Strong used-car values have been softening the blow of loss severity for the past couple years. Now the trend may be contributing to slightly higher repo rates.
Auto repossessions have bumped up slightly since 2008, to 0.77% in the first quarter from 0.68% in 1Q08, according to data released yesterday by Experian Automotive. Repo rates at finance companies climbed to 2.17% from 1.80%; at credit unions they were up to 0.25% from 0.18%.
While the higher repo rates could indicate an increase in delinquent borrowers, they could also signal a move by lenders to repossess vehicles earlier in the cycle so as to benefit from strong auction prices, said Melinda Zabritski, Experian’s director of automotive credit. For April, the Manheim Used Vehicle Value Index, which tracks auction prices, reached 120.7 — a 13.2% increase from the year-prior period and the highest-ever level recorded in the index’s 15-year history.
