Marcie Belles's Blog – July 2008 Archive (4)

Lenders Face Huge Losses From the Glut of Gas Guzzlers

Auto financiers are bracing for higher losses — and there’s little they can do about it.

High-priced fuel has all but dried up the sale of sport-utility vehicles and light-duty trucks, causing resale values to tank. In some cases, borrowers are simply turning in their vehicles’ keys because they can no longer afford the monthly payments.

The glut of gas guzzlers “has ruined the year for us,” said David Pallin, a senior vice president at Massachusetts-based Brookline Bank.… Continue

Added by Marcie Belles on July 31, 2008 at 2:33pm — No Comments

Interesting Remarketing Statistic

Wish you could quantify the effect of higher gas prices on vehicle values? NADA has, and here's the math: For every $1 increase in the cost of a gallon of gas, large pickups decline in value by an average of $2,200, while resale prices of compact cars rise by an estimated $980.

No wonder financiers' losses are skyrocketing...

Added by Marcie Belles on July 31, 2008 at 12:12am — No Comments

The Demise of Leasing

On the heels of Ford Motor Credit's $2.1 billion writedown of its leasing portfolio yesterday, today Chrysler Financial announced that it plans to stop offering leases in the U.S. effective Aug. 1.

Though it came a little sooner than I had expected, I can't say that I was surprised. In fact, I wrote in this space yesterday that… Continue

Added by Marcie Belles on July 25, 2008 at 6:01pm — 1 Comment

Realistic Expectations

Reality is finally setting in for auto financiers: The vehicle sales market is shrinking and losses are climbing — a serious combination with which lenders must grapple.

Manufacturers continue to take steps to reduce headcount and limit output, particularly of gas-guzzling SUVs and pickup trucks. Lenders, meanwhile, face lower origination volume and higher delinquency and chargeoff levels.

So where are things headed? For one thing, I think the lease product is on its way… Continue

Added by Marcie Belles on July 24, 2008 at 12:43pm — No Comments