#GmFinancial

Though investors are not happy with General Motors as of late, Standard & Poor’s is, boosting the automaker’s investment-grade rating from BBB- to BB+.

There is news, at least partially confirmed by General Motors, that the Cadillac brand may expand its operations in New York City, moving some business functions from the RenCen in Detroit. It’s thought that moving some marketing, advertising and strategy functions to the Big Apple will add luster to GM’s luxury brand by separating it from the city of Detroit’s tarnished image, as well as make it easier to attract talent to those positions. Some people apparently have the notion that “Detroit” is this incredibly provincial and insular place and that the only way to thrive in the highly competitive global automobile industry is to leave the Motor City behind, both figuratively and literally. That attitude, though, is nothing new, either outside Detroit or in the region. Also, the idea that the domestic car companies have been operated in Detroit by Detroiters, insulated from the rest of the country (and world) is contrary to the historical record.

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.

Detroit Free Press posits the endless recall parade General Motors has been leading since late February 2014 may be doing more harm than good for public perception or its bottom line. Though spokesman Greg Martin claimed the recalls were an effort to make his employer “a first-class safety organization” by focusing hard upon the consumer, a survey by AutoTrader found 51 percent of auto consumers were less confident in the industry’s overall safety record as a result of the actions by GM, up from 44 percent who thought the same five days’ earlier. In addition, the automaker will take a $400 million charge in Q2 2014 for the recalls since April 1 as of this writing, while its current stock price of $33.07 per share is a few cents above its IPO price from November 2010.

Detroit Free Press reports the U.S. Treasury lost $11.2 billion in taxpayer money from the rescue of General Motors back in 2008, up from the $10.3 billion estimated after the agency sold its remaining shares back in early December 2013. Part of the final figure came as a write-off of an $826 million “administrative claim,” which was found in a report by the Office of the Special Inspector General for the Troubled Asset Relief Program. The overall figure pales in comparison to the $50.2 billion given by both Bush and Obama administrations between 2008 and 2009 to GM as the automaker struggled through its financial crisis at the onset of the Great Recession.

Subprime auto financing continues to grow, and while one analyst at Moody’s says that banks are largely staying out of the subprime space, overall lending continued to rise, with retail banks seeing some of the strongest growth. This expansion in lending, particularly subprime, was attributed as a key driver in auto sales. SNL cited forecasts for a SAAR of between 16 and 16.7 million in 2014, up from 15.5 million in 2013.

Following in the footsteps of Spanish bank Santander, GM Financial announced that it would enter the prime lending market in 2014.

8 years to pay off a car? A report by the Wall Street Journal claims that in Q4 of 2012, the average car loan stretched out to 65 months, or just over 5 years. Loan terms were being stretched out over increasingly longer terms too, with credit firm Experian reporting that nearly 1 in 5 car loans had terms between 73 and 84 months long, with some stretching for as long as 97 months.

March was the 5th straight month of a SAAR above 15 million vehicles. Industry analysts have explained the strength of the market in a number of ways. The need to replace older vehicles is one (new car sales were hit hard during the recession as consumers held on to their vehicles for longer. This also caused used car prices to skyrocket, something TTAC has been documenting), while others have cited increasing fleet demand, and the desire to replace vehicles damaged in Hurricane Sandy.

But one factor that is just starting to get attention outside of TTAC is sub-prime financing. Sub-prime lending, which involves giving high-interest loans to customers with poor credit scores, is driving the SAAR in a big way, by letting buyers with poor credit purchase new cars. In turn, the sub-prime bubble is being driven by Wall Street, whose clients cannot get enough of financial instruments backed by sub-prime auto loans.