Auto loan defaults hit a historic low of 0.86% of the amount outstanding in May, according to the latest S&P/Experian Consumer Credit Default Indices, down from 0.93% a year earlier.
“Auto loans have completely recovered,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. He said it’s both encouraging and significant that defaults are down even though auto loan volume is up.
“It’s not that people are hunkered down, or anything like that,” he told Auto Finance News in a phone interview on Wednesday. “Auto sales are strong.”
Blitzer said May U.S. auto sales were the highest month since July 2005. At the same time, he said defaults are a bit lower than they were back then. “In 2004-2005, before the crisis, defaults were a touch higher than they are now,” he said.
According to Autodata Corp., U.S. auto sales were 1,635,090 in May, an increase of 1.6% from a year ago. Year to date, U.S. auto sales were up 4.5% to 7 million.
“Most consumer indices are positive,” Blitzer said. Besides auto sales, he cited sales of existing homes and household wealth. Last week, the Federal Reserve announced a new record for total U.S. household net worth of $84.9 trillion.
Blitzer said, “The frustration is, wage rates aren’t rising very quickly. People are seeing houses appreciate, so they’re getting weathier.” It just might not feel like it, he said.
