WEEKLY F&I REPORT: Delinquencies likely will rise in second half | New subprime lender plans to sign new-car dealers | Lenders' Red Flags compliance could cost dealers

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WEEKLY REPORT August 15, 2012 Tell a colleague about this newsletter         Contact Us            Delinquencies likely will rise in second half Did a two-and-a-half year decline in auto loan delinquencies end in the second quarter? At least one industry watcher thinks it may have. That's because easier approval standards and a higher volume of subprime loans starting in the third quarter of 2010 likely will result in more consumers making late payments in the second half of this year. ...  story  New subprime lender plans to sign new-car dealers A group of veteran industry executives with experience in auto finance and F&I products is launching a new subprime auto lender. The company, Global Lending Services, based in Atlanta, expects to sign up franchised new-vehicle dealers across the country. ...  story  Lenders’ Red Flags compliance could cost dealers Complying with the Federal Trade Commission’s Red Flags Rule has made auto lenders better at detecting identity theft even months after it happened. But lenders’ savvy has an unexpected downside for dealerships, according to Randy Henrick, associate general counsel for DealerTrack. ...  story  Wells Fargo challenges Ally with expansion of GM auto loans Wells Fargo is expanding loans to customers of GM, threatening to take business from Ally Financial as the bailed-out auto lender seeks a turnaround. ...  story  LEGAL FILE Miami store fends off class action in lease-refund dispute A customer who claims a Miami dealership wrongfully refused to refund her the difference between the estimated and actual value of her lease trade-in cannot pursue a class-action lawsuit, the Florida Court of Appeal has ruled. The unanimous three- ... >> Story            F&I BY THE NUMBERS Auto loan delinquencies dip Auto loan delinquencies dipped sightly in the second quarter compared with the same period a year ago. Bank delinquencies showed a slight uptick, which isn't visible in this table because of rounding. Figures reflect percentage of total loans with 60-day delinquencies, i.e. late payments. After 60 days, accounts are likely to be written off. Lender type Q2 2012 Q2 2011 Bank 0.54% 0.54% Captive 0.37% 0.42% Credit union 0.28% 0.33% Independent finance company 1.53% 1.54% Total, 60-day delinquencies 0.58% 0.60%       Source: Experian Automotive   JIM HENRY Sell more service contracts? That may get tough   Jim Henry is a special correspondent for Automotive News Is the glass 40 percent full, or is it 60 percent empty? Perhaps it's neither. A couple of the publicly traded new-vehicle retailers reported their extended-service contract penetration was around 40 percent for the second quarter -- specifically, Group 1 Automotive and Lithia Motors Inc. The other public groups don't usually break out detailed F&I numbers. The numbers look better if you take out leases. Lease customers are unlikely to buy an extended-service contract. Leasing accounted for about 24 percent of new-vehicle volume in the first quarter for the whole industry, according to Experian Automotive. Those two dealership groups didn't provide specific lease figures, but most of the public retailers say their lease penetration is higher than average. In addition, Lithia said 24 percent of its customers paid cash or got financing somewhere else. For Group 1, it was 30 percent. Those customers are also less likely to buy add-on F&I products at a dealership. So between leasing and cash customers, something like half of their customers weren't good candidates to buy an extended-service contract. That makes 40 percent penetration look a lot higher -- more like 80 percent. Several of the public groups said this month they are leaning on their bottom performers to sell more F&I products. But from the present level, the going may get pretty tough. A blog in the Aug. 8 F&I newsletter had an incorrect quote wrongly attributed. Ford Credit CFO Michael Seneski said, "I wish I could explain why customers are paying the bills." -- Click here for the corrected blog Preventing identity theft: What's (not) in your wallet? The race is on between identity thieves who try to buy cars fraudulently and the companies that come up with software designed to catch them. Prompting so-called out-of-wallet questions for F&I managers to ask customers is a key way theft-deterrent software works, according to DealerTrack and Reynolds and Reynolds. ...  story  GM unit bids for Ally international businesses General Motors has made a bid for Ally Financial's international operations, about two months after CEO Dan Akerson said he'd like to buy the business. GM's lending unit, GM Financial, bid on Ally's international operations last month, GM said in a filing with U.S. securities regulators. ...  story  F&I PRESS RELEASES » Maintenance Plans Keep Consumers Servicing at Dealership After Expiration » Toyota Financial Services Announces Expansion of Its 'Making Life Easier' Scholarship Program to $1 Million DEALER JOB LISTINGS F & I Manager - Dayton Area Dealer - Dayton, OH: Dayton Area Dealer Controller - Confidential - Marietta, OH: Confidential Finance Manager - The Razzari Auto Centers - Merced, CA: The Razzari Auto Centers     F&I BY THE NUMBERS Lenders per dealer continues to rebound The average number of auto lenders per U.S. dealer continued to rebound in the second quarter after bottoming out in the second quarter of 2009. The average is still below the first-quarter 2008 figure of 10 per dealer.       2012 Avg. lenders per dealer Year-ago change (lenders per dealer) Q2 9.5 7% Q1 9.4 7%       2011     Q4 9.4 13% Q3 9.2 12% Q2 8.9 10% Q1 8.8 16%       2010     Q4 8.3 17% Q3 8.2 17% Q2 8.1 17% Q1 7.6 7%       2009     Q4 7.1 -12% Q3 7 -18% Q2 6.9 -25% Q1 7.1 -29%       Source: DealerTrack >> Unsubscribe from this newsletter                        Copyright © Automotive News                        Designed by Templatesbox.com Automotive News is located at 1155 Gratiot Ave., Detroit, Michigan, 48207