Weekly Wrap: Lenders consider benefits of force-placed insurance 

Amanda Harris 0:23 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, August 19th. . I’m Amanda Harris, joined by Ashley Savage and James Megan Bramer. . This is our weekly wrap and what happened in auto finance for the week ending August 16th, 2024 and economic news applications for US unemployment benefits decreased by 7000 to 227,000 in the week ended August 10th, prompting economists to watch for signs that the labor market may be winking faster than anticipated after the jobless rate rose for a fourth month in hiring slowed and auto finance, credit access tightened for the 4th consecutive month in July, but average transaction prices dipped, painting a mixed view of the state of the market for consumers. . The dealertrack headed Availability Index declined 1.5% year over year to 92.9 in July. . Incentives rose to 7% of average transaction prices compared with 4.4% of ATP a year ago and average transaction prices ticked down .2% year over year to $48,401.00. . EV incentives were 73% higher than the industry average, with the average incentive package on a new EV at more than 12% of the transaction price. . Credit access also tightened the most across certified pre-owned loans with availability down 2.5% year over year, which is driven by increased yield spreads, decline in approval rates and an uptick in down payment amounts. . Meanwhile, originations industrywide through April ticked down .7% year over year to about 242 billion, while fintech origination volume increased 12% year over year to 454 million, according to the latest Equifax data, which was presented last week. . Fintech originations make up about 2.2% of total auto originations as of April 24th. . So we’ll look into it a little bit more pretty interesting last week also brought a glimpse of the subprime auto finance market and James has a details there, James. . James Van Bramer 2:29 Thanks, Amanda. . So as inventories continued to come back, I’m here in that there are some real opportunities for buy here, pay dealers and some from LENDERS. . Obviously, managing inventory is certainly a hot topics. . It’s interest rates remain high, which has brought up poor planning expense, which we saw rise and interest rates, but the added selection of variables could spell opportunity in the marketplace. . A core data for one expects that expects to triple attack. . Expects to have triple digit growth this year with total origination value come again at a hair over $500 million of core data usually regulates loans either with buy here, pay here dealers or in the subprime space, Agora CEO Steve Burke added. . That, as banks have started to tighten and become less active in the market, along with some other treated traditional auto lenders, that that should truly spell opportunity for buy here, pay dear pie. . Buy here. . Pay here dealers and subprime folks on the insurance fraud. . We’d have seen that full coverage insurance has risen 15% in the first half of 2024, so more than $2300 a year. . We also saw last week that motor vehicle insurance continues to outpace inflation at 18.6 rising 18.6% year over year in July, even as in core inflation has continued to cool. . According to the most recent CPI report, one thing consumers are doing more often, experts tell me, is opting for liability only insurance versus full coverage now. . This would this lowers the total yearly cost of insurance, but it leaves the asset, the vehicle less protected. . That has LED some subprime lenders to consider force placing insurance, which is essentially a way to collect, protect the collateral and ensure that the asset is financially protected. . As this option becomes more widely used, we have seen some scrutiny pick up on it a bit, which which makes it incumbent on lenders to ensure they are maintaining compliance. . The other thing to keep in mind regarding force placed insurance is how that additional cost might affect the consumer. . In one sense, you may be protecting the lender may be protecting the asset in the vehicle, which is beneficial, but in another sense that payment could be what pushes a consumer into the phone. . So it’s kind of a balancing act at the moment, but that’s definitely something we will look at in the forward that’s about all for me. . We had some interesting updates in Powersports. . However you have. . Details on that. . Ashley Savage 5:07 Yeah. . Thanks James. . Last week, Powersports dealer group Lazydays finance and insurance revenue hit 16 million in Q2, up 5.4% sequentially, but down 9.6% year over year to year over year decline in F and I revenue by days scuse Me Lazy Days joined F and I year over year declines also reported by powersports Retailer Rumbleon in the second quarter. . Rumbleon’s F and I revenue total 29.7 million in Q2 down 10.5% year over year. . Camping World and marine retailer Marine Max, however, both posted year over year increases to their F and I revenue and their latest earnings reports Camping World’s second quarter F and I came in at 179 million up 7.2% year over year while Marine Max’s F and I revenue increased 3.7% year over year to 22.7 million in Q3 of the retailer’s fiscal year 2024, which ended June 30th. . On the retail side, BMW’s latest Powersports dealer survey indicated that the powersports sales were down 4.6% year over year on average in July. . That’s up from 3% in June and an average 3.7% year over year decline in May. . If there’s one thing at the latest batch of earnings and BMO survey highlighted, it’s at the retail environment is still challenged as ongoing inflationary pressures continue to dampen retail demand. . This summer, I’ll chat more about that in my upcoming feature, which will breakdown how powersport players are navigating the existing market headwinds, how incentives continue to be the key to moving inventory for some dealers and what we can somewhat expect the market to look like in the coming month. . That’s all I have on the powersport front, so I’ll hand it back to Amanda for some closing comments. . Amanda Harris 6:45 Great. . Thank you, Ashley and James. . And that will do it for today’s episode. . As a reminder, registration is open for the 2024 Auto Finance Summit and Powersports Finance Summit. . Returning to Vegas in October, you can also announce submit your nominations for the Auto Finance Excellence and Power Sports Achievement Awards, which will be presented during the events. . You can find more information on registration, the events and the awards all at auto finance Dot live and they give it joining us on the roadmap and be sure to follow us on X and LinkedIn and we will see you on autofinance.net and here next time.