What a year it has been, from heightened uncertainty surrounding the SAAR for 2010 to the blockbuster GM IPO and a return to a market healthy that at least this author didn’t predict.
If 2011 will be anything like 2010, there’s much change in store for the auto finance industry. Let’s use this space to hash out what can be expected for auto finance in the coming year. Specifically, and to frame the discussion, here are some topics that deserve our attention:
Unemployment. The unemployment rate is the driver of credit performance for the industry. What are your expectations for unemployment in 2011 and why?
Housing. The faltering economy over the last few years has been squarely blamed on a faltering housing market. What kind of turnaround can we expect in 2011?
Interest Rates. This is perhaps the most uncertain factor out there, what with QE2 in full swing and inflation seemingly on the horizon. In recent months, you couldn’t look at the long bond and not grimace. In 2011?
Gas Prices. Gas prices are attached to the SAAR’s hip, and despite the rash of energy-efficient cars being unveiled, high gas prices would still dampen car sales in 2011. What are your expectations for fuel prices next year?
Underwriting Standards. All the factors we’ve already mention get folded into underwriting standards, and while underwriting has largely held the line in 2010, all bets (in my opinion) are off for 2011. What’s your view on underwriting in the coming year?
Comment on some or all of the indicators we’ve highlighted above. And most importantly, enjoy the holiday season.
