| | | WEEKLY REPORT | June 6, 2012 |
| | | | | | | Why subprime is primo to big retail groups
 The comeback in subprime financing and its role in fueling used-car sales are much more important to dealerships' bottom lines than prime-risk financing, chiefs of two big dealership groups say. ...  story
| Q&A
Anti-theft system gets a new identity
The SkyLink anti-theft tracking system was offered in U.S. Ford and Lincoln-Mercury dealerships under the name SmartAlert, a Ford-authorized accessory, from 2009-11. But it wasn't a big seller and the partners let the relationship expire. ... story
| Chrysler catches subprime wave, again
 The dramatic comeback of subprime loans has helped the entire industry recover from the recession, but easier credit has returned like an old friend to Chrysler Group. In the first quarter of 2012, 29 of every 100 new-auto loans for Chrysler vehicles have been to consumers with credit scores below 680, says credit agency Experian Automotive. Experian considers scores below 680 subprime. ... story
| Smart phones and tablets: What they mean to F&I
 The proliferation of smart phones and mobile tablets opens up possibilities and risks for dealerships seeking to connect with tech-savvy consumers. Three speakers will address the technologies' impact on finance and insurance departments during Automotive News F&I Week, a three-day online conference, on June 21 LEARN MORE: Click here to watch ... story
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F&I BY THE NUMBERS
Auto loans rise, losses drop at Bank of America
Bank of America doesn't usually break out its auto loan results, but in a recent SEC filing, the bank disclosed big growth in auto lending. While the bank's loan volume grew, like other auto lenders, it saw fewer net losses because it tightened standards during the downturn. (dollars in billions) | | | | | | | Total
outstanding
auto loans | Change | Net losses,
% of avg.
outstanding | | 2011 | $22.9 | 27% | 0.1% | | 2010 | $18.1 | 10% | 0.5% | | 2009 | $16.4 | 6% | 1.7% | | 2008 | $15.5 | 5% | 1.8% | | | | | | | Source: Bank of America |
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JIM HENRY
When will subprime season peak?
| |  | Jim Henry is a special correspondent for Automotive News | |
Here's a possible wet blanket on the comeback in subprime loans, at least in the short run: The peak season for subprime loans -- and the boost they give to used-car sales -- is usually over once tax-return season ends.
Data from Experian Automotive show this effect for the past few years. In 2009-2012, the first quarter saw the lowest average credit score for approved subprime loans for the year. That could be because the riskiest customers got loans in anticipation of tax refunds.
Last year, the first-quarter average credit score on a used-vehicle loan was 663. Experian Automotive considers that to be at the high end of the subprime range, also known as nonprime — that is, between 620 and 679.
This year, the average credit score on a used-car loan was 659 in the first quarter.
That the average first-quarter score was a few points lower this year suggests that credit is looser because lenders are buying deeper. If the score were higher -- as scores were in the first quarters of 2009, at 661, and 2010, at 665 -- it would indicate that credit is tightening.
So maybe this year, subprime season hasn't peaked yet. With somewhat looser standards and keener competition in subprime, there are bound to be at least some additional car buyers at the risky end of subprime who can swing a loan, even without a tax refund.
Pros and cons of videotaping F&I deals
 When Mirt Ramey went to Target in 1999 and spent $3,400 on video cameras and recorders for Red McCombs Automotive in San Antonio, she didn't realize what powerful tools they would become. Thirteen years later, McCombs' seven dealerships have graduated to more sophisticated digital recorders, but executives still swear by the basic practice. ... story
| EDITORIAL
Auto lending: Keep things in balance
Subprime auto loans are back, and that's a very good thing for the industry. But we should hold the high-fives until we resolve to avoid the pitfalls that auto lenders blundered into before the recession. ... story
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F&I PRESS RELEASES
» Safe-Guard Products International, LLC Successfully Completes SOC 1 Type II / SSAE 16 Examination
» DealerTrack Launches FinanceDriver to Help Enable and Enhance the Online Financing Process for Automotive Retailers
» iAutopayment Introduced to Increase Sales and Profit for CPO Dealer
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F&I BY THE NUMBERS
American Honda tops in lease penetration
American Honda Finance, which serves the Honda and Acura brands, was No. 1 in share of industry leases among captives and preferred lenders in the first quarter, even though some smaller-volume lenders had a higher lease penetration rate for their particular brands. Figures reflect new-vehicle volume only. | | | | | | Lender | Lease,
% of lender
volume | Lender,
% of industry
leases | | American Honda Finance | 43% | 16.5% | | Toyota Financial Services | 31.1% | 11.4% | | Ford Credit | 31.2% | 11.4% | | Nissan-Infiniti Financial Services | 46.2% | 10.8% | | Ally | 21.6% | 9% | | Hyundai Capital America | 53% | 7.5% | | VW Credit | 52.4% | 7.3% | | Mercedes-Benz Financial | 76.2% | 6% | | BMW Financial | 52.9% | 5.6% | | Chase Auto | 11.5% | 3% | | | | | | Source: Experian Automotive |
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