| | | WEEKLY REPORT | February 8, 2012 |
| | | | | | | Comfort confronts high anxiety as Consumer Protection Bureau takes root
 An auto lenders trade group says it's somewhat reassured by what staffers from the new Consumer Financial Protection Bureau are telling it. But they're still anxious about how the new regulatory body will carry out its mandate. ...  story
| Credit thaw drives loan approvals, sales
 Amid a slow housing market, auto demand is rebounding, spurring lenders from Bank of America Corp. to Capital One Financial Corp. to approve car buyers faster and at better rates to compete for a piece of an expanding market. ... story
| Leasing rebounds, accounts for 1 in 5 sales
Leasing's share of U.S. retail sales rose by a point last year to 20 percent, according to the Manheim 2012 Used Car Market Report. The report credits the industry for getting leasing right, at least “for the most part,” by targeting lease consumers with good credit who trade their vehicles on a regular cycle. The industry also got praise for projecting end-of-lease residual values ... story
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F&I BY THE NUMBERS
Sellers market for used cars
Nearly new cars and trucks depreciated less in 2011 than in 2010. That made it a good time for consumers, lenders and dealers to sell a vehicle, but it also upped the price to buy one, according to Black Book. Figures show annual depreciation for 1-year-old vehicles. | | | % Annual depreciation | | | | | | | Cars | Trucks | | 2011 | -5.6 | -9.2 | | 2010 | -14.4 | -9.5 | | 2009 | -14.9 | 5.1 | | 2008 | -18.0 | -28.4 | | 2007 | -13.8 | -11.5 | | 2006 | -13.3 | -15.1 |
| | Source: Black Book and Fitch Ratings report |
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JIM HENRY
Will leasing's rise spell sleepless nights?
| |  | Jim Henry is a special correspondent for Automotive News | |
There can be too much of a good thing, and that includes leasing.
Several dealers at last week's American Financial Services Association Vehicle Finance Conference in Las Vegas said they would like a bigger comeback for leases.
But some lenders at the same conference said they're leery of leasing and don't want to see the factories drive lease penetration too high with incentives.
"As a car dealer, I would rather see people lease a car than buy," said Bill Underriner -- president of Underriner Motors (Honda, Hyundai, Volvo, Buick) in Billings, Mont., and the new NADA chairman -- in a Feb. 2 panel discussion. "Generally in 24 to 36 months, you're going to have that customer back into your dealership, and they're going to have to decide what to do with that car."
Lease penetration has more than doubled since it bottomed out at around 10 percent of new-car volume in the third quarter of 2009, according to the Power Information Network.
Tom Gilman, CEO of TD Auto Finance, said during another panel discussion on Feb. 3 that the idea of leasing approaching its heyday of 30 percent of new-vehicle volume again scares him. Gilman said he was forced to pull the plug on leasing at then-Chrysler Financial in 2008 because the captive couldn't borrow enough money. At the same time, resale values back then were falling for lease returns, especially for big pickups and SUVs.
"You learn a lot of lessons when you liquidate a portfolio," Gilman said. "When I hear 30 percent leasing, I get nervous. That makes me lose sleep at night. I haven't seen the numbers for January, but it was 26 percent leasing in December. We're starting to do all the things we did before."
Maybe it's too much to ask in a cyclical industry, but isn't there something in between?
JAMIE LaREAU
Rising used-car prices shouldn't hurt F&I
| |  | Jamie LaReau covers auto dealers for Automotive News | |
The cost of used cars will keep rising this year. But that doesn't mean customers won't have the funds to buy those pricey F&I products on the back end.
The National Automobile Dealers Association expects the used-car supply to remain tight, keeping prices up. In some vehicle segments, such as minivans and near-luxury vehicles, prices could increase by 3 percent or more from last year, said Jonathan Banks, NADA's executive automotive analyst.
So, if people are paying more than ever for a used vehicle, would they still have the funds or financing to buy F&I products?
According to Banks, data show that last year dealers sold many F&I products, even to those paying for high-priced used vehicles.
"I think dealers have figured out how to explain to consumers the reasons for buying those products," Banks said. "I don't see rising used-vehicle prices hurting those F&I sales in 2012 either."
Banks speculated that perhaps as dealers focus more on customer service, used-car buyers feel the same as new-car buyers in the way the dealership treats them. Indeed, many dealers say their used-car buyers are given the same treatment and offered the same amenities that new-car buyers get.
Services that were once reserved for new-car buyers, such as special vehicle service clinics, now also are extended to used-car buyers at some dealerships.
It stands to reason if a customer wants a service contract or roadside assistance or some other F&I product, dealers will find ways to get it financed, offer an acceptable price and make it happen.
F&I is a big profit generator no matter where it comes from. As Banks said, "Buying used isn't a dirty word anymore."
Volvo plans captive finance arm
 Volvo Cars of North America will launch a captive finance arm this year to increase sales, boost leasing rates and improve customer retention. ... story
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F&I PRESS RELEASES
» CUDL, Manheim's OVE.com and GE Capital Fleet Services To Launch Online Dealer Buying Network
» Dominion Dealer Solutions' Equity Alerts Chosen by Jaguar North America
DEALER JOB LISTINGS
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F&I BY THE NUMBERS
Ally ends year strong despite Q4 slip
Originations dropped slightly for Ally Financial's North American operations in the fourth quarter, but picked up for the full year, particularly for leasing and used vehicles.
($ billions) | | | | | | | | Q4 | | | | Consumer
originations | 2011 | 2010 | % change | | New | $6.5 | $7.5 | -13% | | Lease | $1.3 | $1.4 | -7% | | Used | $2.3 | $1.4 | 64% | | TOTAL | $10.1 | $10.2 | -1% | | | | | | | Full Year | | | | Consumer
originations | 2011 | 2010 | % change | | New | $27.3 | $26.5 | 3% | | Lease | $7.3 | $3.9 | 87% | | Used | $9.2 | $5.0 | 84% | | TOTAL | $43.8 | $35.4 | 24% |
| | Source: Ally Financial |
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