This week, news of a 4.8% contraction in the nation’s gross domestic product in the first quarter signaled a recession brought on by the economic fallout of COVID-19, and auto lenders are stocking up on cash.
Ford Motor Co., for one, pulled “every appropriate lever” to bolster its liquidity position, which the automaker anticipates will last through the end of the year with “no production or financing actions,” according to Chief Executive Jim Hackett. Currently, Ford Motor has $35 billion in liquidity, and captive Ford Credit has $28 billion. J.P. Morgan estimates that Ford will burn through between $14 billion and $19 billion of cash in the second quarter alone.
Santander Consumer USA, too, is setting aside cash in response to the pandemic. The subprime lender set aside $442 million for losses related to the novel coronavirus, in addition to $2.5 billion for CECL reserves. Total allowances for credit losses came to $5.5 billion on a total portfolio of $47.6 billion.
In this editors’ roundtable, Nicole Casperson, Joey Pizzolato and JJ Hornblass discuss news developments during the week ending May 1, and hint at what Auto Finance News will cover in the forthcoming week.