July 25, 2024
News

Podcast Episode: “Weekly Recap on Sales and Incentives”

June saw varied vehicle sales and an increase in incentives leading up to the July Fourth holiday, while the industry remains vigilant about the effects of cyberattacks that disrupted dealer operations.

Vehicle sales for the month and the second quarter showed mixed results among major manufacturers, indicating ongoing consumer demand for vehicles and positive movement in EV sales.

Incentives also rose in anticipation of the Independence Day holiday, with offers focusing on APR discounts rather than cash rebates.

Dealer services have largely been restored following multiple cyberattacks on dealer software provider CDK Global, minimizing impacts on floorplan asset-backed securitization transactions that could have resulted from prolonged disruptions.

Additionally, the Consumer Financial Protection Bureau‘s latest supervisory highlights report released on July 2 underscores the agency’s continued focus on servicing practices for auto and student loans.

In the latest edition of the “Weekly Wrap,” Auto Finance News Editor Amanda Harris and Associate Editors James Van Bramer and Ashley Savage delve into top stories covering sales trends, compliance updates, and industry news for the week ending July 5.

Subscribe to “The Roadmap Podcast” on iTunes or Spotify, or download the episode.


The Auto Finance Summit, the leading industry event for auto lending and leasing, will take place from October 7-9 at Wynn Las Vegas. For more information about the event and to register, visit www.AutoFinanceSummit.com.

Transcript:

Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.

Amanda Harris 0:33 Hello everyone and welcome to the roadmap from auto Finance News. Since 1996, the nations leading newsletter on automotive lending and leasing, it is Monday, July 8th, and I’m Amanda Harris, joined by Ashley Savage and James Van Bramer. This is our weekly wrap on what happened in auto finance for the week ending July 5th, 2024, and Economic News nonfarm payrolls rose by 206,000 in June and job growth was revised down by 111,000, according to the Bureau of Labor Statistics. The unemployment rate rose to 4.1%, while average employment growth over the last three months slowed to the lowest rate since the start of 2021, bolstering arguments for the Federal Reserve to begin cutting interest rates and Automotive News sales for June and the second quarter were mixed across most major manufacturers, but largely pointed to continued consumer demand for vehicles and positive movement for EV sales. In June, American, Honda, Mazda and Subaru of America reported year over year increases in vehicle sales, while Ford Motor Company, Hyundai Motor America, Kia America and Toyota Motor North America saw sales fall behind June 2023 numbers. Second quarter sales were up for Ford, General Motors and Hyundai, while Stellantis sales fell 21% year over year. Most OEMs who are reported for the quarter also saw an uptick in EV sales year over year. The EV makers also saw mixed results. Lucid delivered 2003 and 94 EV in Q2, up 70.5% year over year and produced just over 2100 vehicles, which was down about 2.9% year over year. Ruby Automotive deliveries rose about 9% year over year to just over 13,000, nine, 700, something. Tesla, however, delivered 443,000 almost 444,000 EV. The decline of 4.8% year over year and since is also picked up tied to the July 4th holiday, with deals centered mainly on annual percentage rate discounts. But cash rebates, limited incentive spend sat at 6.7% of average transaction prices in May, based on latest data up from 6.3% of ATP among prior and 4% of ATP a year ago. Incentives also continue to boost EV leasing, with monthly payments across several EV models in June falling below $400.00 for a lease even as their prices remained above $40,000 in compliance news, the Consumer Financial Protection Bureau summer edition of its supervisory highlights report, published July 2nd, points to the regulators. Continued focus on servicing practices for auto and student loans. Bureau examiners found that if final automatic payments did not match the borrower S typical payment amount, autopay systems did not apply the payments, causing some borrowers to incur late fees, according to the report, loan servicers must ensure they properly communicate with borrowers when payment, and like manual payments, are needed there. Robert also highlights several servicing issues related to student loans that apply to auto loan servicers, who employ call centers. So our coverage of course has more details there and exactly what you need to know about what was pointed out in the supervisor highlights last week also brought updates on potential impacts following the CDK cyberattacks. James has the takeaways there, James. James Van Bramer 3:50 Thanks, Amanda. As we come back from the July 4th holiday, CK has pretty much all but restored their operations. That said, they’re shot. Their their timeline really shapes out to have very likely avoided major disturbances to the auto industry. For example, we learned last week that the CDK incident could have affected well, we learned that it did affect many dealerships ability to sell vehicles which could have had a an effect on our for floorplan securities. Since the incident lasted about about two weeks, based on the from from June 19th until the about the holiday. Sales should quickly become back to normal, sources have told me, which greatly Shields the potential risks that dealerships faced on footprint securities. Floor plan loans are highly prioritized by dealers, according to movies experts who who I talked to last week, and the story that you could find on our site? No, they told me that because CDK systems would, if they had at the time they were selling that if the the systems were covered fast enough, they should avoid any major disruptions. Obviously, now that CDK has mostly restored, there’s their operations. It seems they have staved off any potential floor plan credit applications for dealerships. Sorry, on on work planes. Uh, so again, though the incident decipher incident with CDK was briefed, there was plenty to be learned from it as I continued to report on the incident. And its aftermath? I plan on sharing more on how the incident might continue on the minds of industry leaders moving forward. That said, we also highlighted additional growth data last week. Ashley has the details on that. Ashley Savage 5:44 Great. Thank you, James. Last week we covered the driving factors and associated banks year over year outstandings growth that year. In 2023, Michael Wright, director of indirect auto Lending, was able to share some insight with us and explain that the growth in 2023 was really a product of the Bank’s efforts to target auto loans to diversify its balance sheet and to include more shorter duration loans with higher yields without actually sacrificing loan quality. So versification ultimately led to the banks 63.2% year over year increase in outstandings that you’re in 2023. It’s also worth noting that this growth took place despite banks losing market share for the 10th consecutive year. In fact, Associated Bank was the fastest growing bank in the top 100 auto lenders by outstandings volume in 2023, according to our Big Wheels data ranking. You’ll end outstandings for the bank told totaled more than 2.2 billion, up from nearly 1.4 billion in 2022. Just to kind of conceptualize this growth Associated Bank is now 63rd in outstandings on the big rolls ranking as of year in 2023 after climbing from the 105th spot in 2022, right. Also explained that the bank actually looked at several products and programs when thinking about how to divert, tease me, diversify their portfolio, but ultimately landed on auto loans as it seemed to carry the desirable diversification against its existing large long duration mortgage portfolio despite the noticeable growth reported that you’re in year end 2023, the banks origination volume is projected to be flat through 2024. Delinquencies across the banks portfolio are stable and reflect a fast growing super prime book, according to write. And in case you missed it, we’ve got a detailed look at the bank’s tech initiatives for 2024. It’s portfolio mix and its approach to EV financing available on our site from last week. That’s all I’ve got for today, so I’ll toss it back to Amanda for a few closing comments. Amanda Harris 7:32 Great. Thank you, Ashley and James that about does it for today’s episode. As a reminder, registration is open for the 2024 Auto Finance Summit and Powersports Finance Summit, both returning to Vegas in October. So more information can be found at auto finance dot live. Thanks for joining us on the roadmap. Be sure to follow us on X and LinkedIn and we will see you online at autofinancenews.net and here next time.

FAQs

  • What were the highlights of vehicle sales in June?
  • How did incentives change leading up to the July Fourth holiday?
  • What impact did the CDK cyberattacks have on dealer operations?
  • What is the focus of the Consumer Financial Protection Bureau’s supervisory report?

Conclusion

Overall, the auto finance industry experienced mixed vehicle sales in June with a rise in incentives prior to the July Fourth holiday. The aftermath of the CDK cyberattacks and the focus on servicing practices by regulatory bodies continue to be key areas of interest for industry professionals.

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