Delinquencies across prime and nonprime securitized auto loans are moving closer to pre-pandemic levels, while rising interest rates and declining used-vehicle values are expected to lead to higher losses.
The rate of loans 60-plus days past due increased 10 basis points (bps) year over year to 0.45% in January, according to Kroll Bond Rating Agency. Nonprime 60-day delinquencies came in at 5.88%, up 100 bps YoY.
Meanwhile, February new-vehicle sales are forecasted to reach 1.12 million units, up 4.8% sequentially and 5.6% YoY, surpassing initial expectations. The estimated seasonally adjusted annualized rate (SAAR) for total light vehicle sales in February landed at 14.5 million units, down 3.8% YoY.
In this episode of the Weekly Wrap, Deputy Editor Amanda Harris discusses the top stories for the week ended March 3, and what is to come in the week ahead.
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Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.
Hello everyone and welcome to the roadmap from auto finance news since 1996, the nation’s leading newsletter and automotive lending and leasing. It is Monday, March 6. And I’m Amanda Harris. This is our weekly wrap on what happened in auto finance for the week ending March 3 2023. And auto news Volkswagen is expected to see a jump in sales this year as access to semiconductor chips improves, and the manufacturer works to meet pent up demand. In fact, vehicle sales industry wide are expected to improve as consumer demand remains robust February new vehicle sales are forecasted to reach 1.1 2 million units at 4.8% sequentially and 5.6% year over year, surpassing TrueCar’s initial expectations. The estimated seasonally adjusted annualized rate or SAAR for total light vehicle sales in February landed at 14 Point 5 million units down 3.8% year over year. Other forecasts paint a similar picture JP Morgan’s Equity Research forecasted February SAAR to land at 14 Point 3 million units while Autodata’s projection calls for 15 point 2 million units. Turning to Auto Finance News Tricolour Auto Acceptance told auto finance news this week that the company is expanding its software as a service venture, Tricolour Financial, which it first launched in 2021. tackler financial uses a company’s proprietary artificial intelligence power technology to allow dealerships to sell and finance new vehicles to Hispanic consumers who do not have a FICO score. When a dealership receives an application from an Hispanic borrower who does not have a traditional credit score they offer and the application to try color financial for decisioning. Providing the dealer with a path to sell and finance that vehicle for credit invisible consumers. Try color first tested the program last year with 12 individual dealerships in the Dallas Fort Worth Texas area. Closing 100 deals as proof of concept. The company is now working to launch the SAAS product with multiple dealer groups and later this year hopes to launch with manufacturers such as Ford and Toyota. Moving to a capital markets update, delinquencies across prime and non prime securitized auto loans are tracking closer to pre pandemic levels. While rising interest rates and declining us vehicle values are expected to lead to higher losses later this year. The rate of loans 60 plus days past due increased 10 basis points year over year 2.45% In January according to Kroll bond rating agency nonprime 60 Day delinquencies came in at 5.88%, up 100 basis points year over year, while 30 Day delinquencies are surpassing pre pandemic levels, loss rates are not going up at the same pace indicating consumers are missing one payment and cannot get themselves current, but is not yet going into a lot longer delinquencies or losses. annualized net losses across prime loans climbed eight basis points sequentially and 17 basis points year over year 2.43% In January, and non prime losses ticked up for the eighth consecutive month to 8.33%, which is up 31 basis points month over month and 289 basis points year over year. And losses are expected to go up this year as interest rates continue rising and vehicle values declined. This week. Stay tuned for updates on a new capital program launch loan term trends and industry partnerships. That about does it for today’s episode. Thanks for joining us on the roadmap and be sure to follow us on LinkedIn. We will see you online auto finance news.net and here next time