The latest numbers from Black Book (BB) seem to confirm that the U.S. auto market has peaked.
BB just launched its brand new BB Used Vehicle Retention Index (UVRI), which indicates that used car prices declined by 6.0 percent in 2016. So far in 2017, that trend seems to have continued.
The latest numbers from the National Automobile Dealers Association (NADA) indicate used car prices fell another 7.2 percent year-over-year in February.
According to Height Securities analyst Edwin Groshans, declining auto prices are bad news for subprime auto lenders.
“We expect off-lease volumes to result in above average annual depreciation in 2017 and 2018,” Groshans explains. “The combination of lower used car auction prices and weakening credit quality will manifest in the operations of auto finance companies with subprime lending concentrations.”
Groshans mentions the following companies as particularly at risk from the decline:
- Credit Acceptance Corp. CACC 4.21%
- Santander Consumer USA Holdings Inc SC 2.05%
- Ally Financial Inc ALLY 2.21%
- Capital One Financial Corp. COF 3.02%
Back in February, the Federal Trade Commission requested information from Credit Acceptance Corp related to allegations of potentially abusive debt collection practices.
The total amount of outstanding auto debt in the U.S. now stands…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
