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Archive for the ‘Financing’ Category

Toyota Earnings Jump, Despite Rising U.S. Incentives

Record R&D spending could hurt operating profit.

by on May.09, 2018

Toyota CEO Akio Toyoda is not only pushing for automotive sales growth, but leading the company into the emerging mobility sector.

Toyota saw earnings jump 21% between January and March, the final quarter of its fiscal year, despite having to sharply ramp up incentives in a slowing U.S. automotive market.

The automaker reported a profit of 480.8 billion yen, or $4.4 billion, up from 398 billion yen the year before. Toyota’s sales also rose 2% to 7.58 trillion yen, or $69 billion. For the full fiscal year, it earned 2.49 trillion yen, or $23 billion, a 36% increase, with sales rising 6%, to 29.38 trillion yen, or $268 billion.

Beyond the Numbers!

The strong performance helped highlight the cost-cutting efforts initiated by CEO and President Akio Toyoda, the grandson of Toyota’s founder declaring, “We’ve become a leaner, trimmer company … and in the past year we’ve developed our remaining fat into muscle, so that we’re in a strong position to be more competitive.”

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Automotive Subprime Lending Down in Q1

Banks, finance companies cut back 9.5% in first quarter.

by on May.08, 2018

Banks and finance companies are tightening their belts when it comes to lending to subprime buyers.

With predictions about new vehicle sales for 2018 hovering at or just below 17 million units, it appears that banks and finance companies may be inadvertently impacting that sales total with their current lending practices.

According to Equifax, subprime lending is down nearly double digits through the first quarter of the year.

Dig Deeper!

Reports show that 386,500 auto loans and leases have been originated YTD to consumers with a credit score below 620, which is generally considered subprime. This is a 9.5% decrease from the year-ago period.  (more…)

Senate Strikes Down Rule Protecting Against Discriminatory Lending

House expected to pass Senate measure for Trump to approve.

by on Apr.19, 2018

The National Auto Dealers Association, led by Chairman Wes Lutz, applauded the reversal of CFPB guidance over potentially discriminatory lending practices.

The U.S. House of Representatives is expected to take up a measure passed by the Senate on Wednesday that wiped out guidance from the Consumer Financial Protection Bureau designed to eliminate lenders from discriminating against auto buyers based on race or national origin.

The guidance, which was offered in 2013 by the Obama Administration, was considered controversial at the time and faced fierce opposition from Republicans as well as banks, lenders and finance companies.

Industry News!

The Senate asked the General Accounting Office to era to review whether or not the guidance, which was aimed at preventing auto lenders from charging borrowers higher rates based on factors such as race or national origin, should have been subject to Congressional review. (more…)

Volvo’s Subscription Service Off to Fast Start

Program's already surpassing expected results.

by on Mar.29, 2018

Volvo CEO Anders Gustafson and Heith Rogers talk as Rogers signed up for Care by Volvo.

Volvo Cars new subscription service that kicked off by offering the XC40 is already succeeding.

Anders Gustafsson, president and CEO of Volvo Cars USA, said during the company’s press conference at the New York International Auto Show that the company’s new subscription service launched with the introduction of the new XC40 is already off to a promising start.

Stay Plugged In!

Volvo expected subscriptions, where customers pay one flat price, to account for about 10% of XC40’s total sales. “We’ve already hit that,” he said. In addition, Volvo customers can now sign up for a subscription through Apple Pay. (more…)

Mercedes-Benz Bank Changes Business Model

Moves by automakers toward mobility forces bank to rethink operations.

by on Mar.09, 2018

Mercedes-Benz Bank is changing the way it does things to keep pace with the changes in auto financing needs.

Daimler Financial Services subsidiary, the Mercedes-Benz Bank in Germany, is revising its business model to accommodate the changes in mobility, such as subscription services, with which carmakers have begun to experiment.

The Mercedes-Benz Bank now finances one of every two vehicles sold by the automaker in Germany and the bank’s portfolio now totals around 970,000 cars, trucks, vans and buses on the books and grew by 12% in 2017 to 26.9 billion euros.

Global News!

“In future, we will also integrate mobility services such as car sharing into our vehicle financing, in addition to making offers specifically for electrically powered vehicles,” One in every two Daimler vehicles in Germany is on the road with a contract from Mercedes-Benz Bank, he added. (more…)

Americans Borrowing More Than Ever to Buy Cars

Experian notes creditworthiness of buyers improved in Q4 2017.

by on Mar.02, 2018

During Q4 2017, Americans borrowed more money for longer periods of time than ever for new and used vehicles.

Auto sales continue to drop, yet Americans are borrowing more money than ever to buy new and used vehicles, according Experian’s analysis of fourth quarter of 2017.

Experian shows that auto loans are at record highs for new vehicles, $31,099, and used vehicles, $19,589. Additionally, the amount of money loaned to purchase vehicles is up for the quarter to $1.12 billion. In Q3, that figure was $1.07 billion.

News Now!

“I think we’re certainly at a point where affordability is a question,” said Melinda Zabritski, Experian’s senior director of automotive finance solutions. “When you look at how much income you need to support that payment, it certainly is higher than your average individual income.” (more…)

Automotive Consumer Debt Continues to Rise

Despite selling fewer vehicles, loan originations rose last quarter.

by on Feb.14, 2018

Americans borrowed more money to buy new vehicles in 2017 despite the fact that they bought fewer vehicles.

The amount of money Americans borrowed to finance the purchase of new vehicles increased again during the fourth quarter of 2017, according to new figures published by the Federal Reserve Bank of New York.

The Federal Reserve Bank of NY said the value of auto loans approved during the fourth quarter increased by $8 billion over the same period in 2016 when sales were of vehicles were relatively stronger. In addition, the value of automotive loans or debts held by lenders increased in 2017 by $64 billion to $1.22 trillion even though overall new vehicle sales dropped last year.

Financial News!

The percentage of delinquent auto loans also dropped in the fourth quarter to 2.3% from 2.4%, the report noted. (more…)

Ford Hopes Alibaba’s Online Sales Plan is Purrfect

Vending machine approach expected to increase online sales.

by on Dec.19, 2017

Ford is looking to expand its online sales in China through its partnership with Alibaba and its cat-shaped vending machines for cars.

Ford Motor Co.’s new three-year deal with Alibaba, considered China’s version of Amazon, offers the automaker a new outlet for selling its vehicles in the country.

The idea of buying a new car on the internet isn’t exactly novel, but Alibaba offers Dearborn, Michigan-based Ford more options than simply “click to proceed to checkout” on its Tmall online store.

Global Auto News!

Ford, which has seen its sales in China stagnate this year, and when signed it deal last month with Alibaba, the automaker was looking to expand its capability of selling vehicles online. The company’s year-to-date sales in China total more than 1,056,000 units, a 6% decrease year over year. (more…)

Volvo Sets Up Subscription Service for Polestar

First slots are completely sold out.

by on Dec.15, 2017

Volvo' first offering from its Polestar high performance division, the Polestar 1, will be built at its new plant in China.

Polestar, the new electric performance brand of Volvo Cars, announced the initial launch markets for its first car, the Polestar 1, in the United States and China and Western Europe.

Since its launch in October, Polestar has seen customers line up for the new Polestar 1 subscription with both performance enthusiast and electric car fans depleting the early production slots available.

Global Auto News!

By offering its vehicles, starting with the Volvo XC40 for a flat monthly subscription, Polestar expects to step away from the old-school, dealer-focused method of selling cars and adopted the model used to great success by Netflix and Spotify.  (more…)