| | | WEEKLY REPORT | May 16, 2012 |
| | | | | | | Dealers, customers stand to win as lenders battle for market share
 Growing competition is forcing many auto lenders to grant easier access to auto loans, especially in subprime, and that's good news for dealers and their customers. That's one of the takeaways from panel discussions at last week's Auto Finance Risk Summit here, hosted by Royal Media Group. ...  story
| Fla. dealers soon to track service contract refunds
A new state law in Florida makes dealers responsible in certain circumstances for maintaining records proving that customers who were supposed to receive a refund on a canceled extended-service contract actually got the refund. ... story
| Ally's auto business may get a boost from mortgage unit Chapter 11 bankruptcy
 It should be good news for Chrysler Group and GM dealers in the United States if Ally Financial can divorce itself once and for all from its troubled ResCap mortgage subsidiary. Ally on Monday filed for Chapter 11 bankruptcy protection for ResCap and a long list of related subsidiaries in federal Bankruptcy Court in New York. ... story
| AUTOMOTIVE NEWS F&I WEEK
F&I advice from a veteran: Be brilliant in the basics
 Never skip a menu. Use the products that you sell. Pay service writers for referrals. Stay involved in the showroom. Read, read, read. These are some of the practices followed by Kelly O'Neill, finance manager of Infiniti of Honolulu. She will share her "Be Brilliant in the Basics" philosophy during the Automotive News F&I Week online conference next month. ... story
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F&I BY THE NUMBERS
BMW Financial leasing rebounds
BMW Financial Services managed a slight increase in the number of leases outstanding in 2011 after at least three years of decline. There was also a corresponding drop in off-lease vehicles returned to BMW Financial. Eventually, lease returns should start to rebound, providing BMW dealers with more nearly new used cars to sell. | | | | | | | | | Lease contracts
outstanding (units) | Change | Lease returns
to BMWFS | | 2011 | 281,610 | 2% | 90,619 | | 2010 | 275,336 | -18% | 143,761 | | 2009 | 334,503 | -14% | 137,237 | | 2008 | 390,188 | -5% | 126,928 | | | | | | | | Source: BMW Financial Services |
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JIM HENRY
More loans mean more risk
| |  | Jim Henry is a special correspondent for Automotive News | |
Some dealers say credit is still too tight to suit them, especially in subprime.
But that can't last much longer, according panel discussions at last week's Auto Finance Risk Summit in Dallas.
"Things aren't going to be rosy forever; we've all got to keep that in mind," said Tom Redding, director of risk management for First Investors Financial Services Inc., a subprime auto lender based in Houston.
If you're in charge of minimizing risk for an auto lender, "rosy" means risk is low. In fact, losses are at or near historic lows for many auto lenders, even though volume has grown.
But competition is forcing lenders to continually loosen approval standards. The average credit score on loan originations has slowly declined since the recession. Lenders are approving longer loan terms and more subprime loans.
In short, risk is starting to rise, according to Experian Automotive.
"I don't consider the environment we're in to be stable by any means," Redding said.
But if lenders are buying deeper, dealers should see more sales. That's a good thing.
Q&A
U.S. CEO: Volvo's new captive is big deal
 Volvo Cars of North America is launching a captive this summer. CEO John Maloney calls Volvo Cars Financial Services "the biggest and most important thing we will do this year besides hitting our sales numbers." The Swedish carmaker has not had an in-house finance arm since 2010. ... story
| Subprime lender SAFCo expands
Subprime auto lender Southern Auto Finance is poised to expand. The company said it will enter Illinois, Indiana, Michigan and Ohio, with plans to expand into as many as six additional states by year end. ... story
| How one California dealer made subprime a priority
 Galpin Motors Inc. is aggressively pursuing the subprime market. On June 1 the dealership plans to launch a used-vehicle department focused solely on selling to customers with subprime credit scores, says Andy Graff, vice president of sales at Galpin in Los Angeles. ... story
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F&I PRESS RELEASES
» Vets-Cars and Coastal Credit Establish Partnership to Provide U.S. Military Personnel with Trustworthy Single Stop Access to Quality Vehicles, Loans & Extended Service Coverage
» Fitch: Mean Reversion Expected in U.S. Consumer Loan Performance
» CPS Announces New $100 Million Credit Facility
» Consumer Credit Default Rates Decreased Further in April 2012 According to the S&P/Experian Credit Default Indices
» Ally Financial Announces Key Strategic Actions to Strengthen Company and Accelerate Ability to Repay U.S. Treasury
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F&I BY THE NUMBERS
Originations rising again at Santander
Auto loan orginations picked up for Santander Consumer USA in the first quarter after loan growth was mostly flat in 2011. Acquisitions contributed to Santander's earlier growth through 2010. Santander has also reduced losses as it buys more new-car and near-prime loans, in addition to its traditional specialty in subprime, used-car loans. ($ millions) | | | | | | | | | Total
outstanding
loans | Yr.-Yr.
change | Net losses,
% of
outstanding
loans | | | End of qtr. | | Q1 2012 | $14,921 | 3% | 4% | | Q1 2011 | 14,507 | | 5% | | | | | |
| | Year end | | 2011 | 14,826 | 0.2% | 6% | | 2010 | 14,801 | 116% | 6% | | 2009 | 6,851 | 12% | 13% | | 2008 | 6,112 | 25% | 12% | | | | | | | | Source: Santander |
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