Podcast: ‘Weekly Wrap’ on Q2 earnings kickoff 

Amanda Harris 0:27
Hello everyone and welcome to the roadmap from auto Finance News. . Since 1996, the nations leading newsletter on automotive lending and leasing, it’s Monday, July 15th, and I’m Amanda Harris, joined by Ashley Savage and James Van Bramer. . This is our weekly wrap on what happened in auto finance for the week ending July 12th, 2024 and Economic News. . The core consumer price index, which excludes food and energy costs, climb point 1% for may, the smallest event since August 2021, and rows 3.3% year over year, which is the slowest pace in more than three years. . The numbers indicate rate cuts could come this fall, and Automotive News electric vehicle sales climbed 11.3% year over year to about 330,400 units in Q2, boosted by incentives, price cuts and leasing, EB is made up about 8% of total new vehicle sales in Q2, up from 7.1% and the first quarter and 7.2% in the second quarter of 2023. . A wider product mix is helping support EV sales with large manufacturers such as General Motors introducing several new models to the market. . Notably, EV leader Tesla sales dipped 6.3% year per year in Q2, and Tesla’s market share in the US fell to 49.7%, marking the first time the EV maker share fell below 50%. . Also an auto market update, several retailers have indicated that impact stemming from multiple cyberattacks against dealer software provider CDK Global could have some impact on their sales and earnings performance. . Sonic Automotive has indicated the retailer expects to see a material impact on their second quarter earnings after the attacks shut down operations and still leaves several effective systems still offline. . Penske, AutoNation Group 1 Automotive and Lithia Motors also have filed disclosures with the Securities and Exchange Commission related to concerns following the disruptions in compliance news, the Consumer Financial Protection Bureau has ordered Fifth Third Bank to pay $20 million in penalties related to allegations that the lender force consumers to pay for vehicle insurance who already had accurate adequate coverage leading to fees and vehicle repossessions. . According to Bureau, the penalty also resolves a lawsuit filed in March 2020 accusing the Bank of opening false accounts and consumers names. . Last week also marked the start of second corner earnings, with the banks kicking things off and James has the details there. . So James. .
James Van Bramer 2:58 Thank you, Amanda. . So last week we had Chase Auto and Wells Fargo report their second quarter earnings and much like the first quarter, we saw that the major banks did log declines in originations and outstandings, although say sorry, sorry Chase did not logging year over year decline in outstandings but most marking. . So again, we saw slight decline in the appetite for auto loans from these two weeks. . Thanks. . As I mentioned, Chase Auto, sorry, Wells Fargo auto originations were down 23% year over year, while it’s outstandings were down 14% year over year. . Meanwhile, Chase saw so regulation value shrink 10% year over year. . While it’s outstandings were actually up 5.4% year, the year Wells Fargo had signaled that it would take a credit tightening actions and White 2021, which had helped, which according to his studies earning helped the bank credit performance mostly improve across the board. . Chase’s credit performance also mostly improved, but it was slightly more mixed than while spargos we have more bank earnings to report the yeah this week and the coming weeks. . But so far, the early indication appears to be that the banks remain in sort of the same position as they were in quarter one. . When it comes to the auto industry, which is just a slight dip in terms of appetite at that early notion holds that the IT it, it remains to be seen if that early notion does hold. . Bush will depend on again the upcoming bank earnings, which will be reporting on. . We will also be monitoring how potential rate cuts, as we mentioned earlier, could happen as soon as the fall might have an impact on banks. . Appetites for auto loans and perhaps other lender appetites for auto loans, but that in mind, we also have a few updates on the powersports, powersports market. . I take it away. . Ashley Savage 4:56 Yeah. . Thanks James. . The powersports world right now is really a mixed bag of sales performances, demand and inventory levels. . You know, we’re two weeks into July now. . And when you look at June, the retail environment remained challenged. . You’ve got powersports manufacturers working to align inventory with consumer demand, especially as demand soften from the high seen during the pandemic. . But even as manufacturers work to align inventory to demand, the results are different from dealer to dealer, according to BMO Capital Markets June Dealer survey published last week, inventory levels were about right for 57% of dealers, while 41% indicated that levels were too high. . Still more dealerships in June reported about right levels than in May. . Much like inventory levels, sales performance varied in June as demand continued to soften, give an elevated rates seen across the industry. . BMO survey indicated that on average, sales were down 3% in June compared with an average 3.7% decline in May of the more than 40 respondents to the survey, nearly 62% of dealers saw sales decline in June, up from 51% who reported the same in May tells the clients range from nearly flat to down more than 20%. . On the other hand, about 38% of dealers reported an increase in sales, down from 49% May. . The survey showcases this bigger picture that we’ve seen for some time, which is that retail environment continues to be challenged even during peak demand season and continues to affect powersport lenders and let leaders, excuse me, an entirely different ways depending on their ordering, cadence, manufacturer and dealer relationships, consumer demand and other factors. . Also in power Sports News, powersports, lender Octane returned to the asset backed securitized market with a 365 million issuance on July 11th. . The deal reflects the financiers projected origination growth, stabilizing credit standards and rising approval rates octanes July transaction marks the lender second ABS issue with issuance of 2024 following a 300,000,000 issuance on February 16th, according to Finsight. . More details about Octanes latest transaction and its efforts to reach 1.5 billion in originations this year will be available on our site later this evening. . Now back to Amanda for some closing comments. . Amanda Harris 7:05 OK, great. . Thank you both and that will do it for today’s episodes. . As a reminder, registration is open for the 2024 Auto Finance Summit and Powersports Finance Summit. . Returning to Vegas in October, more information can be found at Autofinance News or Sorry Auto Finance Dot Live. . And thank you for joining us on the roadmap and be sure to follow us on X and LinkedIn and we will see you online at autofinancenews.net and here next time.