Consumers Skip More High-Rate Auto Payments Than During Crisis

First Up 05/15/18

Consumers Skip More High-Rate Auto Payments Than During Crisis
Borrowers in the U.S. are defaulting on subprime auto loans at a higher rate than during the financial crisis, according to Fitch Ratings, reports Bloomberg. Lenders are responding by pulling back on financing to applicants with shaky credit histories and requiring higher standards for loans that they bundle and sell on to investors. The delinquency rate for subprime auto loans more than 60 days past due reached the highest since 1996 at 5.8 percent, according to March data, the most recent available from Fitch. That compares with default rate of around 5 percent during the financial crisis in 2008. The number of auto loans and leases extended to subprime borrowers fell by almost 10 percent from a year earlier in January, which is the latest data available from the credit reporting agency Equifax. Auto-lease origination to those customers decreased by 13.5 percent. Read more here

Discounts Deepen as Sedans Fall Out of Favor
The Detroit Free Press reports that over the past few years, car shoppers have flocked to crossovers and SUVs because of their higher seating position, added cargo space, and ease of entry. As a result, sedan sales have slowed to a crawl. Things are so bad that Ford last month announced plans to stop selling most of its sedans in North America by 2022. Right now, though, the lack of love for sedans is good news for bargain-hunting car shoppers. Slow-selling four-door models are being heavily discounted, and those who can live without an SUV can find excellent deals. The following sedans make the list because all of them have sat on dealers' lots for an average of 90 days or longer. The average 2018 vehicle's "days to turn" is 61. The Detroit Free Press then looked at the average discount off the manufacturer's suggested retail price (MSRP). (The MSRP shown is the average for all of a model's trim levels, weighted toward what is most commonly sold.) Not all of these cars are best in class, but they are solid vehicles that get even more attractive when you factor in the available deals. Read more here.

Automakers Miss deadline for Repairing Explosive Air Bags
A dozen auto makers failed to meet a deadline to repair millions of air bags that risk exploding in crashes, prompting the U.S.’s senior-most traffic-safety regulator to summon them to meetings, reports The Wall Street Journal. Under an unprecedented government order, automakers were required to address by the end of 2017 vehicles with Takata Corp. air bags at the highest risk of rupturing and spraying metal shards. The National Highway Traffic Safety Administration (NHTSA) said Monday it was “concerned that certain higher-risk vehicles with defective Takata air bags remain unrepaired,” adding that the agency had contacted 12 auto makers to ensure “repairs are completed immediately.” Automakers have made “continued progress” in repairing those at the highest risk of rupturing, according to a letter NHTSA Deputy Administrator Heidi King sent to the dozen car companies. Read more here

Fiat Chrysler Employees Knew of Emissions Cheating, Documents in Shareholder Suit Claim
Fiat Chrysler Automobiles employees believed the automaker used illegal software in diesel-powered vehicles to cheat on U.S. emissions tests and concealed it from regulators, according to allegations by plaintiffs’ lawyers in federal court documents unsealed Monday. According to The Wall Street Journal, the documents cite communications by Fiat Chrysler officials as part of a deposition request and refer to several employees allegedly having misgivings about the company’s use of software affecting emissions The plaintiffs’ lawyers cite internal chat rooms and external emails in which employees allegedly discuss the use of “defeat devices,” which are emission-control components that improperly manipulate pollution emanating from tailpipes. The disclosures, filed as part of shareholder litigation in Manhattan federal court, follow allegations last year from U.S. authorities and consumers that the Italian-U.S. auto maker used such improper software to allow diesel-powered pickup trucks and sport-utility vehicles to appear to meet emissions standards and then pollute far beyond legal limits on the road. Read more here

Elon Musk Shakes Up Telsa as Another Model S Faces Crash Queries
Tesla's week started with a bang Monday as CEO Elon Musk announced a management "flattening" designed to meet make-or-break manufacturing goals while Utah police investigated why a Model S hit a stopped fire truck at 60 mph, reports USA Today. The shuffle comes as Tesla's head of engineering embarks on a leave of absence and its liaison with federal safety officials defects to Waymo, formerly known as Google's self-driving car project.  This is a time of heightened scrutiny for the electric automaker as it pushes to double production of its entry-level Model 3 sedans to 5,000 per week, a volume considered critical to both short-term cash flow and long-term market success. Tesla also is grappling with federal agency probes into other accidents involving its vehicles, specifically a Model X that hit a highway divider in California while in Autopilot mode, killing its driver, and a Model S that hit a concrete wall and burst into flames in Florida, killing two teenagers. Read more here.

Webinar: Driving Customer Retention and Brand Loyalty
Join AIADA for our May AutoTalk webinar on Tuesday, May 22, where we'll be joined by Kendall Billman, Senior VP at AutoAlert. He will share tips on how to improve customer retention and brand loyalty, including the following areas:

  • Predict Behavior: Knowing your customers and predicting their behavior is a boon to all departments. 

  • Communicate: The quicker you get an upgrade opportunity to the customer, the better chance you have at winning. Ensuring that your marketing is effective is critical.

  • Keep Your Team Engaged: Making it easy for the right employee to have the right information about the customer, at the right time, is just as important as having that information in the first place. It not only ensures a seamless customer experience, but also provides a better employee experience.

Happening Tuesday, May 22, 2018. Sessions held at 10:00 a.m. EST and 4:00 p.m. EST. Click here to register.

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