Podcast: ‘Weekly Wrap’ on Q3 sales, UAW strike, EVs

Riley Wolfbauer 0:09
Hello everyone and welcome to the roadmap from auto finance news since 1996, the nation’s leading newsletter on automotive lending and leasing. It is Monday, October 2 and I’m Riley Wolfbauer joined by Amanda Harris. This is our weekly wrap on what happened in auto finance for the week ending September 29 2023. This episode is sponsored by AI software provider informed IQ. In automotive news. The UAW strike continues on to its third week as the union has staged multiple walkouts at Ford Motor Company, General Motors and Stellantis NV facilities since September 15. The UAW is seeking a 30% pay raise and has said more workers will walk out at other distribution plants if a deal isn’t reached. A prolonged strike could affect vehicle production and lead to an inventory shortage in a slowly recovering supply market. Driving up car prices which have begun to come down in the recent months inventory has has been improving following pandemic induced supply chain constraints. new vehicle supply industry wide increased 63% year over year to more than 2 million units as of the end of the third quarter occurred according to Cox automotive. After the strike began inventory started tightening that every affected brand. The industry has gone from 57 days of supply and aggregate when the strike started to 52 days now. new vehicle sales jumped in the third quarter and are projected to be up 15.5% year over year to 3.9 million units but down 4.4% compared with the second quarter, pent up demand created by the post COVID supply disruptions have been driving sales this year. The seasonally adjusted annualized rate for the third quarter is forecasted at 15 Point 4 million units up compared with 13 point 4 million in q3 2022. But down from 15 point 6 million in the second quarter. Evie sales are continuing to garner more market share in the third quarter. Amanda you covered that last week. Want to give us the details.Amanda Harris 2:04
Yeah, so Evie sales continue to take up it’s not really that surprising. As more models come to market. We’ve seen price decreases happen kind of across the board. And we know that LSTMs and everyone’s kind of pushing Evie sales. So they’re continuing to grow. As of q3, they made up about 8% of total vehicle sales nationwide about 308,000 units. For sales of EVs during the quarter. We’re on we’re on track to some estimates say will surpass the 1 million mark by the end of the year. That could be a pretty big milestone, you know, for the country. As far as Evie adoption goes, that are kind of remains to be seen. It depends on how production you know, kind of goes with everything going on there. And it depends on how adoption goes. We know that you know even though consumer adoption has been taking up, we have seen inventory really building for EVs. In fact AV inventory nationwide was at 89 days supply. You’re today in September, which is up 271% year over year. So production is definitely pretty strong for EVs. But adoption is still kind of trickling in. So there’s a little bit of concern there. But we are starting to see more and more, you know, people kind of put out more affordable models trying to get to that mainstream segment trying to move on from EVs being very much a luxury item. But we’re still not there yet. So it’s kind of remains to be seen how quickly maybe adoption will pick up. But evey sales are still growing. And we’re kind of you know, seeing very good signs there that they will continue taking up the rest of the year. So primarily, you know, in California, some of the states for adoption has been pretty strong. But we are seeing you know, people try to you know, push into other areas, really get the word out on EVs and trying to get an infrastructure in place. So that’s something that the industry as a whole is working toward. Obviously, it’s going to take a little bit of time, and I don’t think we’re going to be there really see, you know, huge numbers at the end of this year. But pretty much everyone makes American included, they did a forecast, they, you know, definitely see EVs kind of going up penetration continue to go up, could be into the 20%, you know, in a couple of years is kind of what they’re projecting. So we’ll have to keep a close eye on that and just see what happens as far as infrastructure goes and getting into those areas that aren’t really big on EVs now, but could be depending on the pricing models coming to market and the push by kind of everyone in the industry.

Riley Wolfbauer 4:23
Yeah, and then it’ll be interesting to see as inventory builds, if OEMs have to adjust prices, knock those down a little bit. And then that could also open up adoption for consumers as well, so we’ll keep a close eye on it as we keep on covering it. In auto finance news Carmax auto finance logged 4.3% year over year decline in origination volume in the second quarter of its fiscal year 2024 clocking in at $2.2 billion as elevated interest as elevated interest rates weighed on consumer affordability, still Carmax auto finance has penetrated rate jumped 106 basis points to 46.4%. Their outstandings landed at 17 Point 3 billion up 6.8% year over year. net interest margin on the portfolio fell to 6.1% in the quarter flat from the prior quarter but down from 7.3% in the same period last year, increases in consumer rates were more than offset by rising cost of funds. Meanwhile, credit union liquidity continues to feel the squeeze as deposit inflows slow and interest rates remain at historic levels following market share gain in the last two years. Las Vegas based Silver State schools credit union for one liquidity is at an all time low. President and Chief Executive Scott Arkells said at the open lending executive roundtable in Austin, Texas last Tuesday. He said the credit union is state chartered, so it requires a 5% liquidity percentage and the credit unions liquidity has remained around six to 7%. Two years ago at the same time, the credit union had 20% to 30% liquidity in power sports and auto run Milan has completed its planned wind down of its automotive business as it focuses on growing its powersport retail business. The company also plans to sell its loan portfolio as part of a debt restructuring plan. Rumble on finances loan losses totaled $3.3 million in the second quarter, bringing losses across the portfolio to $5.4 million for the first half of the year. According to the company’s earnings supplement, rumble on plans to sell the loan portfolio and pay off the outstanding balance on its $25 million credit facility with Credit Suisse. rhumbline is focused on increasing retail power sports unit sales in store and online to boost revenue after adding 60 franchises in 2022. That about does it for today’s episode. As a reminder, you can purchase your all access pass to the auto finance Summit and the power sports finance summit to attend both events October 29 through 31st at the Bellagio in Las Vegas for 20% off, you can get your all access pass at WWW dot auto finance dot live. Thanks for joining us on the roadmap and be sure to follow us on X formerly known as Twitter and LinkedIn. We will see you online at Auto Finance News dotnet and here next time

Riley Wolfbauer 0:09
Hello everyone and welcome to the roadmap from auto finance news since 1996, the nation’s leading newsletter on automotive lending and leasing. It is Monday, October 2 and I’m Riley Wolfbauer joined by Amanda Harris. This is our weekly wrap on what happened in auto finance for the week ending September 29 2023. This episode is sponsored by AI software provider informed IQ. In automotive news. The UAW strike continues on to its third week as the union has staged multiple walkouts at Ford Motor Company, General Motors and Stellantis NV facilities since September 15. The UAW is seeking a 30% pay raise and has said more workers will walk out at other distribution plants if a deal isn’t reached. A prolonged strike could affect vehicle production and lead to an inventory shortage in a slowly recovering supply market. Driving up car prices which have begun to come down in the recent months inventory has has been improving following pandemic induced supply chain constraints. new vehicle supply industry wide increased 63% year over year to more than 2 million units as of the end of the third quarter occurred according to Cox automotive. After the strike began inventory started tightening that every affected brand. The industry has gone from 57 days of supply and aggregate when the strike started to 52 days now. new vehicle sales jumped in the third quarter and are projected to be up 15.5% year over year to 3.9 million units but down 4.4% compared with the second quarter, pent up demand created by the post COVID supply disruptions have been driving sales this year. The seasonally adjusted annualized rate for the third quarter is forecasted at 15 Point 4 million units up compared with 13 point 4 million in q3 2022. But down from 15 point 6 million in the second quarter. Evie sales are continuing to garner more market share in the third quarter. Amanda you covered that last week. Want to give us the details.Amanda Harris 2:04
Yeah, so Evie sales continue to take up it’s not really that surprising. As more models come to market. We’ve seen price decreases happen kind of across the board. And we know that LSTMs and everyone’s kind of pushing Evie sales. So they’re continuing to grow. As of q3, they made up about 8% of total vehicle sales nationwide about 308,000 units. For sales of EVs during the quarter. We’re on we’re on track to some estimates say will surpass the 1 million mark by the end of the year. That could be a pretty big milestone, you know, for the country. As far as Evie adoption goes, that are kind of remains to be seen. It depends on how production you know, kind of goes with everything going on there. And it depends on how adoption goes. We know that you know even though consumer adoption has been taking up, we have seen inventory really building for EVs. In fact AV inventory nationwide was at 89 days supply. You’re today in September, which is up 271% year over year. So production is definitely pretty strong for EVs. But adoption is still kind of trickling in. So there’s a little bit of concern there. But we are starting to see more and more, you know, people kind of put out more affordable models trying to get to that mainstream segment trying to move on from EVs being very much a luxury item. But we’re still not there yet. So it’s kind of remains to be seen how quickly maybe adoption will pick up. But evey sales are still growing. And we’re kind of you know, seeing very good signs there that they will continue taking up the rest of the year. So primarily, you know, in California, some of the states for adoption has been pretty strong. But we are seeing you know, people try to you know, push into other areas, really get the word out on EVs and trying to get an infrastructure in place. So that’s something that the industry as a whole is working toward. Obviously, it’s going to take a little bit of time, and I don’t think we’re going to be there really see, you know, huge numbers at the end of this year. But pretty much everyone makes American included, they did a forecast, they, you know, definitely see EVs kind of going up penetration continue to go up, could be into the 20%, you know, in a couple of years is kind of what they’re projecting. So we’ll have to keep a close eye on that and just see what happens as far as infrastructure goes and getting into those areas that aren’t really big on EVs now, but could be depending on the pricing models coming to market and the push by kind of everyone in the industry.

Riley Wolfbauer 4:23
Yeah, and then it’ll be interesting to see as inventory builds, if OEMs have to adjust prices, knock those down a little bit. And then that could also open up adoption for consumers as well, so we’ll keep a close eye on it as we keep on covering it. In auto finance news Carmax auto finance logged 4.3% year over year decline in origination volume in the second quarter of its fiscal year 2024 clocking in at $2.2 billion as elevated interest as elevated interest rates weighed on consumer affordability, still Carmax auto finance has penetrated rate jumped 106 basis points to 46.4%. Their outstandings landed at 17 Point 3 billion up 6.8% year over year. net interest margin on the portfolio fell to 6.1% in the quarter flat from the prior quarter but down from 7.3% in the same period last year, increases in consumer rates were more than offset by rising cost of funds. Meanwhile, credit union liquidity continues to feel the squeeze as deposit inflows slow and interest rates remain at historic levels following market share gain in the last two years. Las Vegas based Silver State schools credit union for one liquidity is at an all time low. President and Chief Executive Scott Arkells said at the open lending executive roundtable in Austin, Texas last Tuesday. He said the credit union is state chartered, so it requires a 5% liquidity percentage and the credit unions liquidity has remained around six to 7%. Two years ago at the same time, the credit union had 20% to 30% liquidity in power sports and auto run Milan has completed its planned wind down of its automotive business as it focuses on growing its powersport retail business. The company also plans to sell its loan portfolio as part of a debt restructuring plan. Rumble on finances loan losses totaled $3.3 million in the second quarter, bringing losses across the portfolio to $5.4 million for the first half of the year. According to the company’s earnings supplement, rumble on plans to sell the loan portfolio and pay off the outstanding balance on its $25 million credit facility with Credit Suisse. rhumbline is focused on increasing retail power sports unit sales in store and online to boost revenue after adding 60 franchises in 2022. That about does it for today’s episode. As a reminder, you can purchase your all access pass to the auto finance Summit and the power sports finance summit to attend both events October 29 through 31st at the Bellagio in Las Vegas for 20% off, you can get your all access pass at WWW dot auto finance dot live. Thanks for joining us on the roadmap and be sure to follow us on X formerly known as Twitter and LinkedIn. We will see you online at Auto Finance News dotnet and here next time