First-quarter earnings continued to bring mixed results as vehicle sales slowed in April.
Capital One’s auto outstandings decreased 3.7% year over year to $73.8 billion, while Ford Credit’s outstandings grew 7.6% YoY to $83.9 billion.
Credit performance worsened on a YoY basis at the bank and the captive in line with trends so far in Q1.
On the retailer front, Sonic Automotive’s finance and insurance revenue ticked up 1.8% quarter over quarter and 0.12% YoY to $169 million. The retailer’s new-vehicle sales fell 11.2% QoQ and increased 3.1% YoY to 25,676 units.
Industrywide new-vehicle sales are projected to be down 6.8% sequentially and 2.6% month over month to 1.34 million units in April, according to Cox Automotive.
In this episode of the “Weekly Wrap,” Auto Finance News Editor Amanda Harris discusses the bank and captive earnings results and sales projections for the week ended April 26.
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Transcript:
Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.
Hello everyone, and welcome to The Roadmap from Auto Finance News, since 1996 the nation’s leading newsletter on automotive lending and leasing. It is Monday, April 29, and I’m Amanda Harris. This is our weekly wrap on what happened in auto finance for the week ending April 26, 2024.
In economic news, gross domestic product increased at a 1.6% annualized rate in the most recent reading, while personal spending rose at a slower-than-forecast 2.5% pace. The core personal consumption expenditures index rose 3.7%, above expectations. The figures may signify further holding by the Federal Reserve on rates and delayed cuts.
In automotive news, U.S. new-vehicle sales are expected to land at 1.34 million units in April, down 2.2% year over year. However, the seasonally adjusted annual rate is expected to finish above last year’s pace at 15.9 million units, up 2.6% MoM and 1.31% YoY, according to Cox Automotive. Better supply and incentives are contributing to what should be the best new-vehicle sales pace since 2019.
In powersports news, Harley Davidson financial services’ retail loan originations increased 2% YoY in the first quarter, while retain finance receivables were up 1.5% YoY to $6.8 billion. The company’s credit losses increased 50 basis points YoY to 3.7% and the lender’s allowance for loan losses rose 30 bps YoY to a coverage ratio of 5.4%.
Sales at HOG’s electric motorcycle manufacturing subsidiary LiveWire increased 86% YoY to 117 units, while operating losses were up slightly at $29 million.
In auto finance, more earnings came in this week. Capital One and Ford Credit reported Q1 results. Capital One’s auto outstandings decreased 3.7% year over year to $73.8 billion, while Ford Credit’s outstandings grew 7.6% YoY to $83.9 billion.
Credit performance worsened on a YoY basis at the bank and the captive in line with trends so far in Q1. Capital One’s 30-day auto delinquencies increased 28 basis points YoY to 5.28% while net charge-offs rose 46 basis points YoY to 1.99%. The bank’s credit loss allowance was steady YoY.
Ford Credit’s loss-to-receivables ratio landed at 0.47% in Q1, up 12 bps YoY.
On the retailer front, Sonic Automotive’s finance and insurance revenue ticked up 1.8% quarter over quarter and 0.12% YoY to $169 million. The retailer’s new-vehicle sales fell 11.2% QoQ and increased 3.1% YoY to 25,676 units.
That about does it for today’s episode. We kick off Auto Finance Summit East in Nashville on Wednesday. Stay tuned for live show coverage on underwriting, AI, electric vehicles, risk management, compliance and more.
Thanks for joining us on the roadmap and be sure to follow us on X, formerly known as Twitter, and LinkedIn. We will see you online at autofinance news.net and here next time.