Banks continued to tap the auto asset-backed securitization market last week to offload consumer debt amid shrinking deposits.
Fifth Third, for example, entered the auto ABS market for the first time since 2019 with a $1.6 million deal backed by prime loans. Ally Financial, Bank of America, Capital One, Citizens Financial Corp. and U.S. Bank $6.8 billion in auto loans year to date, compared with a total of $4.3 billion in auto loans securitized at yearend 2022.
Meanwhile, EV leasing gained traction in April as 18.52% of new EV purchases were leases, jumping 4.48 percentage points month over month and 4.63 percentage points year over year.
In powersports, manufacturer BRP is discontinuing dealer surcharges for 2024 model year units as supply chain issues have eased.
In this episode of the “Weekly Wrap,” Senior Associate Editor Riley Wolfbauer and Associate Editor Johnnie Martinez II discuss the top stories for the week ended Aug. 25, and what to expect in the week ahead.
Subscribe to “The Roadmap Podcast” on iTunes or Spotify, or download the episode.
Auto Finance Summit, the premier industry event for auto lending and leasing, returns Oct. 29-31 at the Bellagio Las Vegas and features fireside chats with Vroom and Ford Credit. To learn more about the 2023 event and register, visit here.
Transcript:
Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.
Riley Wolfbauer 0:08
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, August 28, and I’m Riley Wolfbauer joined by Johnnie Martinez. This is our weekly wrap on what happened in auto finance for the week ending August 25 2023. In general economic news Federal Reserve Chair Jerome Powell said the US central bank intends to keep borrowing costs high until inflation is on a path towards the Feds 2% target and is prepared to raise interest rates further if needed. Powell said in his speech at the US Central Bank’s annual conference, quote, although inflation has moved down from its peak a welcome development it remains too high. We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective and quote, in all the way BS Fifth Third is the latest bank to enter the auto ABS market, as banks look to offload consumer debt amid shrinking deposits, the $1.6 billion prime deal which closed last week and was upside from $1.1 billion on investor demand. March 5 third’s first asset backed securitization since 20 19/5 Third is the sixth bank to issue deals into the capital markets this year. Banks have securitized $8.4 billion dollars in auto loans year to date, by comparison banks securitize $4.3 billion in auto loans in 2022. Meanwhile, the return of student loan payments in October could drive up securitized auto loan losses as delinquencies and losses increased in June, private securitized loans 60 plus days 60 plus days delinquent increased one basis point month over month and eight basis points year over year 2.44%. According to the Kroll bond rating agency July auto loan abs and Index, which measures performance during the June collection period on all publicly rated securitized auto loan collateral pools in the United States. annualized net losses across prime securitized auto loans increased 14 basis points month over month and 17 basis points year over year 2.41%. Non prime securitized auto 60 plus days past due came in at 5.2% An increase of 22 basis points month over month and 45 basis points your year. annualized net charge or annualized net losses for non prime loans increased 107 basis points sequentially, and 170 basis points year over year to 6.74% and electric vehicle news Evie leasing is gaining traction with consumers. The percentage of new Evie purchases industry wide that were leases landed at 18.52% in April, an increase of 4.48 percentage points sequentially and 4.63 percentage points year over year. In power sports octane drove up originations in the first half of 2023 as the lender continued to increase its base of dealers integrated with octane pre qual and grow its new RV tractor and trailer finance segments. Octane originations totaled $634 million in the first half of the year, an increase of 1.6% year over year, bringing its total portfolio to about $2 billion. The lender expects originations to total $1.2 billion for 2023 flat compared with 2022. RV originations have increased 85% Since the end of 2022. While tractor trailer originations jumped 112% year over year, octane added financing for trailers to his portfolio in January 2022 tractors in February 2022 and RVs and September 2022. Octane also increased the number of dealer partners integrated with octane pre qual, which takes a soft credit poll and can qualify a consumer for a loan on a dealer’s website. Before the consumer enters the dealership. The number of dealers with octane pre qual jumped to 645, an increase of 140% year over year, integrating pre qual with more dealerships helps the lender increase its conversion rates. Johnny, last week, you covered BRP. And in surcharges for 2020 for what’s going on there.Johnnie Martinez 4:23
Yeah, so like you said, brps, and surcharges for 2020 for all their 2024 models, which they announced quite a few at their club ERP event in this last week. And during that event, they were actually telling dealers that they are going to end surcharges for 2024. Essentially, the surcharges are just another cost that was driving up the prices for these units. And a time we’re like you’re mentioning these borrowing costs are higher, it’s harder to get hands on powersports vehicles. This became kind of a big pain point in the industry, with the National powersports dealer Association back in March. It’s Wing position statement essentially saying, you know, we understood the surcharges during the pandemic, right, freight was harder. There were supply chains concerns, there were just other, you know, cost factors involved. Now, the market is coming back to normal, it’s time to kind of get rid of the surcharges and, you know, the BRP ending and kind of signals that there’s an agreement in that right this market in the power sports industry starting to come back to its normal brps, ending their surcharges. Yamaha, as well announced, they were ending their surcharges last month for their 2023 and 2024 models. And Kawasaki didn’t in them, but they did cut them by 50%. So again, it’s just more signals more indicators that the power sports markets during the normal, we’re dropping these costs, it’s easier to get hands on units and in the time where, like you were talking about before borrowing costs are so high. Anything that makes it easier to get power sports units into people’s hands, is something that benefits the whole industry. And this is just another part of that.Riley Wolfbauer 5:58
Yeah, it’s good to see the market normalized. And again, so thanks, Johnny. That about does it for today’s episode. As a reminder, you can purchase your all access pass to the auto finance Summit and the power sports finance summit to attend both events October 29. Through the 31st at the Bellagio in Las Vegas for 20% off, you can get your all access pass at WWW dot auto finance dot live. Thanks for joining us on the roadmap and be sure to follow us on Twitter and LinkedIn. We will see you online at Auto Finance News dotnet and here next time.
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, August 28, and I’m Riley Wolfbauer joined by Johnnie Martinez. This is our weekly wrap on what happened in auto finance for the week ending August 25 2023. In general economic news Federal Reserve Chair Jerome Powell said the US central bank intends to keep borrowing costs high until inflation is on a path towards the Feds 2% target and is prepared to raise interest rates further if needed. Powell said in his speech at the US Central Bank’s annual conference, quote, although inflation has moved down from its peak a welcome development it remains too high. We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective and quote, in all the way BS Fifth Third is the latest bank to enter the auto ABS market, as banks look to offload consumer debt amid shrinking deposits, the $1.6 billion prime deal which closed last week and was upside from $1.1 billion on investor demand. March 5 third’s first asset backed securitization since 20 19/5 Third is the sixth bank to issue deals into the capital markets this year. Banks have securitized $8.4 billion dollars in auto loans year to date, by comparison banks securitize $4.3 billion in auto loans in 2022. Meanwhile, the return of student loan payments in October could drive up securitized auto loan losses as delinquencies and losses increased in June, private securitized loans 60 plus days 60 plus days delinquent increased one basis point month over month and eight basis points year over year 2.44%. According to the Kroll bond rating agency July auto loan abs and Index, which measures performance during the June collection period on all publicly rated securitized auto loan collateral pools in the United States. annualized net losses across prime securitized auto loans increased 14 basis points month over month and 17 basis points year over year 2.41%. Non prime securitized auto 60 plus days past due came in at 5.2% An increase of 22 basis points month over month and 45 basis points your year. annualized net charge or annualized net losses for non prime loans increased 107 basis points sequentially, and 170 basis points year over year to 6.74% and electric vehicle news Evie leasing is gaining traction with consumers. The percentage of new Evie purchases industry wide that were leases landed at 18.52% in April, an increase of 4.48 percentage points sequentially and 4.63 percentage points year over year. In power sports octane drove up originations in the first half of 2023 as the lender continued to increase its base of dealers integrated with octane pre qual and grow its new RV tractor and trailer finance segments. Octane originations totaled $634 million in the first half of the year, an increase of 1.6% year over year, bringing its total portfolio to about $2 billion. The lender expects originations to total $1.2 billion for 2023 flat compared with 2022. RV originations have increased 85% Since the end of 2022. While tractor trailer originations jumped 112% year over year, octane added financing for trailers to his portfolio in January 2022 tractors in February 2022 and RVs and September 2022. Octane also increased the number of dealer partners integrated with octane pre qual, which takes a soft credit poll and can qualify a consumer for a loan on a dealer’s website. Before the consumer enters the dealership. The number of dealers with octane pre qual jumped to 645, an increase of 140% year over year, integrating pre qual with more dealerships helps the lender increase its conversion rates. Johnny, last week, you covered BRP. And in surcharges for 2020 for what’s going on there.Johnnie Martinez 4:23
Yeah, so like you said, brps, and surcharges for 2020 for all their 2024 models, which they announced quite a few at their club ERP event in this last week. And during that event, they were actually telling dealers that they are going to end surcharges for 2024. Essentially, the surcharges are just another cost that was driving up the prices for these units. And a time we’re like you’re mentioning these borrowing costs are higher, it’s harder to get hands on powersports vehicles. This became kind of a big pain point in the industry, with the National powersports dealer Association back in March. It’s Wing position statement essentially saying, you know, we understood the surcharges during the pandemic, right, freight was harder. There were supply chains concerns, there were just other, you know, cost factors involved. Now, the market is coming back to normal, it’s time to kind of get rid of the surcharges and, you know, the BRP ending and kind of signals that there’s an agreement in that right this market in the power sports industry starting to come back to its normal brps, ending their surcharges. Yamaha, as well announced, they were ending their surcharges last month for their 2023 and 2024 models. And Kawasaki didn’t in them, but they did cut them by 50%. So again, it’s just more signals more indicators that the power sports markets during the normal, we’re dropping these costs, it’s easier to get hands on units and in the time where, like you were talking about before borrowing costs are so high. Anything that makes it easier to get power sports units into people’s hands, is something that benefits the whole industry. And this is just another part of that.Riley Wolfbauer 5:58
Yeah, it’s good to see the market normalized. And again, so thanks, Johnny. That about does it for today’s episode. As a reminder, you can purchase your all access pass to the auto finance Summit and the power sports finance summit to attend both events October 29. Through the 31st at the Bellagio in Las Vegas for 20% off, you can get your all access pass at WWW dot auto finance dot live. Thanks for joining us on the roadmap and be sure to follow us on Twitter and LinkedIn. We will see you online at Auto Finance News dotnet and here next time.
