Vehicle Debt is Piling Up, Driven by Demand for SUVs & Trucks

First Up 02/13/20

Nissan Slashes Profit Outlook After Posting Net Loss for the Quarter 

Nissan Motor Co. on Thursday cut its full-year operating profit forecast by 43 percent, reports Automotive News. The dismal outlook comes after the automaker posted a net loss of 26.1 billion yen ($238 million) for the October-December third quarter, which contrasts sharply with upbeat forecasts from rivals Toyota Motor Corp. and Honda Motor Co. For its latest three-month period, Nissan posted an operating profit of 23 billion yen, short of analysts’ average estimate for 59 billion yen. Quarterly sales fell 18 percent to 2.5 trillion yen, short of analysts’ prediction for 2.7 trillion yen. Nissan's global vehicle sales tumbled 11 percent during the October-December period. Sales dropped 18 percent in the United States, with once popular models such as the Rogue SUV crossover and Sentra sedan falling out of favor. In China, sales slipped 0.6 percent. Nissan now expects to sell 5.05 million vehicles for the entire year, which would be its weakest sales performance since 2013. The slump in vehicle sales has increased the pressure on new management to fix a company still reeling from the scandal surrounding former leader Carlos Ghosn. Read more here. 

Vehicle Debt is Piling Up, Driven by Demand for SUVs & Trucks 

The Detroit News reports that U.S. auto loan originations rose by the most in four years in the final quarter of 2019, driven by demand for light trucks and SUVs. Loan originations for new and used vehicles rose by 7.5 million accounts – a 4.3% quarterly jump – bringing the total to 83.8 million. A majority of the increase came from the purchase of new trucks and SUVs – a category which now accounts for 71% of the new financed vehicle market compared with 68% a year earlier, according to data released Tuesday by TransUnion, a consumer report provider. Borrowers have been increasing the time needed to repay. The average pay-back period for new vehicles grew to 69 months in the third quarter compared with 68 months the same period a year earlier. Additionally, consumers taking out car loans increasingly purchased used vehicles. Used vehicle financing accounted for 53.3% of the loan-origination market, up from 52% four years earlier. Read more here. 

Nissan's Slumping Profits, Dividend Trip Up Turnaround Plans

Nissan Motor Co.’s efforts to halt declines in key markets is faltering, forcing the automaker to cut its full-year profit outlook a second time and scrap its year-end dividend payout to investors, including top shareholder and partner Renault SA. Bloomberg reports that dogged by falling sales in the U.S., Japan, and Europe, as well as instability in its most senior management ranks following the arrest of former Chairman Carlos Ghosn, Nissan reduced its full-year operating profit forecast to 85 billion yen ($774 million), down from an earlier estimate of 150 billion yen. By slashing its dividend payment to the lowest level since 2011 and pursuing a previously announced plan to cut 12,500 jobs globally, Nissan is trying to free up cash for investment in next-generation technology needed to stay competitive in areas such as electric vehicles and self-driving cars. Read more here. 

These 21 New Cars, Trucks, SUVs Are Most Dependable Vehicles of 2020 

New vehicles, on the whole, are more dependable than ever, reports USA Today. That's according to J.D. Power's 2020 U.S. Vehicle Dependability Study, which was released Wednesday. According to USA Today, the closely-tracked index has found that 2020 is the best year ever for vehicle performance. The bottom line: Your new vehicle should hold up well. Really well. Either that or something went terribly awry. The study, which automakers often trumpet to market their vehicles, tracks the number of problems in three-year-old vehicles during the previous 12 months. Per 100 vehicles, the average was 134. mong the vehicles tracked by J.D. Power, Japanese automaker Toyota's Lexus ES topped the list as the most dependable model. Toyota had six winners overall, including two Lexus models. General Motors had four, including three Chevrolet models, while Nissan and Ford had two apiece. Read more here.  

IIHS Awards Fewer Vehicles with Top Safety Pick+ Over Tougher Criteria for Headlights 

The Insurance Institute for Highway Safety continues to add requirements to qualify for the 2020 Top Safety Pick and Top Safety Pick+ awards., as the overall number of vehicle models awarded rises. According to Automotive News, IIHS said vehicles must have good or acceptable headlights as standard equipment to qualify for 2020 Top Safety Pick+ award. Good or acceptable-rated headlights may be optional for the IIHS' regular Top Safety Pick award, the institute said. Vehicles must also offer "advanced" or "superior" front crash prevention technology to win either award. Twenty-three vehicles received the Top Safety Pick+ Award, down 7 from 2019. IIHS President David Harkey told Automotive News that the decrease came from more-stringent criteria for headlights. Read more here. 

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