GM Sales Soar In May On Easy Credit As 74 More Deaths Revealed Due To Faulty GM Switches

Tyler Durden's picture




 

It seems that if the monthly payment is right, then no matter how "Sarcophagus-like" GM's cars are, Americans will lever up and buy 'em. Many were shocked to hear that GM reported the highest sales this month since August 2008 - especially in light of the record-breaking recalls and now Reuters reporting that up to 74 people have died from faulty ignition switches - but one glance at Experian's auto loan data and it's clear why... The average loan term and average amount financed for a new light-vehicle hit record highs in the first quarter, signaling U.S. consumers continue to extend themselves to afford pricier cars. GM cars may be "grenade-like" but US consumers - with stagnant wages - are extending maturities (loans with terms 73-84 months grew by 27.6%) to manage that monthly nut... This will not end well.

First we are treated to exuberance this morning...

  • *GM MAY U.S. AUTO SALES UP 12.6%, EST. UP 6.4%
  • *GM REPORTS BEST MONTHLY SALES SINCE AUG. '08
  • *GM MAY SAAR FOR LIGHT VEHICLES ESTIMATED AT 16.5M

Great news, right... and extrapolate that (even as inventory levels on dealer lots remains just shy of record highs).

Which is all very surprising given that Reuters reports that...

At least 74 people have died in General Motors cars in accidents with some key similarities to those that GM has linked to 13 deaths involving defective ignition switches, a Reuters analysis of government fatal-crash data has determined. Such accidents also occurred at a higher rate in the GM cars than in top competitors’ models, the analysis showed.

 

...

 

GM, which has offered few details of the fatal crashes related to faulty switches, told Reuters it derived the tally of 13 deaths from claims and lawsuits filed against the automaker. GM checked those claims and lawsuits against other sources available to it, including vehicle data recorders recovered from some crashes.

 

The Reuters analysis relied on the FARS database, which encompasses a much wider universe of accidents. GM declined to say whether it had used information from the federal database.

 

Read more here...

But the reason why "rolling-sarcophagus" "kevorkianesque" car sales are so robust is simple... easy credit...

  • Average automotive loan term reaches record high of 66 months; loans with terms 73-84 months grew by 27.6%
  • For new vehicle loans, the average credit score was 714, down from 722 in Q1 2013.

As Experian notes,

The average loan term, average monthly payment and average amount financed for a new light-vehicle hit record highs in the first quarter, signaling U.S. consumers continue to extend themselves to afford pricier cars, Experian Automotive reported today.

 

Lease penetration also hit a record high in the same period in another sign consumers are willing to leverage their spending power to afford more expensive vehicles.

 

"As the cost of purchasing a new vehicle continues to rise, consumers clearly are stretching the loan term to help lower monthly payments, keeping them at a manageable level,"

 

...

 

Experian Automotive said the average new-vehicle loan term reached 66 months in the first three months of the year

 

Also in the first quarter, the average amount financed on a new-vehicle loan was $27,612, an increase of $964, or 3.6 percent. For used vehicles, the average amount financed was $17,927, up $395 or 2.3 percent.

 

At the same time, Experian Automotive said leasing hit a record 25.6 percent of all new-vehicle sales volume in the first quarter, up from a previous high of 24.2 percent in the fourth quarter of 2013.

 

As it seems cash-for-clunkers as well as recent sales is maintaining prices in the used car market and thus reducing the cost of leasing (depreciation) relative to buying (financing)...

 

 

Market share for nonprime, subprime and deep subprime new vehicle loans rose slightly in Q1 2014 to 34.34 percent.

So the Fed's reach for yield has created demand for yiled-providing CDOs stuffed full of auto loans, no matter the risk... when has that ever gone wrong?

Imagine how great GM sales would have been if 74 people had not died and record recalls had not happened.??

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Tue, 06/03/2014 - 12:52 | 4820471 earnyermoney
earnyermoney's picture

GM vehicles, the new mobile home.

Tue, 06/03/2014 - 13:01 | 4820510 RevRex
RevRex's picture

Obama and the Demoshit Party are accesories to murder.

Tue, 06/03/2014 - 13:03 | 4820519 Pladizow
Pladizow's picture

Its incredible what Americans will pay for a COW - Coffin on Wheels!

Tue, 06/03/2014 - 13:06 | 4820533 knukles
knukles's picture

WAIT A MINUTE!

Isn't his sales as per GM to dealers and not dealers to the public or is this balls'oshite flowing off dealer lots into suicidal retail motorists?

WHICH?

Tue, 06/03/2014 - 13:17 | 4820563 Dr. Richard Head
Dr. Richard Head's picture

I would gander a guess of shipped to lots and nothing more.

Tue, 06/03/2014 - 13:22 | 4820586 NotApplicable
NotApplicable's picture

That's one helluva "First Time Buyers" program!

More like "Last Time Buyers."

Tue, 06/03/2014 - 14:30 | 4820808 alexcojones
alexcojones's picture

One HUGE reason I get a daily dose of the drug known as ZH, is the dark, dartboard humor.

ZH is funnier and more daring, more sarcastic, more Political Un-correct, than the Onion.

ZH posters are often funnier than the paid writers on the Jon Stewart show.

Actually I think some of the Daily Show show writers READ the remarks here to get good ideas.

Reading Zerohedge is better than crack to a crack addict, because our teeth are less damaged.

AC

Tue, 06/03/2014 - 16:30 | 4821183 Joe A
Joe A's picture

Hear hear.

Tue, 06/03/2014 - 14:43 | 4820844 Metalredneck
Metalredneck's picture

I've worked with dealerships for decades, and I recall telling our sales manager:  "A dead customer is not a repeat customer."

 I left the next week.

Tue, 06/03/2014 - 13:17 | 4820564 Citxmech
Citxmech's picture

Exactly.  Can't wait to see the next installment of the Dealer Inventory numbers. . . 

Tue, 06/03/2014 - 14:31 | 4820811 Freddie
Freddie's picture

They will probably look like Mr. Lundegaard doing the inventory.

http://www.zerohedge.com/comment/reply/489230/4820564

 

Tue, 06/03/2014 - 13:04 | 4820524 NOTaREALmerican
NOTaREALmerican's picture

If it wasn't for infinite debt GM wouldn't exist.   Which Team loves infinite debt more?

Tue, 06/03/2014 - 13:03 | 4820526 SamAdams
SamAdams's picture

GM lost me at bailout.  They are owned like CAT.  Should add a pyramid to their logo.

Tue, 06/03/2014 - 16:44 | 4821220 jackstraw001
jackstraw001's picture

New GM Motto -- "The last car you will ever buy..."

Tue, 06/03/2014 - 22:19 | 4821948 thecoloredsky
thecoloredsky's picture

"... so make it count."

Tue, 06/03/2014 - 13:07 | 4820538 813kml
813kml's picture

And the GM vehicle can also double as a coffin.

Tue, 06/03/2014 - 13:11 | 4820551 BennyBoy
BennyBoy's picture

More like mobile tomb.

Tue, 06/03/2014 - 12:52 | 4820474 quasimodo
quasimodo's picture

The assholes in DC be partly to blame for this. Guilty by association.

Tue, 06/03/2014 - 12:56 | 4820478 TideFighter
TideFighter's picture

"Merikans love anything on sale-even shit that kills them."

Example: Dollar Value Meal

ObamaCare

Pet Meds.com

Outlet Stores

Walmart

Let's get a list going

Tue, 06/03/2014 - 13:02 | 4820515 RevRex
RevRex's picture

^^^^^Stupid post^^^

Tue, 06/03/2014 - 13:56 | 4820694 Headbanger
Headbanger's picture

Even moar stupidier post ^^^^^^^^^^^^^^^^  (up there!)

Tue, 06/03/2014 - 12:54 | 4820479 pods
pods's picture

If you like your faulty ignition switches.................

Tue, 06/03/2014 - 12:55 | 4820483 replaceme
replaceme's picture

Holy shitsnacks, 84 month auto loans?  Who the hell thinks that's a good idea besides about 51% of the population?  That really makes me want to give up.

Tue, 06/03/2014 - 12:58 | 4820498 Dr. Richard Head
Dr. Richard Head's picture

Might be a signla of the coming pop of those CDO's.  When I worked in the mortgage insdustry for a very short while I saw people rolling in their credit card debt right into a 30 year mortgage.  That was the beginning of the mortgage debt pop.

Tue, 06/03/2014 - 14:01 | 4820704 Headbanger
Headbanger's picture

It's also a signal that these 84 month loan buyers are going to be way way under water on their car loans in about four years if they want to trade up.

This could mean future used car prices will go up cause dealers will have to cover the loan value of these cars on trade in to sell new cars.

Or.. It could mean these car buyers will get fucked on their cars just like their homes and will stop making payments and the repo man business really takes off!

Tue, 06/03/2014 - 12:59 | 4820502 NOTaREALmerican
NOTaREALmerican's picture

As long as you can make the minimum payment everything's fine.   

Tue, 06/03/2014 - 13:02 | 4820517 Tsar Pointless
Tsar Pointless's picture

Just give up already. Get one of those shirts that once were advertised on this site - "I Used to Care" was the slogan on them.

If you have come to the realization that it's all pointless, then you'll understand my moniker.

Americans are the dumbest creatures on this planet. Seven-year automobile loans? Ludicrous. But pointless to fret over it. Live your life. Be happy, even if you force yourself to do so. I did, and it's worked. Homemade Kool-Aid is the best kind.

Tue, 06/03/2014 - 18:46 | 4821472 Pootie Tang
Pootie Tang's picture

Kool-Aid with Grey Goose?

Tue, 06/03/2014 - 13:18 | 4820561 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

Pontoon boat loans go out to 144 months now... That's right, a boat that's little more than plywood on some tin cans (and is good for nothing except partying all day) will take you 12 years to pay off.

Tue, 06/03/2014 - 13:21 | 4820576 Kprime
Kprime's picture

wow a 12 year, all day, party.  Where do I get one?

do you get free obamacare with that purchase?

Can I upsize the drink holders to hold a 40?

Tue, 06/03/2014 - 13:18 | 4820567 tarsubil
tarsubil's picture

The economy is so loaded with cheap debt that any problem is going to cause a monumental implosion. The biggest house of cards yet.

Tue, 06/03/2014 - 13:19 | 4820571 Kprime
Kprime's picture

I am holding out for 120 month loans for those with 420 credit scores.  The stock market will soar and gold will be 800. When silver hits 12, I am going all in.

Tue, 06/03/2014 - 14:02 | 4820706 oklaboy
oklaboy's picture

we don't know what's gonna happen in the next 7 weeks, let alone 7 years.

Tue, 06/03/2014 - 14:02 | 4820710 oklaboy
oklaboy's picture

we don't know what's gonna happen in the next 7 weeks, let alone 7 years.

Tue, 06/03/2014 - 12:56 | 4820491 NOTaREALmerican
NOTaREALmerican's picture

New home size (as measured in square-footage) increased this year.   Looks like more debt is a good thing.

Tue, 06/03/2014 - 12:57 | 4820493 moonman
moonman's picture

"the average credit score was 714, down from 722 in Q1 2013"

 

Not exactly sub prime loans being made here.

Tue, 06/03/2014 - 13:00 | 4820506 the not so migh...
the not so mighty maximiza's picture

you know they will revise it in the middle of the night in september too 620

 

Tue, 06/03/2014 - 14:04 | 4820721 Headbanger
Headbanger's picture

Nahh.. I think they start "grading it on a curve" so we all look good.

Tue, 06/03/2014 - 13:02 | 4820514 Dr. Engali
Dr. Engali's picture

The fact that they are being financed for up to 84 months suggests they are.

Tue, 06/03/2014 - 13:21 | 4820581 tarsubil
tarsubil's picture

FICO scores indicate how good of a debt serf you are. Many good debt serfs are loading up on ridiculously termed car loans. They'll pay out the ass and have their scores go up. At least those that make it. Many will have a personal crisis and won't pay the damn loan back.

Tue, 06/03/2014 - 13:54 | 4820661 Dr. Richard Head
Dr. Richard Head's picture

Indeedy doodie.  A gal I know carries a high balance on her cards, makes the minimum payments, and keeps charging up that plastic for her whoreshit consumerism.  She is near 800 on her score.  Still cheaper to keep her though....

Tue, 06/03/2014 - 14:21 | 4820784 Osmium
Osmium's picture

For a second there I thought you were talking about my wife....

Tue, 06/03/2014 - 17:33 | 4821306 nightshiftsucks
nightshiftsucks's picture

Who down voted you Doc ? Was it your wife ?

Tue, 06/03/2014 - 12:58 | 4820496 Bunga Bunga
Bunga Bunga's picture

74 died, get over it, it's not NSA's business.

Tue, 06/03/2014 - 12:57 | 4820497 disabledvet
disabledvet's picture

Of course "GM will be bankrupt again soon" so good luck finding parts.

Tue, 06/03/2014 - 13:00 | 4820508 NOTaREALmerican
NOTaREALmerican's picture

"Bankrupt" is so old-school.   It just means there's a lack of financial immagination. 

Tue, 06/03/2014 - 16:42 | 4821210 James T. Kirk
James T. Kirk's picture

And with two sentences you have managed to capture the entire philosophy AND essence of fiat money. When you are long dead, and our civilization finally rises from the ashes, you will be posthumously awarded the Nobel Prize in Economics.

Tue, 06/03/2014 - 13:08 | 4820540 Bunga Bunga
Bunga Bunga's picture

Obamaparts

Tue, 06/03/2014 - 13:00 | 4820505 Kaiser Sousa
Kaiser Sousa's picture

must....

           keep....

                      illusion....

                                     alive...

debt slaves.

Tue, 06/03/2014 - 13:06 | 4820513 JustObserving
JustObserving's picture
GM Sales Soar In May

Perhaps, GM started marketing its cars as mobile crematoriums. Have you looked at the cost of a funeral in the US?

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