UPDATE: Added Santelli carefully negotiating LeBeau's awesome optimism.
Like everywhere else, quality collateral is increasingly being soaked away and nowhere is this more evident than in the auto industry. We recently noted the significance of the auto industry and its self-fulfilling (and destroying) channel-stuffing 'mandates' around the world but today we get confirmation of the depths the car industry will stoop to. Via Subprime News, we see that Preferred Automobile Credit Co. (PACCO) is 'expanding' both the age and mileage limits of vehicles eligible for collateral, as "the pool of quality used cars has been shrinking, making it more challenging for dealers to find quality inventory". Of course, any 'knock' on the risk management or honesty or sustainability of an auto industry so much a part of the US recovery would not be complete without CNBC's Phil LeBeau's rebuff that the entire industry sees things as golden (in all its rear-view mirror glory) - we wonder what subprime lenders were saying about the environment for loans in 2006? And of course they can carry that 20% interest-rate, car prices never go down right?
and this from BBG earlier:
Preferred Automobile Credit Co. (PACCO) expanded age, mileage limits of vehicles eligible for financing, subprimenews.com reports.
Increased allowable age of eligible cars, SUVs, trucks from 8-10 years, max allowable mileage from 115k to 130k miles
"In recent years, pool of “quality used cars has been shrinking,” making it challenging for dealers to find quality inventory": PACCO president CJ Zaruba
[even subprime collateral is running out!!!]
"At the same time, we've found that older model year and higher mileage vehicles, when purchased from quality dealers, pose no greater collateral risk to PACCO. The industry is changing, and we are changing with it," Zaruba continued.
And Santelli carefully negotiating LeBeau's awesomeness...