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Cox Automotive Hires Economists

Tuesday, 18 April 2017 23:39

Jonathan Smoke joins Cox Automotive as chief economist and will lead the creation of an economic industry insights office.
This new office is tasked with leveraging data to expand Cox Automotive's deep expertise in all aspects of the automotive industry. Smoke succeeds Tom Webb who is retiring June 30. Based in Atlanta, Smoke reports to Isabelle Helms, vice president of research and market intelligence, Cox Automotive.
 A 21-year veteran of the housing industry, Smoke most recently served as Realtor.com's chief economist. Prior to that, he was the chief economist for Hanley Wood, a media and market intelligence company, and also served in a variety of roles at Beazer Homes, including senior vice president of strategy and innovation.
Smoke holds a bachelor's degree in economics and religious studies from Rhodes College and a master's degree in business from The University of Texas at Austin.
Charlie Chesbrough is joining Cox Automotive as senior economist and senior director of industry insights. Chesbrough previously served as executive director and senior economist for the Original Equipment Suppliers Association (OESA).  
Prior to joining OESA, Chesbrough was the senior principal economist and director of industry analysis at IHS Automotive, where he was responsible for developing and integrating statistical models and economic scenarios into global automotive forecasts.
 Chesbrough brings more than 25 years experience in market planning; demand forecast modeling and consumer research for Fortune 500 companies across many industries. Reporting to Smoke and based in Detroit, he will assist in the creation and development of the new Cox Automotive economic industry insights office.
In addition, he will direct the company's automotive forecasts as well as manage the economic industry insights related to the new-car sector of the automotive market.

Black Book Sees Decline in Retention Index

Monday, 17 April 2017 23:39

Black Book announced its latest Used Vehicle Retention Index figures, with the index listed at 113 at the end of March, a 0.8 percent decrease from the previous month’s mark of 113.9.
The Black Book Used Vehicle Retention Index is calculated using Black Book’s published wholesale average value on two- to six-year-old used vehicles, as percent of original typically equipped MSRP. The index offers an accurate, unbiased view of the strength of today’s used wholesale market values.
Two individual segments showed significantly higher drops according to their Index calculations on the month: subcompact cars fell 2.2 percent; and compact crossovers fell 1.6 percent during the month of March.

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FTC Looks at Finance Issues Involving Military

Thursday, 13 April 2017 15:45

Auto purchase, financing, and leasing will be among the topics at an upcoming Federal Trade Commission workshop.
The FTC is hosting a workshop in San Antonio, Texas, on July 19 to examine financial issues and scams that can affect military consumers, including active duty service members in all branches and veterans. The workshop also will discuss FTC resources available to military consumer advocates and representatives on financial readiness and fraud prevention, including the FTC’s Military Consumer Toolkit, available at Military.Consumer.gov.
The FTC’s Military Consumer Financial Workshop: Protecting Those Who Protect Our Nation will bring together military consumer advocates, consumer groups, government representatives (local, state, and federal), military legal services and legal clinics (including those at universities), all service branches, and industry representatives.

Worries Mount Around Automotive Finance

Thursday, 13 April 2017 14:34

Concerns are mounting about the state of auto finance as both wholesale volumes and delinquencies grow while new-car sales plateau.

But most industry observers remain fairly confident about prospects for prices and finance, at least for now.

Ally Financial Inc. did recently lowers its profit expectations to 5 percent growth from 15 percent growth at the start of the year. But Chris Halmy, Ally’s chief financial officer, said the company has adjusted its auto finance focus to risk from growth.

Halmy also calls the decline in wholesale prices manageable.

Melinda Zabritski, of Experian Automotive, said many finance companies are taking the same approach on financing as Ally and tightening.

The situation looks bad right now because delinquencies tend to grow 18 months after origination and credit was looser in 2015 and early 2016, Zabritski said.

It’s not all of auto finance that’s struggling, either.

Auto finance outperformed other categories of consumer credit in February according to the S&P/Experian Consumer Credit Default Indices.
Auto credit defaults came in at 1.05 percent for the month, down one basis point from January.

Subprime auto finance, however, is showing more signs of trouble.

Zabritiski said deep subprime delinquencies recently saw a larger year-over-year increase than they had in prior years.

Amy Crews Cutts, Equifax’s chief economist, said not all subprime is the same, either.

Crews Cutts said banks, captive and credit unions are performing fairly well. It’s the pure auto finance firms and larger buy-here, pay-here operations that are seeing more problems.

Some of the bad news around higher defaults might come from a delay in tax refunds this year.

Much of the concern comes from analysts looking at automotive asset-backed securities. This provides a very narrow view of the market,” Crews Cutts said.

The rise in delinquencies becomes a problem if it leads to more defaults. And that becomes a problem if creditors lack adequate reserves to cover those defaults.

Those reserves last longer if the creditors can get back more money at auction. A decline in wholesale prices has many financing providers predicting higher loses going forward.

There are reasons to worry about a downturn, especially if manufacturers, finance companies or both start fighting for market share.

“When the pie isn’t growing, you have to take some pie off the other guy’s plate,” Crews Cutts said.

The good news is while down cycles in auto finance remain common, they don’t last long, Zabritiski said. The collateral is fairly easy to dispose of and the finance terms, while growing, remain short compared with other types of credit.