The need to replace aging automobiles and a slow but growing labor market have fueled demand for both new and used cars and will continue to buoy the auto finance sector, according to William Strauss, senior economist at the Federal Reserve Bank of Chicago.
“We’ve seen recovery in the auto industry, largely due to the fact that the finance side of the business is probably one of the healthiest financial sectors the economy has right now,” Strauss told Auto Finance News before his presentation on the nation’s macroeconomic outlook at the 2014 Auto Finance Summit in Las Vegas. “You look at the mortgage market, it’s still very troubled,” he said, while in the auto sphere there’s been more willingness to accept borrowers with less than prime credit. “That’s allowing the greater auto industry to have sales that are quite good,” he said.
He also noted that one reason for increased competition in the auto finance space was due to strong risk performance. “When you look at people who are not paying their bills, who are falling behind with auto payments, the numbers are actually looking good,” Strauss said.
