Not Bad: Market Conditions Appear Favorable, Although Not Stellar

LAS VEGAS–The feel from day one of the Auto Finance Summit, which started yesterday and continues today here, suggest that current market conditions favor industry expansion, although no lender called it the best auto finance market ever. Not by a long shot.

Solid new car sales, which should end in the 13 million range for 2011, have provided a boon to lenders and lessors. But with the improved origination volume this year have come remarkably varied underwriting, and in some cases — as evidenced in a presentation by Kevin Borgmann, president of Capital One Auto Finance — wildly irrational pricing and risk assessment.

Not surprisingly, the overall economy remains a trouble spot for lenders. William Strauss, senior economist of the Federal Reserve Bank of Chicago, suggested that attendees watch today’s GDP numbers for anything above 2%. Indeed, GDP came in at 2.5% today.  

And while that should encourage lenders, the fact is that the word in the exhibit hall was, by and large, that business was “OK, not great.” Certainly, the increase in investment dollars coming into the industry is a positive, and more than one lending company has its goals set on massive origination growth. But I sensed a certain “been there, done that” weariness. Lenders seem more aware of the precariousness of ignoring economic realities in the face of a fine year for originations. And that seems to be the most prudent approach of all.

Check out Twitter tweets from today’s sessions at the hashtag #afs11 or here on AutoFinanceNews.net.