3 key themes for this week’s Auto Finance Summit

LAS VEGAS — Finally, industry participants will come together this week at the Auto Finance Summit, after many long, pandemic-filled months apart.

After all this time, what are the key themes that will fill the agenda at the summit, other than the relief of networking again with industry colleagues?

Here are three key themes that will form the backdrop of nearly all the sessions planned for the Auto Finance Summit, which starts Wednesday.

1. Semiconductor chips, and the lack thereof

U.S. new-vehicle sales fell last September and last August, and posted lackluster totals last July. The problem is largely blamed on the semiconductor shortage.

To give a sense for the shortage, consider data on lead times — which measures how long it takes between when a chip is ordered and when it is delivered to the customer — offered by Susquehanna Financial, the research and investment firm, as quoted by The Wall Street Journal. According to Susquehanna, lead times soared to an average of nearly 22 weeks last quarter compared with just over 13 weeks at the end of 2020. That is the longest lead time since Susquehanna began tracking it in 2013.

While average vehicle prices and rates were high, yielding enviable revenue and profitability, the chip shortage is the “Debbie Downer” for the industry. This is equally true in powersports, for which sales numbers for motorcycles and other vehicles are at record levels — but could have been even higher.

How long will the shortage last? How has it changed the auto market? Which of those changes will be long-lasting, and what do they mean for auto finance? These are key questions for Summit attendees.

2. Drinking the EV Kool-Aid

Name an automotive manufacturer and you’ll find an electric-vehicle program in their strategic plan. This is exemplified by General Motors, which earlier this month offered investors a full-throated EV strategy. The EV dynamic is coloring how the industry views not just 2022 car lineups and sales, but how auto finance will adapt over the longer-term. Some view the EV paradigm shift as potentially altering the core business model of the auto finance industry. Others think we are far away from an auto industry without ICE (internal combustion engines). This debate will be on full view at the summit.

3. The pandemic (yeah, that pandemic)

From how auto finance industry participants live, work, spend, how performance metrics in 2022 will fair — the pandemic is the front-and-center factor that will dictate the industry’s future. Obviously, the chip shortage is a byproduct of the pandemic. The role of the dealership is in flux, as is the allocation of auto-industry resources to product development. Put another way, the long-term industry outlook just gets cloudier with the pandemic continuing apace.