The auto credit business is a consistent element of the US automotive market and has certainly played a significant part in assisting the general recovery of the US economy. This is in stark contrast with Europe (despite some signs of resilience in the UK) where the automobile market has fallen whilst the market in the US has steadily increased. However, it will be interesting to see whether the American momentum continues as it is widely expected that Mr Bernanke (US Federal Reserve Chairman) will temporarily cease or at least significantly reduce output of the monetary printing press - which reflects the downturn seen in GDP growth by the OECD in 2013 - albeit that US performance is still way ahead of the Eurozone.

 

Recent developments in the US have seen the US auto credit environment returning to a pre-financial crisis state. The ‘American dream' based on supporting enterprise and creating confidence has played a key role in recent US economic policy resulting in a renewed growth in car purchases encouraged by easier consumer credit availability and a willingness by the manufacturing and banking community to again grow their credit riskIn Europe, consumer confidence is not high and despite record low interest rates, credit can still be difficult for businesses and consumers to obtain.

 

Perhaps the balance between austerity, a more risk-averse credit environment and the consequences of low consumer confidence is holding Europe back? Is the USA playing with fire and running the risk of creating a further crisis, or is it just being its enterprising, risk-taking self?

On May 14th, Experian Automotive USA reported that “30 to 60 day non-payment of arrears and repossessions had increased, but remain below recession high levels” – in quarter one 2013, 30 day non-payment of arrears rose 1.3 % whilst the 60 day rose to 12.4%; repossessions rose 16.9% compared to 2012. However, this is at a time when total dollar automotive loans rose 9.6% to $726bn from $663bn in Q1 2012. Experian went on to say that “in spite of these increases, overall repossession rates are still relatively low when compared with the peak rate of 0.71% in Q1 2010”. On March 11th The FT in New York reported, “Sub-prime car loan securities soar … sales of risky pools of securities backed by car loans have greatly increased this year as investors' search for return takes them to corners of the market that boomed in the build-up to the financial crisis”. The FT report also quoted Adrian Miller, director of fixed income securities at GMP Securities that “Credit standards have not deteriorated back to the levels seen during the crisis and as long as the economy keeps growing and lenders keep a conservative bias, the increase in subprime auto asset backed sales is not alarming.”

This poses the question - has the nature of US auto creditchanged much since the financial crisis, and can this willingness to take on higher loan risks aid the US's economic recovery without risking another financial failure and credit freeze? This contrast between the US market's recovery and the relationship with auto credit availability is addressed further in ICDP's latest Executive Briefing, “Is the US re-inventing the financial crisis or just returning to business as usual?” which can be downloaded free of charge after registering on their web-sitehttp://www.icdp.net/

This contrasting situation in the US market recovery and its relationship to auto credit availability is discussed in a little more detail in ICDP's latest Executive Briefing, “Is the US re-inventing the financial crisis or just returning to business as usual?” which can be downloaded free of charge after registering on their websitehttp://www.icdp.net/

Introduction to ICDP

ICDP (short for the International Car Distribution Programme) is an international research-based organisation focused on automotive distribution, including the supply and retailing of new and used vehicles, aftersales, network structures and operations.

This collaborative research programmes remain at the very heart of what ICDP does, however recently in order to respond to changing times, they have now added a range of new services around the research core, building on the skills, capabilities, and experience they already have in place, but allowing clients to tailor a package of ICDP support customised to their individual needs. These services include:

· Data services

· Education and training

· Events and publications

· Consultancy

ICDP was founded in 1994 and based at the Hen House, a rural office near to Birmingham in the West Midlands. The team and research partners operate from a number of locations around the world, including Paris, Frankfurt, Treviso, Melbourne and Madrid.

İrtibat Bilgileri / Contact Details:

ICDP UK

5, The Hen House,
Oldwich Lane West
Chadwick End,
Solihull B93 0BJ
U.K.

Phone: +44 (0) 1564 784200
Fax: +44 (0) 1564 782555
General enquiries email:projectoffice@icdp.net