It was an interesting year. Early in 2018, Fiat Chrysler Automobiles said it would form a captive unit. The end of the year saw the arrest of Renault-Nissan-Mitsubishi alliance head Carlos Ghosn. And there was plenty of news in between. What follows are AFN editors’ picks for top five stories of 2018:
Fiat Chrysler Automobiles to Form Captive
Fiat Chrysler Automobiles Group in May said it would form a captive unit. The move came almost eight years after Cerberus Capital Management sold Chrysler Financial to TD Bank. However, FCA has yet to release any details on how it plans to create a lending arm.
S&P Downgrades Honor Finance’s ABS
S&P Global Credit Ratings in July downgraded subprime auto lender Honor Finance’s 2016 ABS issuance because, S&P said at the time, the bonds issued are “at risk of not being repaid.” Honor’s Class C notes, originally rated BB-, were downgraded to CCC+. It was the first post-crisis downgrade of a subprime auto ABS. From 2009 to July 2018, subprime loan rating actions included 1,090 upgrades and zero downgrades. In late November, S&P Global Ratings noted that Honor Finance’s 2016 ABS issuance is on track for a second downgrade.
GM’s Barra to Directly Oversee GM Financial
Earlier this month, GM Chief Executive Mary Barra took direct responsibility for GM Financial after GM’s President Dan Ammann, the company’s president who had been overseeing GM Financial and other operations, was named chief executive of the OEM’s Cruise Automation autonomous vehicle subsidiary. One analyst, Jeremy Acevedo, Edmund’s manager of industry analysis, saw the move leading to tighter integration between the OEM and its captive finance arm. GM did not respond to a request for comment.
Auto Finance Feels the Pressure of Fed’s Rate Hikes
Although rate hikes signal the Federal Reserve‘s confidence in the economy, lenders are worried higher rates will lead to slower new car sales. The Fed boosted interest rates four times in 2018, the latest coming in mid-December. Rising interest rates can contribute to a market decline as higher rates make used vehicles more attractive than new vehicles, Doug Evans, senior director of remarketing at Hyundai Capital America, told Auto Finance News.
Renault-Nissan-Mitsubishi’s Ghosn Arrested
Carlos Ghosn, who headed the Renault-Nissan-Mitsubishi alliance, was arrested in November by Japanese authorities who say he underreported his compensation in financial reports. Ghosn, who has not been released, has maintained his innocence, according to reports. Since his arrest, Ghosn has been replaced as chairman of Nissan and Mitsubishi Motors. Renault holds a 43.5% stake in Nissan, while Nissan owns 15% of Renault. Mitsubishi joined the alliance in 2016 after Nissan purchased 34% of its stock.Like This Post