#AutomotiveFinancing

Earlier this year, auto lenders assured us that the stagnating car market and an unprecedented number of off-lease vehicles flooding into used vehicle lots would coalesce into the perfect storm of unprofitability. However, despite stoking the flames of terror at the beginning of the year, automotive lenders are doing just fine.

We’re sure you’re all very pleased to read car financiers are still doing so well and have likely collectively exhaled a sigh of relief. But there’s more good news. Some of these companies aren’t just surviving, they’re thriving. Several have even reported record high profits, even though used car prices continue to fall. It may be time to pop the champagne corks, pour out the bubbly, and hoist our glasses for the financial institutions we all love so dearly.

The auto industry has really turned a corner over the last decade, but this year has been underlined by an unsettling lack of interest in new vehicles — potentially hinting at the return of a industry-wide crisis. The good news is that abnormally high used car prices are sinking like a stone. The flip-side of that coin, however, means that we could be approaching darker days as more consumers shy away from the new vehicle market.

Most carmakers spent last year enjoying record sales but seemed keenly aware that the market was about to plateau. However, 2017 sales have stagnated more than predicted, with rising interest rates and deflated prices seen on second-hand automobiles. It all looks very pre-recessionish and some analysts are beginning to make fearful noises.

Leases are red-hot these days, but those signing up for temporary ownership of their rides will be facing lower mileage caps in exchange for low payments.

The hammer has fallen on captive automotive lenders, such as GM Financial, Ford Motor Credit and Toyota Financial Services: The Consumer Financial Protection Bureau began officially asserting its authority over them as the feds and the lenders battle over allegations of discrimination in the latter’s loan products.

In a perverse nexus where connected-vehicle technology, privacy and subprime lending intersect, consumers who fall behind on so much as a single payment, or even stray outside a given teritory, may find their vehicles shutdown by their lender from a digital panopticon.

It took four years, but the Securities and Exchange Commission has put the final touches on a rule regarding asset-backed securities — including auto loans and leases — and what information is given when a company or investor takes on an ABS.

Doing business with Chrysler proved to be a boom for Santander Consumer USA’s Chrysler Capital during Q1 2014, while former lending partner Ally Financial experienced a painful bust on its Pentastar originations.