is secured.

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Ally Financial Closer To Freedom Through Upcoming Stake Cut http://www.thetruthaboutcars.com/2014/08/ally-financial-closer-freedom-upcoming-stake-cut/ http://www.thetruthaboutcars.com/2014/08/ally-financial-closer-freedom-upcoming-stake-cut/#comments Fri, 15 Aug 2014 11:00:10 +0000 http://www.thetruthaboutcars.com/?p=893434 Former General Motors lending subsidiary Ally Financial is one step closer from leaving government oversight, thanks to the United States Treasury cutting its stake in the company. Bloomberg reports the Treasury will sell its stake of 75.1 million shares on the open market, the first divestiture since April 2014′s IPO. Though no word on the […]

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Ally Financial

Former General Motors lending subsidiary Ally Financial is one step closer from leaving government oversight, thanks to the United States Treasury cutting its stake in the company.

Bloomberg reports the Treasury will sell its stake of 75.1 million shares on the open market, the first divestiture since April 2014′s IPO. Though no word on the size or timeline regarding the cut was given, Treasury CIO Charmian Uy says the move will be made with “maximum returns for taxpayers” in mind.

Ally representative Gina Proia added that the agency’s stake cut “was another step toward” exiting government ownership under the TARP program, “delivering additional value to shareholders, including the U.S. taxpayer” in so doing.

At its peak, the Treasury owned 74 percent of the lender, with the U.S. investing $17.2 billion and receiving $17.8 billion after asset sales.

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Saab’s Newest Owners Face Bankruptcy Petition In Sweden http://www.thetruthaboutcars.com/2014/08/saabs-newest-owners-face-bankruptcy-petition-sweden/ http://www.thetruthaboutcars.com/2014/08/saabs-newest-owners-face-bankruptcy-petition-sweden/#comments Wed, 13 Aug 2014 13:00:42 +0000 http://www.thetruthaboutcars.com/?p=889754 Saab’s newest parent company may soon be declared bankrupt by a Swedish court, once again bringing the make toward the grave. The Detroit News reports supplier Labo Test has petitioned the court to declare National Electric Vehicles of Sweden bankrupt after failing to receive kr150,000 ($22,000 USD) since February 2014. The supplier provides testing tools […]

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Saab’s newest parent company may soon be declared bankrupt by a Swedish court, once again bringing the make toward the grave.

The Detroit News reports supplier Labo Test has petitioned the court to declare National Electric Vehicles of Sweden bankrupt after failing to receive kr150,000 ($22,000 USD) since February 2014. The supplier provides testing tools to automakers for quality testing of auto parts.

Sveriges Radio adds that CEO Håkan Bodin has no “hard feelings against NEVS,” and would be joyful to receive money owed from the company’s Chinese owners. NEVS communication officer Mikael Östlund, meanwhile, states that though his employer “cannot fully pay any of its suppliers,” NEVS itself is not insolvent.

The bankruptcy hearing, to be held in district court in Vänersborgs, is scheduled for September 8.

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VW Works Council Forces Out Consultants Amid Headcount Reduction Fears http://www.thetruthaboutcars.com/2014/08/vw-works-council-forces-consultants-amid-headcount-reduction-fears/ http://www.thetruthaboutcars.com/2014/08/vw-works-council-forces-consultants-amid-headcount-reduction-fears/#comments Tue, 12 Aug 2014 13:00:44 +0000 http://www.thetruthaboutcars.com/?p=889337 Volkswagen AG execs will have to go back to the drawing board to determine where to cut costs after its works council demanded outside consultants be shown the door. Reuters reports last month, CEO Martin Winterkorn informed his employees that he was seeking €5 billion ($6.7 billion USD) in efficiency gains by 2017 so as […]

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VW XL1s

Volkswagen AG execs will have to go back to the drawing board to determine where to cut costs after its works council demanded outside consultants be shown the door.

Reuters reports last month, CEO Martin Winterkorn informed his employees that he was seeking €5 billion ($6.7 billion USD) in efficiency gains by 2017 so as to close the profit gap between his company and its rival automakers. In turn, VW brought aboard consultant group McKinsey to help determine where to find the needed gains. But the pricey consultants were a point of contention with VW’s labor representatives.

The concerns over McKinsey’s presence focused upon fears of potential layoffs at factories in Kassal and Wolfsburg, Germany, where a total of over 65,000 assemble components, transmissions and vehicles. Labor leaders suggested the company focus on cutting both R&D spending and its trimming its bloated model lineup rather than reduce headcount.

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Santander Consumer Receives DOJ Subpoena http://www.thetruthaboutcars.com/2014/08/886161/ http://www.thetruthaboutcars.com/2014/08/886161/#comments Sat, 09 Aug 2014 15:35:40 +0000 http://www.thetruthaboutcars.com/?p=886161 Following GM Financial’s subpoena from the Department of Justice, Santander Consumer said that it had received a subpoena as well related to “production of documents and communications that, among other things relate to the underwriting and securitization of nonprime auto loans since 2007,”   Reuters is reporting that Santander Consumer is co-operating with the requests. […]

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Following GM Financial’s subpoena from the Department of Justice, Santander Consumer said that it had received a subpoena as well related to

“production of documents and communications that, among other things relate to the underwriting and securitization of nonprime auto loans since 2007,”

 

Reuters is reporting that Santander Consumer is co-operating with the requests. Santander Consumer is a major lender, with Experian reporting that it ranked 5th in used vehicle loan originations in the first quarter of 2014 and 10th overall. Santander Consumer is also partnered with Chrysler Capital, which is Chrysler’s captive financing arm. When reached for comment, Chrysler was unavailable at the time of publication.

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GM Compensation Fund Receives Nearly 100 Claim Submissions Thus Far http://www.thetruthaboutcars.com/2014/08/gm-compensation-fund-receives-nearly-100-claim-submissions-thus-far/ http://www.thetruthaboutcars.com/2014/08/gm-compensation-fund-receives-nearly-100-claim-submissions-thus-far/#comments Thu, 07 Aug 2014 13:00:12 +0000 http://www.thetruthaboutcars.com/?p=883633 Last Friday was the first day claims linked to accidents and fatalities related to the ignition switch that kicked-off the 2014 General Motors recall parade could be submitted to the compensation fund set up by GM and Kenneth Feinberg. Thus far, 93 such claims have been submitted. The Detroit News reports around 50 of those […]

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GM RenCen Blue Night

Last Friday was the first day claims linked to accidents and fatalities related to the ignition switch that kicked-off the 2014 General Motors recall parade could be submitted to the compensation fund set up by GM and Kenneth Feinberg. Thus far, 93 such claims have been submitted.

The Detroit News reports around 50 of those claims were submitted on the first day. Deputy administrator Camille S. Biros said most of the claims lacked supporting documents, though she expects the lawyers to submit them soon enough. The majority of the claims were submitted electronically en masse by attorneys representing clients who may have been affected in some way as a result of the defective ignition switch.

Upon being found “substantially complete,” the claims will be decided within 90 to 180 days, depending on complexity (or lack there of) of each claim. GM set aside $400 million for the payouts, though the total payout could be as high as $600 million, with Feinberg repeatedly stressing that there will be no cap on total claims.

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Aston-Daimler Partnership Deepens With Component Agreement, Increased Holdings http://www.thetruthaboutcars.com/2014/08/aston-daimler-partnership-deepens-component-agreement-increased-holdings/ http://www.thetruthaboutcars.com/2014/08/aston-daimler-partnership-deepens-component-agreement-increased-holdings/#comments Thu, 07 Aug 2014 10:00:10 +0000 http://www.thetruthaboutcars.com/?p=883521 Daimler’s partnership with Aston Martin is growing, as the former will supply electric and electronic components to the latter for a 1 percent increase in holdings. Bloomberg reports Daimler’s total holdings will come to 5 percent as part of the supply deal, which in turn is part of a larger agreement where Mercedes AMG will […]

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Mercedes SLS AMG + Aston Martin DBS

Daimler’s partnership with Aston Martin is growing, as the former will supply electric and electronic components to the latter for a 1 percent increase in holdings.

Bloomberg reports Daimler’s total holdings will come to 5 percent as part of the supply deal, which in turn is part of a larger agreement where Mercedes AMG will supply V8s for future Aston models. Aston Martin is also planning on using Mercedes tech to develop an SUV for sale by 2017 at the earliest.

Other shareholders of the largely independent premium automaker include London-based investment firm Investindustrial, and Kuwaiti-based Investment Dar Co. and Adeem Investment Co.

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Bubble Warnings Loom Large Over US Auto Sales Boom http://www.thetruthaboutcars.com/2014/08/bubble-warnings-loom-large-us-auto-sales-boom/ http://www.thetruthaboutcars.com/2014/08/bubble-warnings-loom-large-us-auto-sales-boom/#comments Tue, 05 Aug 2014 11:00:38 +0000 http://www.thetruthaboutcars.com/?p=882066 Business is booming on the lot, with the industry on pace to move some 16 million vehicles out onto the highway by the end of 2014. However, some Wall Street insiders are growing bearish with this bull market, blaming easy credit for the surge in demand. Reuters reports the insiders believe the demand is artificial, […]

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Salesman With Customer

Business is booming on the lot, with the industry on pace to move some 16 million vehicles out onto the highway by the end of 2014. However, some Wall Street insiders are growing bearish with this bull market, blaming easy credit for the surge in demand.

Reuters reports the insiders believe the demand is artificial, and should begin to drop once the U.S. Federal Reserve raises interest rates next year. Morgan Stanley auto analyst Adam Jonas is among those insiders, and has gone as far as to proclaim the demand “peak auto”:

We have little doubt that we’re in bubble territory. We’ve blown through prior (sales) peaks in terms of value, the amount of money people are spending on automobiles. We’re in uncharted territory right now.

Jonas posits demand will actually hit its peak in 2017, when a record 18 million units are expected to leave the showroom floor, before dropping to just 14 million in 2019.

Easy credit is claimed to be fueling the current demand, which, in turn, is also fueling record transaction prices, the current average being more than $30,000 per vehicle. The U.S. Office of the Comptroller of the Currency goes as far as to claim in a June report that “signs of risk in auto lending are beginning to emerge” as automakers and their financing partners go after subprime consumers with ever-lengthening long-term loans.

However, most industry insiders believe pent-up customer demand is driving the ongoing sales boom, with incentives remaining stable compared to the run-up to the Great Recession six years ago. Inventories, too, are at “a healthy and manageable level,” with production capacity at near-peak, according to Ernst & Young lead analyst Anil Valsan. He expects sales to cool off and plateau in the coming years, rather than the bust Jones is forecasting.

That said, some vehicles are being moved with a much larger carrot than others, like the Cadillac ELR’s $20,000 discount and Chevrolet’s and Ford’s $10,000 discounts on their respective full-size pickup offerings. Jonas believes it’s only a matter of time before the market visits the ER for credit poisoning, warning the next decade in the auto industry will be “more brutal” than the current decade “in almost every way.”

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GM Financial Subpoenaed By DOJ In Subprime Lending Review http://www.thetruthaboutcars.com/2014/08/gm-financial-subpoenaed-doj-subprime-lending-review/ http://www.thetruthaboutcars.com/2014/08/gm-financial-subpoenaed-doj-subprime-lending-review/#comments Tue, 05 Aug 2014 10:00:04 +0000 http://www.thetruthaboutcars.com/?p=882002 While the parent company goes through the federal ringer over product safety, GM Financial is under the gun after receiving a subpoena from the U.S. Department of Justice regarding potential deceptive practices in subprime lending. The Detroit News reports the subpoena is part of a review “to determine if banks were misled into buying some […]

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GM Financial AmeriCredit

While the parent company goes through the federal ringer over product safety, GM Financial is under the gun after receiving a subpoena from the U.S. Department of Justice regarding potential deceptive practices in subprime lending.

The Detroit News reports the subpoena is part of a review “to determine if banks were misled into buying some auto loans,” according to General Motors. The subpoena was served July 28, requesting documents linked to the lending arm’s and affiliates’ subprime originations and securitizations going back to 2007.

The review in question is the DOJ’s investigation into potential violations of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, particularly around the underwriting criteria of said originations and “the representations and warranties relating to those underwriting criteria that were made in connection with the securitization of the automobile loan contracts.” The findings of the review could open the door to civil suits.

For GM Financial’s part, executive vice president and treasurer Susan Sheffield claimed the subpoena only focused on subprime lending issues in general, and not on the lender specifically. GM Financial represents 30 percent of all subprime lending to the parent company’s dealership network, and holds the title of second-largest subprime lender with $2 billion issued to-date in 2014.

Representatives for Chrysler Capital and Ford Credit both said their employers have not received a subpoena thus far.

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Federal Highway Safety Grants Go Mostly Unclaimed Over Stringent Qualifications http://www.thetruthaboutcars.com/2014/08/federal-highway-safety-grants-go-mostly-unclaimed-stringent-qualifications/ http://www.thetruthaboutcars.com/2014/08/federal-highway-safety-grants-go-mostly-unclaimed-stringent-qualifications/#comments Mon, 04 Aug 2014 10:00:52 +0000 http://www.thetruthaboutcars.com/?p=880978 Aside from funding issues with the U.S. Highway Trust Fund, state governments are having a difficult time applying — and receiving — federal grants to make their part of the system safer. USA Today reports grants for graduated licensing for teens, ignition interlocks for DUI offenders, and distracted driving prevention have gone largely unclaimed. Though […]

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Capital Hill Interstate

Aside from funding issues with the U.S. Highway Trust Fund, state governments are having a difficult time applying — and receiving — federal grants to make their part of the system safer.

USA Today reports grants for graduated licensing for teens, ignition interlocks for DUI offenders, and distracted driving prevention have gone largely unclaimed. Though several states have laws on the books that would merit the boost, the qualifications necessary for each grant and the two-year time frame for each grant are too much of an obstacle to make the attempt, let alone be rejected by the federal government.

As a result, no states received grants for graduated licensing. New Jersey came close by mandating restrictions until the driver is 18 — which the grant requires — but the rest of the state’s GDL legislation failed to match up with the rest of the grant’s requirements.

Additionally, four states qualified for the ignition interlock grant by meeting the requirement that all first-time offenders must use interlocks for no less than 30 days.

Finally, Connecticut was the only state to win a grant for distracted driving prevention by imposing minimum fines that escalate with every new offense, as well as warn of the issue in driver’s licensing exams.

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Equifax: Auto Lending At Record Highs, Delinquencies At Record Lows http://www.thetruthaboutcars.com/2014/07/equifax-auto-lending-at-record-highs-delinquencies-at-record-lows/ http://www.thetruthaboutcars.com/2014/07/equifax-auto-lending-at-record-highs-delinquencies-at-record-lows/#comments Tue, 29 Jul 2014 12:00:08 +0000 http://www.thetruthaboutcars.com/?p=874985 Six years after the dark days of the Great Recession, automotive lending is back on the rise, while delinquencies on those loans remain grounded. Ward’s Auto reports the total balance of the loans after the first half of 2014, according to a report by credit reporting agency Equifax, is a record $902.2 billion. Equifax economist […]

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new couple old tricks auto lending

Six years after the dark days of the Great Recession, automotive lending is back on the rise, while delinquencies on those loans remain grounded.

Ward’s Auto reports the total balance of the loans after the first half of 2014, according to a report by credit reporting agency Equifax, is a record $902.2 billion. Equifax economist Dennis Carlson adds that auto lending accounts for more than half of all new non-mortgage lending during the first four months of the year, with delinquencies making up less than 1 percent of the total balance:

Lenders are responding to record low delinquencies by offering great rates and terms, while consumers are responding to the improving economic conditions by making the decision to purchase newer vehicles.

For those first months of 2014, the total balance of new auto loans is $163.5 billion, with 8.1 million loans out and about. Further, 2.6 million of those loans went to subprime consumers, while the total balance of the loans is $46.2 billion, making up 28.2 percent of the overall new loan balance.

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Latest GM Recall Woes Hurt Q2 Results http://www.thetruthaboutcars.com/2014/07/general-motors-digest-july-25-2014/ http://www.thetruthaboutcars.com/2014/07/general-motors-digest-july-25-2014/#comments Fri, 25 Jul 2014 13:00:24 +0000 http://www.thetruthaboutcars.com/?p=873066 In today’s General Motors digest: The automaker takes it on the chin in its quarterly report; the analysts have their say; GM Korea could allow its workers to build the next Cruze if only they would put down the picket signs; 45 attorney generals are investigating the February 2014 recall; and CEO Mary Barra will […]

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GM Renaissance Center

In today’s General Motors digest: The automaker takes it on the chin in its quarterly report; the analysts have their say; GM Korea could allow its workers to build the next Cruze if only they would put down the picket signs; 45 attorney generals are investigating the February 2014 recall; and CEO Mary Barra will be the keynote speaker for a connected-vehicle forum.

Autoblog reports GM made a net income of $200 million for Q2 2014, in comparison to $1.2 billion during Q2 2013. Speaking of $1.2 billion, that was how much the automaker paid in recall-related repairs this quarter, with a $900 million charge ready for future recall campaigns. Finally, $400 million has been set aside for the Feinberg compensation plan, though $200 million may be added down the road.

Meanwhile, Automotive News collected a number of analyst quotes regarding the poor Q2 2014 showing, including KBB.com’s Jack Nerad proclaiming that while the automaker may be handling recalls better these days, “it is paying for past sins in terms of the bottom line.” Michael Krebs of AutoTrader.com adds that GM “would have had an outstanding quarter” were it not for the ongoing recall parade, and both Brian Johnson of Barclays Capital (but not of AC/DC) and Morningstar’s David Whiston believing brighter days ahead in Europe and outstanding success in China.

Speaking of the Asia-Pacific, GM Korea management informed the employee’s union that if the latter calls off its impending strike over stalled wage negotiations, the next-gen Chevrolet Cruze would be built in its Gunsan facility. The factory — where the Orlando and current-gen Cruze are assembled — is one of four under GM Korea, and boasts a production capacity of 260,000 units per year.

Back at home, The Detroit News reports GM is under investigation by 45 attorney generals over the February 2014 ignition switch recall, as well as auto safety agency Transport Canada. On the federal level, CEO Mary Barra stated she hasn’t met with the prosecutors or the grand jury regarding the U.S. Attorney’s Office and the Securities and Exchange Commission investigations into wire and bankruptcy fraud related to the automaker’s 2009 bankruptcy proceedings.

Finally, Barra will be the keynote speaker at the 21st World Congress on Intelligent Transport Systems in Detroit September 7. The event, focused on connected vehicles, will attract 10,000 guests from 65 countries to share and discuss ideas, challenges and strategies regarding the burgeoning scene. Barra’s keynote will focus on the future of intelligent transportation.

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The New York Times Shines A Light On Subprime http://www.thetruthaboutcars.com/2014/07/the-new-york-times-shines-a-light-on-subprime/ http://www.thetruthaboutcars.com/2014/07/the-new-york-times-shines-a-light-on-subprime/#comments Mon, 21 Jul 2014 13:20:41 +0000 http://www.thetruthaboutcars.com/?p=870066 The issue of subprime car loans, specifically loans with exorbitant interest rates for used cars, has filtered into the New York Times, with the paper’s Dealbook section running an investigation into the practice. The NYT article serves as a primer on the subprime auto loan crisis, though it focuses on used cars, and the unscrupulous practices of dealers […]

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20subprime-blog480

The issue of subprime car loans, specifically loans with exorbitant interest rates for used cars, has filtered into the New York Times, with the paper’s Dealbook section running an investigation into the practice.

The NYT article serves as a primer on the subprime auto loan crisis, though it focuses on used cars, and the unscrupulous practices of dealers who charge interest rates as high as 25 percent for used cars, which are frequently repossessed and then re-sold, enabling dealers to make vast profits many times over on the same car.

The Times also found evidence of hardball sales tactics and fraudulent loan documents, with some salesmen facing criminal charges related to their heavy-handed sales tactics and fraudulent loan applications. The article also focuses on the securitization of these loans, and Wall Street’s hunger for them thanks to the higher yields that they pay

Investors, seeking a higher return when interest rates are low, recently flocked to buy a bond issue from Prestige Financial Services of Utah. Orders to invest in the $390 million debt deal were four times greater than the amount of available securities.

What is backing many of these securities? Auto loans made to people who have been in bankruptcy.

An affiliate of the Larry H. Miller Group of Companies, Prestige specializes in making the loans to people in bankruptcy, packaging them into securities and then selling them to investors.

The average interest rate on loans bundled into Prestige’s latest offering, for example, is 18.6 percent, up slightly from a similar offering rolled out a year earlier. Since 2009, total auto loan securitizations have surged 150 percent, to $17.6 billion last year, though some estimates have put the total volume even higher. To meet that rising demand, Wall Street snatches up more and more loans to package into the complex investments.

Much like mortgages, subprime auto loans go through Wall Street’s securitization machine: Once lenders make the loans, they pool thousands of them into bonds that are sold in slices to investors like mutual funds, pensions and hedge funds. The slices that include loans to the riskiest borrowers offer the highest returns.

Rating agencies, which assess the quality of the bonds, are helping fuel the boom. They are giving many of these securities top ratings, which clears the way for major investors, from pension funds to employee retirement accounts, to buy the bonds.

None of this is news for anybody that has been following the topic on TTAC, nor does the NYT article cover the risks related to subprime lending in the new car market. But the Times does advance the argument that the lending practices of certain banks could pose a systemic risk if the subprime auto loan market faces a major downturn.

While losses from soured car loans would be far less than those on subprime mortgages, the red ink could still deal a blow to the banks not long after they recovered from the housing bust. Losses from auto loans might also cause the banks to further retrench from making other loans vital to the economic recovery, like those to small business and would-be homeowners.

If those losses materialize, they could pummel a wide range of investors, from pension funds to insurance companies to mutual funds held by Americans preparing for retirement. For the huge baby-boomer generation, including many whose savings were sapped by the 2008 crisis and the ensuing recession, any losses from the auto loan securities could deal them another setback.

After outlining the deteriorating underwriting standards and outright fraud used to get unworthy buyers into overpriced cars with usurious loan terms, NYT article closes by noting that in Q1 2014, repossessions were up 78 percent year over year. While the NYT points the finger at ratings agencies for being complicit in fueling the subprime bubble, at least one agency has taken notice.

As it stands now, the average vehicle loan term is 66 months, according to credit rating agency Experian, with loan terms of 73 to 84 months make up nearly a quarter of loans originated in Q1 of this year. The average amount financed for a new vehicle loan and the average loan payment also hit new highs in that same period. All of this suggests that Americans are financing vehicles with ever higher transaction pricing and stretching out the payments to unprecedented lengths, all in the name of a lower, more manageable monthly payment with little regard to how affordable the actual vehicle is. But as well all know, it’s different this time.

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Oil Booms Slowed Down By Weakening Roads http://www.thetruthaboutcars.com/2014/07/oil-booms-slowed-down-by-weakening-roads/ http://www.thetruthaboutcars.com/2014/07/oil-booms-slowed-down-by-weakening-roads/#comments Mon, 21 Jul 2014 10:00:40 +0000 http://www.thetruthaboutcars.com/?p=869970 For the past few years, the oil booms in North Dakota and southern Texas have brought in a lot of money wherever oil could be drawn out. At the same time, the booms have taken their toll on amenities and infrastructure, the latter now the cause of slowing the boom down. Bloomberg reports both states […]

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Oil Boom Shifts The Landscape Of Rural North Dakota

For the past few years, the oil booms in North Dakota and southern Texas have brought in a lot of money wherever oil could be drawn out. At the same time, the booms have taken their toll on amenities and infrastructure, the latter now the cause of slowing the boom down.

Bloomberg reports both states are increasing or seeking to increase their road maintenance and construction budgets as the literal weight of tanker truck upon tanker truck crushes current roads underfoot, slowing down oil production along with weather and exhausted wells.

North Dakota’s transportation department has boosted their budget to $800 million per year, $550 million more than the budget in 2007, while Texas’ department is crossing their fingers residents will vote yes to use $1.4 billion from the state’s oil-funded rainy day fund to go towards highway work instead. The legislature itself gave the department $225 million, with another $225 to the counties most affected by heavy truck traffic.

Aside from hindering oil production, the crumbling roads also bring more accidents — from tankers becoming stuck, to increases in fatalities — and add difficulties for other vehicles attempting to navigate what had once been a less-traveled path.

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Obama Talks Connected Vehicles, Highway Funding http://www.thetruthaboutcars.com/2014/07/obama-talks-connected-vehicles-highway-funding/ http://www.thetruthaboutcars.com/2014/07/obama-talks-connected-vehicles-highway-funding/#comments Wed, 16 Jul 2014 10:00:06 +0000 http://www.thetruthaboutcars.com/?p=866778 Amid touring the Turner-Fairbank Highway Research Center in McLean, Va. and having a go at a driving simulator based upon a Saturn SL, President Barack Obama talked about connected vehicles and increasing highway funding before reporters in attendance Tuesday. Autoblog and Bloomberg report the President spoke for 14 minutes on both subjects, though the majority […]

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Barack Obama + Connected Vehicles

Amid touring the Turner-Fairbank Highway Research Center in McLean, Va. and having a go at a driving simulator based upon a Saturn SL, President Barack Obama talked about connected vehicles and increasing highway funding before reporters in attendance Tuesday.

Autoblog and Bloomberg report the President spoke for 14 minutes on both subjects, though the majority of his speech focused upon the U.S. Highway Trust Fund. Obama warned that if Congress fails to come to a decision as to how the trust will be funded, 700,000 jobs and 100,000 active projects could be shuttered when the well runs dry next month. He offered some praise regarding bipartisan bills in both houses offering a solution, though Obama urged Congress to focus on the long term instead of “kicking the can down the road for a few months.”

On the connected vehicle front, he proclaimed his support for any new technology that could improve driver safety, referencing his 16-year-old daughter Malia alongside results of a study where 5.5 billion hours and $120 billion in time and fuel are lost annually due to traffic congestion. Obama also joked about his brief ride in the aforementioned simulator, finding the experience disorienting in relation to his diminishing driving experience.

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Buy-Here, Pay-Here Dealers Face Stiff Competition From New-Car Dealers’ Cheap Credit http://www.thetruthaboutcars.com/2014/07/buy-here-pay-here-dealers-face-stiff-competition-from-new-car-dealers-cheap-credit/ http://www.thetruthaboutcars.com/2014/07/buy-here-pay-here-dealers-face-stiff-competition-from-new-car-dealers-cheap-credit/#comments Thu, 10 Jul 2014 12:00:57 +0000 http://www.thetruthaboutcars.com/?p=862945 Buy-here, pay-here lots, traditionally the place to find a vehicle with little, bad or no credit, are facing some stiff competition as of late from new-car dealers offering cheap financing. Automotive News reports in a conference call this spring by America’s Car-Mart CEO Hank Henderson, he said new-car dealerships were making finance offers on both […]

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buy here pay here

Buy-here, pay-here lots, traditionally the place to find a vehicle with little, bad or no credit, are facing some stiff competition as of late from new-car dealers offering cheap financing.

Automotive News reports in a conference call this spring by America’s Car-Mart CEO Hank Henderson, he said new-car dealerships were making finance offers on both low-end new vehicles and high-end used units his group are unable to counter:

Some of the offerings are zero percent down, no payments for 90 days. We’ve even seen no payments for a year — and then those are getting financed at 72 months, sometimes even longer.

Lenders are fueling the demand for cheap credit at new-car dealers, as well, forcing the buy-here, pay-here dealers to turn down business from consumers hoping to find as much with the latter party. That said, the approach said dealers promote — including substantial down payments and shorter terms — claims to be more economically healthy for subprime consumers than the competitive approach that could leave a consumer upside-down in the long run.

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