After this week's Auto Finance Summit here, I can firmly say those days are over for auto finance.
The story at the Summit was growth and prosperity. You want capital to make more loans? It's there for you. You don't want to pay too much for that capital? Investors are demanding spreads at pre-credit crisis levels. You don't want to see undesirable credit performance? Delinquencies and credit losses remain near historical lows. Even the regulators have yet to get to auto finance (although they likely will).
This is, officially, the best of times in auto finance.
Yes, there was much discussion about competition, tightening spreads, a looming reversal of high prices on the used car market, and fear of oversupply on the auto ABS market -- but, truth be told, these concerns were far, far outweighed by the stellar performance in the market today. One vendor official told me that the company needed to be careful about the new customers it takes on. It just can't handle all the business.
What a turnaround from just a few years ago.
I could bark about concerns about underwriting standards and too much capital flowing into the market, but why do that? I'd rather just enjoy the moment, enjoy the fact that the auto finance market is strong and has a bright future in 2013 and beyond. We forecast originations growth of more than 5% to greater than $400 billion next year. Some lenders on a panel I moderated that included executives from Bank of America, Ally and Nissan Motor Acceptance Corp. predicted originations growth of 10% next year.
Enjoy the moment, indeed.