Podcast: ‘Weekly Wrap’ on capital funding, competition

Auto lenders have been active in the past week in funding initiatives, while competition has ramped up across the market. Lendbuzz secured a $330 million forward flow facility with AB CarVal , an alternative asset management company that became Lendbuzz’s fifth financing partner. Prime and subprime auto lenders also issued nearly $5 billion of new asset-backed securities volume, accounting for 10% of the $48 billion in total issuance this year. Meanwhile, captives have held underwriting standards steady despite elevated interest rates and compressed profit margins and are gaining market share largely due to incentives. The market is also responding to an uptick in negative equity after two years of elevated used-vehicle values, with many consumers now upside-down on their auto loans by thousands of dollars. In this episode of the “Weekly Wrap,” Auto Finance News Editor Joey Pizzolato and Deputy Editor Amanda Harris discuss the top trends during the week ended March 22. Subscribe to “The Roadmap Podcast” on iTunes or Spotify , or download the episode. Registration is now available for the annual Auto Finance Summit East 2024, May 1-3 in Nashville, Tenn., which gathers lenders, dealers and fintech innovators in an event designed to bring the power of technology to a cross section of industry players. Visit AutoFinance.Live to learn more. Transcript: Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Amanda Harris 0:04 Yeah. Hello everyone and welcome to the roadmap from auto Finance. News is 1996 and nations leading News. I don't automotive lending and leasing it is Monday, March 25th and I Amanda Harris joined by Joey Pizzolato. This is our weekly route and what happened in auto finance for the week ending March 22nd, 2024 and iconic News. The Federals are of last week voted to leave the benchmark federal funds rate in a range of 5.25% to 5.5%, the highest level since 2001, for the 5th consecutive meeting. While acknowledging they plan to pass three quarter rate quarter point rate cuts this year, cuts aren't likely until officials are confident inflation is moving closer to the 2% target and let your vehicle News Evie Maker Lucid Group has secured $1 billion from its biggest investor Ayar Third Investment Co, Saudi Arabia's public investment fund for capital expenditure and working capital, the funds come as a US based. Lucid has been straining to scale its output. Evie maker Fisker and other News is facing potential bankruptcy asset Sales or restructuring measures after negotiations with the large automaker for an influx of cash ended without a deal. The company is working to renegotiate financing terms with an investor while reviewing its options in light of a lack of capital, an auto industry News Stellantis is cutting 400 jobs related to the automaker shift of its product lineup toward electric vehicles. The reductions affect about 2% of the company's engineering, technology and software staff and take effect March 31st, and powersports limited snowfall has led to decreased demand in Sales for snowmobiles this season with dealers who sell Polaris snowmobiles reported an average sales decline of 20.5% year over year. In February, Octane snowmobile originations are about flat or down year over year as Sales dipped at the end of February into March. Dealers are also selling higher price, no mobile units as auction as they look to liquidate unsold inventory quickly. So we values ticked up 2.3% sequentially in February. All others tower sport segments, so all values decline in February as dealers had enough inventory. An auto finance captives have held underwriting standards steady despite elevated interest rates and compressed more profit margins and are gaining market share largely due to incentives. Southeast Toyota Finance, for one, offers a supportive purchase policy with favorable deal terms for dealers that provide the captive with a specific percentage of their nonprime and prime financeable business. The captive was offering low rate and leasing deals on certain vehicles. Meanwhile, negative equity is something the industry is keeping an eye on, while negative equity is always been part of the equation in auto finance deals, elevate used vehicle values have kept those concerns at a minimum for more than two years. Consumers who bought higher priced cards? A few years ago and are now looking to purchase their next vehicle or finding themselves upside down, their auto loan and having to build negative equity into their Next financing transaction, making it challenging for some consumers to qualify and forcing dealers to negotiate deals at a higher level than they have in the past few years. This week also marked a large volume of capital market activity as lenders shore up funding. Joey has the details, Joey. Joey Pizzolato 3:33 Thanks. It was a busy couple weeks for the auto ABS market last week. 5.8 billion in auto ABS deals came to market across all asset classes as well as all credit tiers, Chase Auto, GM Financial, VW Credit, Credit Acceptance Corp, Prestige financial services and Valley Strong Credit union all came to market last week. That follows 5.7 billion in issue inches it new issuances for the week of March 11th, notably in no in during that week. GreenState Credit Union made its first issuance debut with a deal backed by Prime Auto loans. The deals follow all the the busy two weeks equals over 11 billion in new issuance volume following the SF Vegas and Conference in Las Vegas earlier this month, reflecting a strong ABS market. Six of those deals were upsized outside of the ABS market. Lendbuzz also secured a $330 million forward flow arrangement with private equity and alternative investment group, maybe CARVAL, marking its 5th financing partner, whether that be through, you know, warehouse or forward flow arrangements. So it was a good week for funding. Amanda Harris 4:55 Yeah, definitely. I imagine there will be continued funding activity. It's already still continuing to be strong over the next few weeks and into the rest of the year as well. So we'll keep an eye on that for sure. Great. Well, that'll do it for today's episode. TuneIn this week for other updates and on finance industry. And thank you for joining us in the road map. Be sure to follow us on X, formally known as Twitter and LinkedIn, and we will see you online at autofinancenews.net and here next time.

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