The Next Subprime Crisis Is Here: 12 Signs that the US auto industry’s day of reckoning has arrived

  1. Seven out of the eight largest automakers in the United States fell short of their sales projections in March.
  2. Overall, U.S. auto sales so far in 2017 have been described as a “disaster” despite record spending on consumer incentives by automakers.
  3. Dealer inventories are now at the highest level that we have seen since the last financial crisis. Why this is so troubling is because there are a whole lot of unsold vehicles just sitting there doing nothing, and this is becoming a major financial problem for many dealers.
  4. It now takes an average of 74 days before a dealer is able to sell a new vehicle. This number is also the highest that it has been since the last financial crisis.
  5. Not only is Ford projecting that sales will fall this year, they are also projecting that sales will fall in 2018 as well.
  6. Used vehicle prices are already starting to decline dramatically…  The used-vehicle price index from the National Automobile Dealers Association posted a 3.8% decline in February compared to the prior month. NADA also said wholesale prices fell 1.6%.
  7. As I discussed yesterday, Morgan Stanley is projecting that used car prices “could crash by up to 50%” over the next four or five years.
  8. Right now, more than a million Americans are behind on their payments on their auto loans. This is something that has not happened since the last financial crisis.
  9. In 2017, U.S. consumers are more “underwater” on their auto loans than they have ever been before.
  10. Subprime auto loan losses have soared to their highest level since the last financial crisis, and the delinquency rate on those loans has risen to the highest level that we have seen since the last financial crisis. By now, I am sure that you are starting to notice a pattern in these data points.
  11. At this moment, approximately $200,000,000,000 has been loaned out by auto lenders to consumers with subprime credit.
  12. Just like with subprime mortgages in the run up to the last financial crisis, subprime auto loans have been bundled together and sold as “securities” to investors. And just like last time around, this has turned out to be a recipe for disaster…

http://tapnewswire.com/2017/04/the-next-subprime-crisis-is-here-12-signs-that-the-us-auto-industrys-day-of-reckoning-has-arrived/

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