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This Is What Happens When The Government Cracks Down On Subprime Auto Loans
A running theme here has been the great rotation of bubble-blowing credit from subprime housing to subprime auto-loans. Amid government probes of underwriting standards and soaring delinquencies, it appears when the least-creditworthy Americans are cut off from debt servitude, bad things happen in car sales...
- *FORD FEB. U.S. LIGHT-VEHICLE SALES FALL 2.0%, EST. UP 5.8% (miss!)
- *GM FEB. U.S. AUTO SALES UP 4.2%, EST. UP 5.9% (miss!)
- *NISSAN FEB. U.S. AUTO SALES UP 2.7%, EST. UP 3.8% (miss!)
- *FIAT CHRYSLER FEB. U.S. AUTO SALES UP 5.6%, EST. UP 8.2% (miss!)
- *HONDA FEB. U.S. AUTO SALES RISE 5%, EST. UP 11% (miss!)
- *TOYOTA FEB. U.S. AUTO SALES RISE 13.3%, EST. UP 15%( miss!)
Of course, the real blame - as we will be told - is the weather... It seems Obama's new American Dream of a brand new Ford or GM (or Maserati) in every driveway may be another broken promise.
- *FORD SAYS WEAK TEXAS SALES MAY HAVE BEEN WEATHER RELATED
So did the analysts that forecast sales not know that there was weather? not know the seasonals in fleet sales?
This won't end well...
as the delinquencies are already surging...
The details are even worse:
- *FORD FEB. U.S. F-SERIES SALES DOWN 1.2%
- *FORD FEB. U.S. ESCAPE SALES DOWN 9.6%
- *FORD FEB. U.S. FUSION SALES DOWN 4.9%
- *JAGUAR LAND ROVER CEO SEES 2015/2016 PROFIT MARGIN DECLINING
This really should not be a total surprise as auto sales have fallen and missed for 3 months in a row... to 10-month lows
This is the biggest 3 month drop since June 2011 and on par with the drop into Lehman...
- *AUTODATA: FEB. LIGHT VEHICLE SAAR 16.23M UNITS, EST. 16.6M
Even Phil LeBeau could only muster "lacklustre" as a response to this data...
But finally...
- *LAMBORGHINI CEO SEES HIGHER SALES IN 2015 THAN 2014
We leave you with this...
Sergio Marchionne, chief executive officer of Fiat Chrysler, said in an interview. “Full employment, low interest rates, stock prices up. It’s like dreamland.”
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If you are offering, I'll have the Maserati please.
This is what happens Larry.
http://youtu.be/DZV_vpkVTNA
So what you're saying is the subprime loan application for my new Bugatti Veyron will be declined?
Damn.
JGfla,
Only because the last of the run (450) "finale edition " sold, will have to wait for new EB model intro.
access to new vehicles are a fundemental right
So what is the best vehicle to short this disaster. Car companies, or Wells Fargo?
a slightly used Sherman tank.
with zombie pod upgrade
biotechs - the mother of all bubbles.
Also the mother of all stock rigging so timing a short is way to risky for those not in the know.
It will be like the rally. Throw a fucking dart and hit pay dirt. Careful though, this crash will be so big you may never get to cash out and shorts may get 'bailed-in' as punishment. Really, it could happen.
I'm short on stocks, I have non. My only position is around 4,300 penny stocks in an African farming company with little debt and plenty of cash (not to mention shit loads of cows and land). I figure after the crash and the demise of the west Africa will be set free and could see huge growth.
I've closed all blue chip positions, walked away from currencies and starting to stock up on phyical assets and cash. I'm hoping the fact I'm in the UK will mean my pounds will make it very cheap to relocate to a Euro area country after the EUR collapses. Don't really want to be in the UK when SHTF wrong mentality here need to be somewhere more community spirited like Ireland.
It has two wheels and pedals.
I'm in the market for a F250
Prices certainly don't reflect slow sales.
Buddy you have to wait till about Sept, Nov, when the dealers and the Manufactures start freaking out about all the metal they still have in the lots. Thats when the "sales" will happen.
November as always been my best month deal wise. I bought my 14 F250 in Nov 13 for a song, same with the ten it replaced. With the oil slow down in TX this summer should be a great time to pick up a lightly used one I'd imagine. Lots of oil workers with $60k trucks last time I was there.
Back when gas shot up over $4.00 a gallon I picked up a no frills F150 for $9k in cash when the lots filled up. Blue book was over 12K at the time and is still over $10k. Hand crank windows...keeps one in touch with the asspocalypse headed our way.
"Sergio Marchionne, chief executive officer of Fiat Chrysler, said in an interview. “Full employment, low interest rates, stock prices up. It’s like dreamland.”"
Full employment, you say? Funny, I thought that the labor force participation rate dropped. Fucking wanker.
"It’s like dreamland.”
Freddy Kruger dreamland...
Yeah and the north east is a "winter wonderland", you can't make this shit up.
Full employment for the dealer that sells this man the crack. That's for sure.
Looks like obvious... everything is rigged anyway.
We need to find more products to buy with debt or the entire shebang collapses.
A no money down bass boat in every driveway a 0% interest no payments till ever swimming pool in every backyard...
Sod that, negative interst rate please, self liquidating over the life of the boat.
Don't give that idiot in the WH any ideas- it will be ObamaCar- asshole will want to pass a law you HAVE to buy a new car every other year. Except the free shit army- Theirs will be free through subsidies.
After Judge Roberts ruleing there is nothing to stop them from doing that.
They already do this in Japan (home of SUKI (tm), The New World Religion (tm)). Its called Shakken. Look it up!
how bout subprime 70 inch TVs in every home?
the more ppl i visit, the more, and bigger, TVs i seem to notice. seems like the next logical step...
that, or, subprime iShit for every man/woman/child on earth
Drop by my place.
You won't find a single example of the manipulation box.
I've only ever had one new car - mainly due to my (now ex) wife.
Had to shut her up one way or another.
Other than that, I've always saved and paid cash for something not too old that I could afford.
I gave 'em up once they got to the point where I couldn't fix the damn things myself.
The problem is that not only do you need something to finance but it has to be mass market and expensive to make the magic work... homes and cars are king of the hill ... maybe I can get a no-doc $200,000 education loan to fund an e-trade account with....
Blaming low car sales on weather is asinine. It implies that your buyers were poised to invest but didnt like the chill in the air to commit. Their true and current growing clientele come in and out like the tide, no forethought involved. Got a paycheck, then commit to 7 years of payments at current budget planning.
Not sure what these used dealers are planning in the future, but when fixing a car involves an electrician, computer programmer, and wrencher, then those models wont move.
so, responsible people buy used vehicles and keep them for many years.
irresponsible people live in section 8 housing, get food stamps, WIC, EBT, etc... and use their "off the books" income to purchase shiny new SUV's.
Not the irresponsible. Taking from the system without giving back is one of the best forms of resistance I know.
i thought it was unusually warm and dry out west? doesn't that include texas? shouldn't there have been additional vehicle sales given the warm dry weather out west?
I wanna be buried in that grove of pecans down by the creek :-) Texas is still on some maps, weather chilly and dismal. The effects of the oil and gas turn down wrt auto sales will be seen in the coming months. The kids are trying to keep the trucks, but $80K/yr aint the same as $18K (if found) and $800/mo payments + full coverage won't be sustainable. The banks and stuff will be vacuuming up the unemployment benefits for some time yet, however.
The majority of car/truck sales are sold to the "how much a month crowd."
Most have no idea as to the total cost of the depreciating appliance that they are in debting themselves for. When a debt based country who's citizens have a lousy understanding of finance it's no suprise.
Auto dealers love to run corny comercials offering free hot dogs and flat screens. Their customers will flock in to get the "deal" and get it really good!
Moving target
Overlay the line with the slope (downward) of average FICO scores from '06 through.
40 acres and a mule.
to dream, the impossible dream
...and a mule?
Because we will purchase gas guzzlers in cash without the need of a third party banking theft ring. We don’t live on a UK island at the doorstep of 10 Downing Street. Suck up your losses in selling a clown car based on a liter of imported fuel. Or the carbon electrical car who is creating Climate Disruption due to the fact, you need taxpayers monies to build such bullshit infrastructure.
Ring Taxi Nürburgring
We can always take the House, Senate, or Congress for a ride to remind them that they work for us. It’s a hell of a fall, tuck, and roll if that door opens and you fall out!
Why do we employ you, if everything goes through an Executive Order? If Obama bypasses you, what is your purpose under constitutional law? Might be time to take the wind out of his sails.
FREE MONEY FOR ALL....beware the deflation. Wonder why in the history of the world no one thought to print unlimited current and just give it out for free. I guess next year I will learn why it doesn't work!
God Dang man, don't use that word "deflation" around here!!
"bad things happen to bad people" - NOT APPROVED, NOT APPROVED, NOT APPROVED.
31% of auto loans in the U.S. between January-October 2014 were made to subprime borrowers with a credit score under 640.
There are going to be some incredible deals in the secondary car market later this year.
at 640 and less is is ONLY a matter of time before the loan defaults. with longer terms, lenders have a much longer time to be on the hook to lose more money. the collateral depreciates, by the time month 60 hits, 100% of borrowers default, half want to leave the car somewhere...but by then the loan is still 60% of original amount, but collateral only 20%. figure roughly 30% of total subprime autodebt will get eaten, but worse 9for the economy) is that no new loans will be made after this starts happening.....defaults start, but then lending REALLY dries up, and sales actually decline rather than growing at a slower rate. but by that point, SD and ND will be suing drillers for cleanup costs after the leave town. a little at first, then all at once.
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cn13 wrote:
Yes, cn13, another ZH reader made the same remark on Sunday. That seems to be the growing consensus here on ZH. We shall soon see. And I cannot wait. I cannot become an Uber driver without a fairly new car. In order to become an Uber driver, your car cannot be older than a 2008, and my current car is a 2005.
Paul D. Bain
PaulBain@PObox.com
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Lease a new $40,000 minivan and let them have it back in 4 years with 500,000 miles... they can sue you for the approx. $90,000 in mileage overage but they'll settle... OR you could just "adjust" the odometer to 40,000 miles.... that's what dashpro.com is for...
They need to add an 84-month term chart, which delays the trade-in cycle due to further lack of equity.
THIS IS WHAT HAPPENS LARRY!
THIS IS WHY WE CAN'T HAVE NICE THINGS....
A car in every pot and two chickens in every garage.
Don't worry, Wall St goes into subprime housing lending again.
I worked hard, made money, and bought a used Ranger today. I paid cash.
So, I guess I am a dumbass.