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Discussion: (5 comments)

  1. Yay autos!

  2. Subprime borrowers received 56.46% of loans on used cars in the quarter, up from 52.70% a year earlier.
    The average loan-to-value on new cars was 109.55%
    The average used car loan-to-value ratio rose to 126.62%
    77% of Subprime Auto Loans are for a period greater than five years

    It’s amazing how many cars you can sell when you aren’t worried about getting paid

    We’ve become a subprime auto nation, addicted to easy debt, living lives of hope, delusion and minimum monthly payments. Storylines about economic recovery, fraudulent government statistics showing lower unemployment, feel good propaganda from the corporate mainstream media, and a return to easy money debt fueled spending does not constitute a real recovery. Until the bad debt is purged from the system and saving takes precedence over spending, the country will stagger and ultimately fall under the weight of its immense debt. We are lost in a blizzard of lies. This subprime fueled engine of recovery will propel the country into the same canyon of reality we entered in 2008. The crack up boom approaches.

    1. Whoo! More conspiracy theories!

      But FYI, the above chart reflects new automobile sales, not used.

    2. Walt Greenway

      I used to think 72-month loans were stupid until I realized 6-year old cars now are usually in better shape and more reliable than 3 or 4-year-old cars of the past. My car tires now last longer than the cars I used to buy in the 1970s! It’s hard to beat a deal like a $15,000 to $25,000 car that you can drive for 10 or 15 years and still be in great shape (my new cars are a 2002 and a 2004 I plan to drive another 5-7 years).

  3. As James Grant has been pointing out, given the growth of population and the age of the fleet we would expect auto sales to increase. The problem is that the conditions require much larger sales than what we are seeing and that does not fully account for the very high loan amounts and the low rates being given to purchasers with questionable credit histories. We should have seen more than 16 million units being sold this year. The actual sales number means that the real economy is a lot weaker and that weakness would explain the Fed’s panic.

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