Podcast: ‘Weekly Wrap’ discussion on sales, pricing 

Amanda Harris 0:03
Hello everyone and welcome to the road map from auto Finance News.Amanda Harris 0:06
Since 1996, the nations leading newsletter and automotive lending and leasing, it is Monday, December 11th and Amanda Harris, joined by Riley Wolfbauer.
This is our weekly wrap on what happened in auto finance for the week ending December 8th, 2023.
This episode is sponsored by business law firm McGlinchey. In Economic News, the US labor market strengthened more than anticipated in November with non farm payrolls up 199,000, following 150,000 increase in October.
Auto workers who returned after being on strike accounted for a 30,000 uptick.
The unemployment rate also fell to 3.7% their growth is at odds with expectations that hiring would soften and lead to the Fed bringing down interest rates and auto finance. US Bank is gearing up to issue 2.5 billion of credit linked notes tied to a pool of auto loans, marking the 1st of this type of securitization for the bank.
Under the setup, the issue we’re essentially transfers credit risk tied to the collateralized loans to investors.
An auto lender activity Pagaya Technologies signed on a large captive finance company in the third quarter as the AI based financier continues to scale its auto business.
The lender, described as a top four OEM captive finance company by US vehicle sales and with a network of more than 2500 franchise dealerships, is the latest to underwrite loans to pagaya criteria.
Pagaya uses AI and machine learning to assess consumers creditworthiness and then purchases loans originated by banks and financiers.
Pagaya then immediately secured, as is the auto loans, and uses that funding for the next round of originations.
Pagaya has seen an uptick in auto originations and as a result has increased its cadence in the securities market having closed its fourth auto ABS deal of the year.
Just last month.
I don’t finance news is also pleased to announce that Dan Berce, GM Financial President and chief executive, is a 2023 auto finance executive of the year.
GM Financial posted year over year gains in origination volume during the past 3/4 despite market challenges.
GM Financials total managed portfolio also rose 5.2% to 115 billion as of September 31st.
From year end 2022, you can read the full feature on a website to learn more about bursts and the financier success this year, turning to vehicle sales.
Nearly every major manufacturer report of year over year increase in sales in November, driven by pin up demand and improved supply.
American Honda’s sales for one jump 32.8% while Hyundai Motor America and Volvo Car USA also saw double digit increases year over year.
Nationwide sales volume in November is expected to increase about 7% year over year to 1.2 million units, bringing the annual new vehicle sales forecast to 15.3 million units, which is up about 1,000,000 from a year ago but still down compared with 15.5 million units forecast in October.
And that’s from Cox Automotive and the used market used retail sales dipped in November, while prices declined, the Manheim used Vehicle Value Index decreased 5.8% year over year to 205.
Really, as a market is stabilizing, used retail sales resonated to be down 7% month over month and 2% year over year.
Meanwhile, leasing is also gaining traction amid affordability challenges.
Riley has the details there.Riley Wolfbauer 3:24
Yeah.
So what we’re seeing, well, we saw leasing first fall, umm, when interest rates were low and there wasn’t uh and we had inventory shortages, captives withdrew their leasing incentives.
But those incentives are starting to come back.
So once those incentives were withdrawn, we saw leasing go down to.
Uh, 21% in the third quarter 2022 Prime Leasing is now up to 27.4.
That level is still below the 21 levels in Q 32021.
It was at 29.4%, so leasing is coming back.
It’s still not quite at the level that we have historically seen, but it’s gaining traction as supplies back and OEMs are trying to move metal to make payments more affordable for consumers amid the high interest rates for a loan.
So for example, the Ford F-150 and the third quarter consumers could at least sit for an average of 594 and that’s compared with a $970 loan payment according to experience.
So the delta there is like there’s a huge difference.
Melinda Zabritski said that the average difference is about $140 between a loan payment to a lease payment.
So that’s like she said.
It typically sits around 1:30 to 1:40 in the second quarter.
It was a little bit higher.
It was closer to 150 and so, like I said, it’s sitting at that 140 number now.
And then just a few examples of other incentives that are out there in the market, Toyota is offering multiple lease deals through the end of the year, including the 2024 Toyota Corolla LE for 249 a month for 36 months and GMC is offering lease deals with 24 month terms and 1.9% APR for well qualified buyers on certain 23 and 24 models.
So it will be interesting to see going into the new Year, I’ll especially after the car buying season to finish up the year here.
How much leasing kind of rejuvenates? Again?
We’ll see where it goes in the fourth quarter.Amanda Harris 5:44
Yeah, definitely.
Will have to see if it starts getting closer to.
I think historically it’s around like 30% has been around 30% of the market and it’s it’s creeping up.

Riley Wolfbauer 5:49
Yeah.

Amanda Harris 5:52
But yeah, definitely still behind.
So we’ll see if the if that difference really draws people in, and now that supply is coming back up and there are more options for what vehicles you can leave.
So we’ll definitely keep a close eye on that.
Great.
Thanks, Riley.
That about does it for today’s episode.
Thanks for joining us on the roadmap and be sure to follow us on X, formally known as Twitter and LinkedIn, and we will see you online at autofinancethings.net and here next time.

Amanda Harris 0:03
Hello everyone and welcome to the road map from auto Finance News.Amanda Harris 0:06
Since 1996, the nations leading newsletter and automotive lending and leasing, it is Monday, December 11th and Amanda Harris, joined by Riley Wolfbauer.
This is our weekly wrap on what happened in auto finance for the week ending December 8th, 2023.
This episode is sponsored by business law firm McGlinchey. In Economic News, the US labor market strengthened more than anticipated in November with non farm payrolls up 199,000, following 150,000 increase in October.
Auto workers who returned after being on strike accounted for a 30,000 uptick.
The unemployment rate also fell to 3.7% their growth is at odds with expectations that hiring would soften and lead to the Fed bringing down interest rates and auto finance. US Bank is gearing up to issue 2.5 billion of credit linked notes tied to a pool of auto loans, marking the 1st of this type of securitization for the bank.
Under the setup, the issue we’re essentially transfers credit risk tied to the collateralized loans to investors.
An auto lender activity Pagaya Technologies signed on a large captive finance company in the third quarter as the AI based financier continues to scale its auto business.
The lender, described as a top four OEM captive finance company by US vehicle sales and with a network of more than 2500 franchise dealerships, is the latest to underwrite loans to pagaya criteria.
Pagaya uses AI and machine learning to assess consumers creditworthiness and then purchases loans originated by banks and financiers.
Pagaya then immediately secured, as is the auto loans, and uses that funding for the next round of originations.
Pagaya has seen an uptick in auto originations and as a result has increased its cadence in the securities market having closed its fourth auto ABS deal of the year.
Just last month.
I don’t finance news is also pleased to announce that Dan Berce, GM Financial President and chief executive, is a 2023 auto finance executive of the year.
GM Financial posted year over year gains in origination volume during the past 3/4 despite market challenges.
GM Financials total managed portfolio also rose 5.2% to 115 billion as of September 31st.
From year end 2022, you can read the full feature on a website to learn more about bursts and the financier success this year, turning to vehicle sales.
Nearly every major manufacturer report of year over year increase in sales in November, driven by pin up demand and improved supply.
American Honda’s sales for one jump 32.8% while Hyundai Motor America and Volvo Car USA also saw double digit increases year over year.
Nationwide sales volume in November is expected to increase about 7% year over year to 1.2 million units, bringing the annual new vehicle sales forecast to 15.3 million units, which is up about 1,000,000 from a year ago but still down compared with 15.5 million units forecast in October.
And that’s from Cox Automotive and the used market used retail sales dipped in November, while prices declined, the Manheim used Vehicle Value Index decreased 5.8% year over year to 205.
Really, as a market is stabilizing, used retail sales resonated to be down 7% month over month and 2% year over year.
Meanwhile, leasing is also gaining traction amid affordability challenges.
Riley has the details there.Riley Wolfbauer 3:24
Yeah.
So what we’re seeing, well, we saw leasing first fall, umm, when interest rates were low and there wasn’t uh and we had inventory shortages, captives withdrew their leasing incentives.
But those incentives are starting to come back.
So once those incentives were withdrawn, we saw leasing go down to.
Uh, 21% in the third quarter 2022 Prime Leasing is now up to 27.4.
That level is still below the 21 levels in Q 32021.
It was at 29.4%, so leasing is coming back.
It’s still not quite at the level that we have historically seen, but it’s gaining traction as supplies back and OEMs are trying to move metal to make payments more affordable for consumers amid the high interest rates for a loan.
So for example, the Ford F-150 and the third quarter consumers could at least sit for an average of 594 and that’s compared with a $970 loan payment according to experience.
So the delta there is like there’s a huge difference.
Melinda Zabritski said that the average difference is about $140 between a loan payment to a lease payment.
So that’s like she said.
It typically sits around 1:30 to 1:40 in the second quarter.
It was a little bit higher.
It was closer to 150 and so, like I said, it’s sitting at that 140 number now.
And then just a few examples of other incentives that are out there in the market, Toyota is offering multiple lease deals through the end of the year, including the 2024 Toyota Corolla LE for 249 a month for 36 months and GMC is offering lease deals with 24 month terms and 1.9% APR for well qualified buyers on certain 23 and 24 models.
So it will be interesting to see going into the new Year, I’ll especially after the car buying season to finish up the year here.
How much leasing kind of rejuvenates? Again?
We’ll see where it goes in the fourth quarter.Amanda Harris 5:44
Yeah, definitely.
Will have to see if it starts getting closer to.
I think historically it’s around like 30% has been around 30% of the market and it’s it’s creeping up.

Riley Wolfbauer 5:49
Yeah.

Amanda Harris 5:52
But yeah, definitely still behind.
So we’ll see if the if that difference really draws people in, and now that supply is coming back up and there are more options for what vehicles you can leave.
So we’ll definitely keep a close eye on that.
Great.
Thanks, Riley.
That about does it for today’s episode.
Thanks for joining us on the roadmap and be sure to follow us on X, formally known as Twitter and LinkedIn, and we will see you online at autofinancethings.net and here next time.