Wall Street sounds alarm over strain throughout car lending market as experts warn of potential risks for wider economy
Alarm bells are ringing on Wall Street. The recent collapses of Tricolor, a used car seller and sub-prime auto lender, and First Brands, an auto parts supplier, have put the finance industry on edge, almost two decades after problems in the sub-prime mortgage lending market set the stage for the global financial crisis.
When you see one cockroach, there are probably more, Jamie Dimon, the JPMorgan Chase CEO, ominously cautioned analysts this week, after the USs largest bank disclosed a $170m charge tied to Tricolors bankruptcy. Everyone should be forewarned on this one.
As the car lending market shows signs of strain, business around repossessions is booming. Right now, were overwhelmed with work, George Badeen, who runs Midwest Recovery and Adjustment in Detroit, Michigan, said.
The so-called repo man, tasked with recovering vehicles from drivers who default on loan agreements, was eulogized in music by Bruce Springsteen and in the 1984 Alex Cox film Repo Man.
Repossessions C especially in the sub-prime auto market C are on the rise, according to Badeen, who is also president of the Allied Finance Adjusters trade body. Weve seen some sub-primes making changes, which probably indicates theyre having issues, he said. Theyre not financing cars like they were. Two years ago they were financing anybody.
While few are bracing for a crisis on the scale of the crash that pushed the world economy to the brink in 2008 C sub-prime auto lending is a fraction of the $1.7tn overall car lending business C the collapses of Tricolor and First Brands have drawn the car sector into the spotlight, amid fears they highlight credit stress in lower-income households, as well as problems in credit markets tied to auto debt.
First Brands received approval for $500m rescue financing from a bankruptcy court, although Scott Greenberg, an attorney for First Brands lenders, told the court of concerns that they could be lending good money after bad.
The wider fear C and the one causing consternation among investors C is what the troubles inside this one market might indicate about broader pressures rippling throughout the wider economy. Distress in auto lending broadly is often seen as a bellwether to changing circumstances in the US economy , because Americans particularly in the lower-income brackets tend to put their highest priority in auto payments, said Brett House, an economics professor at Columbia Business School.
Having a car is essential to being able to work, he added. So when we see stress in the auto financing market, we typically receive that as an indication that household finances are getting tighter.
An estimated 100 million Americans hold auto loans, with 85% of new car purchases and 55% of used car purchases financed. It is the third-largest consumer credit market in the US, behind mortgages and student loans.
Problems in the auto loan industry have been manifesting for several years, as car prices rose sharply during the Covid-19 pandemic while inflation soared and interest rate increases followed. Paying off a new car required 42 weeks of income in 2023, according to Cox Automotive, up from about 33 before the pandemic.
High prices meant bigger loans. The average monthly repayment now stands at more than $750.
Car repossessions surged to their highest level since 2009 last year, according to Cox, with 1.73m vehicles seized, up 16% from the year prior and 43% from 2022.
Car owners were found to be missing payments at the highest rate in more than 30 years in January, when a Fitch Ratings index monitoring the share of sub-prime auto borrowers at least 60 days past due on their loans hit 6.5%.
The consumer has been distressed for a little while, Bill Nash, CEO of CarMax, the biggest seller of used cars in the US, told analysts last month after its lower sales and profits unnerved shareholders. I think theres some angst.
Auto loans are short-term investments, and Kevin Armstrong, author of Repo Blood: A Century of Auto Repossession History, believes they are often extended to consumers who may not be credit-worthy. For this reason, he said, auto loan delinquencies are often seen as clues C one of the canaries in the coalmine C to the health of the broader economy.
Loan operators are now giving out massive amounts of loan modification to try to move back delinquencies to stave off repossession orders, Armstrong said. But they may only be buying time. Theres a massive amount of recidivism when it comes to loan delinquencies, he added.
Armstrong traces the rise in repossessions to the pandemic, when stimulus checks and extra unemployment aid allowed consumers to pay up for pricier cars. When Covid hit, prices went through the roof, he said. I watched people paying outrageous amounts for cars that just werent going to hold their value, and the dealers laughing all the way to the bank. They got hosed.
Now, coupled with higher mortgage or rental payments, high grocery bills and higher auto loan payments, he added: Consumers got stuck with loan payments they cant afford.
Under most loan agreements, the lender or leaseholder can repossess the car even if borrowers are only a few weeks behind in payments, in part because a borrower could try to hide the car if they know the lender is looking to repossess it C and potentially sell it at auction.
The job of repossessing a car is becoming harder, according to Badeen, with greater consumer rights awareness and a higher likelihood of confrontation. Weve had so much violence in recent years that weve had to train our people in what people like to call situational awareness and de-escalation, he said. His company typically now sends tow trucks out with two people, one to pick up the car and another to keep watch.
The clouds gathering over the auto lending market could grow darker. Should Congress fail to agree on a continuation of Covid-era healthcare subsidies, the political issue at the center of the current federal government shutdown, that could put more pressure on the finances of auto borrowers.
That whole mess comes out of Covid. It has an impact on individual people that many people dont understand, said Badeen. Everything intertwines in some way, shape or form.
If a large sub-prime lender stumbles as a result of this pressure C Santander Consumer is the nations biggest, and was last year fined $550m to resolve claims it violated consumer protection laws by placing borrowers with sub-prime credit into auto loans it knew carried an unacceptably high probability of default C there could be wider turbulence.
Unlike First Brands, Tricolor sought bankruptcy protection last month under the shadow of fraud allegations that have prompted two federal investigations. Charles Gibbs, the attorney representing Tricolors court-appointed trustee, told a Texas court this month that initial reports indicate potentially systemic levels of fraud.
Tricolors failure is not necessarily indicative of what is immediately ahead for the sector as a whole, because of the special circumstances, but I would still see it as an economic warning indicator, said House.
Armstrong, too, was reluctant to call the failure of the companies, and the rise in repossessions, a trend. But its on the verge, he added.
华尔街对汽车贷款市场整体承压拉响警报，专家警告或对更广泛经济构成潜在风险
华尔街正拉响警报。二手车销售商兼次级汽车贷款机构Tricolor（三彩公司）与汽车零部件供应商First Brands（第一品牌）的近期倒闭，令金融业风声鹤唳——距离次级抵押贷款市场问题引发全球金融危机已过去近二十年。
摩根大通首席执行官杰米·戴蒙本周向分析师发出警示称：“当你看到一只蟑螂时，很可能还有更多。”此前这家美国最大银行披露了因Tricolor破产而产生的1.7亿美元费用。他意味深长地补充道：“所有人都应对此保持警惕。”
随着汽车贷款市场显现压力迹象，车辆收回业务正蓬勃发展。密歇根州底特律市的中西部回收与调解公司负责人乔治·巴丁表示：“眼下我们的工作量已不堪重负。”
所谓的收车人（repo man）专门负责向违约车主收回车辆，这一职业曾通过布鲁斯·斯普林斯汀（Bruce Springsteen）的歌曲和亚历克斯·考克斯（Alex Cox）1984年执导的电影《报信的人》（Repo Man）获得艺术赞颂。
联合金融调解员贸易机构主席巴丁表示，资产收回情况正在增加，尤其是在次级汽车贷款市场。他说：“我们看到一些次级贷款机构正在做出调整，这可能表明它们遇到了问题。它们不再像以前那样提供汽车贷款。两年前，它们几乎向任何人提供贷款。”
尽管很少有人预计会出现2008年那样将全球经济推向崩溃边缘的大规模危机——次级汽车贷款仅占1.7万亿美元汽车贷款业务的一小部分——但Tricolor和First Brands的倒闭已将汽车行业推上风口浪尖。人们担忧这些事件凸显了低收入家庭的信贷压力，以及与汽车债务相关的信贷市场问题。
First Brands公司已从破产法院获得5亿美元救助融资的批准，不过该公司贷款方的律师斯科特·格林伯格（Scott Greenberg）向法院表达了担忧，认为这可能是在"赔了夫人又折兵"。
更广泛的担忧——也是令投资者惊慌的原因——在于这一市场内部的问题可能预示着更广泛经济中蔓延的压力。哥伦比亚商学院经济学教授布雷特·豪斯表示："汽车贷款领域的困境通常被视为美国经济环境变化的风向标，因为美国民众尤其是低收入群体往往将汽车还款视为首要财务优先级。"
他补充道：'拥有汽车是能够工作的必要条件。因此，当我们看到汽车金融市场出现压力时，通常认为这意味着家庭财务状况正在收紧。'
据统计，约1亿美国人持有汽车贷款，其中85%的新车购买和55%的二手车购买通过贷款完成。汽车贷款是美国第三大消费信贷市场，规模仅次于住房抵押贷款和学生贷款。
汽车贷款行业的问题已持续数年。新冠疫情大流行期间，汽车价格大幅上涨，通胀飙升，利率随之攀升。考克斯汽车公司数据显示，2023年还清新车贷款需耗费42周收入，较疫情前约33周明显增加。
高昂的房价意味着贷款金额增加。目前平均每月还款额已超过750美元。
考克斯公司数据显示，去年车辆收回数量飙升至2009年以来的最高水平，共计173万辆汽车被收回，较前一年增长16%，较2022年增长43%。
1月，惠誉评级监测数据显示，次级汽车贷款借款人逾期至少60天的比例达到6.5%，车主拖欠还款的比例创下30多年来的新高。
美国最大二手车零售商CarMax的首席执行官比尔·纳什（Bill Nash）上月向分析师表示，在销售和利润下滑令股东不安后，"消费者的焦虑情绪已持续了一段时间"。他认为"市场确实存在一些忧虑"。
汽车贷款属于短期投资，《收回血液：汽车收回百年史》作者凯文·阿姆斯特朗认为，这类贷款常会发放给信用资质不足的消费者。正因如此，他指出汽车贷款违约现象常被视为更广泛经济健康状况的预警信号——堪称"煤矿中的金丝雀"之一。
阿姆斯特朗表示，贷款机构目前正通过“大量发放贷款修改方案来试图延缓违约”，以避免资产收回令。但这可能只是权宜之计。他补充道：“在贷款违约问题上，存在极高的再犯率。”
阿姆斯特朗（Armstrong）将车辆收回率上升归因于疫情期间的刺激支票和额外失业补助，这些措施使消费者有能力购买更昂贵的汽车。"新冠疫情爆发时，汽车价格飙升至天价，"他表示，"我目睹人们为那些根本不会保值的汽车支付离谱的高价，而经销商们则一路笑着去银行数钱。这些人被坑惨了。"
如今，随着抵押贷款或租金、高昂的食品杂货账单以及汽车贷款还款额的增加，他补充道：'消费者陷入了无力承担的贷款还款困境。'
根据大多数贷款协议，即便借款人仅逾期数周未还款，贷款方或租赁方仍有权收回车辆。部分原因在于，若借款人得知贷款方有意收回车辆（并可能通过拍卖转售），其可能会试图藏匿车辆。
巴丁（Badeen）表示，随着消费者维权意识增强及冲突可能性上升，收回车辆的难度正日益加大。"近年来暴力事件频发，我们不得不对员工进行所谓的‘态势感知’和‘冲突降级’培训。"他说道。目前该公司通常派出两人执行拖车任务：一人负责拖车，另一人负责警戒。
汽车贷款市场上空积聚的阴云可能愈发浓重。若国会未能就延续新冠疫情时期的医疗补贴达成一致——这一导致当前联邦政府停摆的核心政治议题——或将进一步加剧汽车贷款借款人的财务压力。
贝丁表示：“这一切混乱都源于新冠疫情。它对个人的影响，许多人并不理解。所有事物都以某种方式相互交织。”
若某大型次级贷款机构因这种压力而陷入困境——比如美国规模最大的桑坦德消费金融公司（Santander Consumer）去年就因违反消费者保护法被处以5.5亿美元罚款，该公司明知次级信用借款人的汽车贷款违约概率高得离谱，仍执意放贷——可能引发更广泛的市场动荡。
与第一品牌集团不同，三色公司上月深陷欺诈指控阴云并申请破产保护，这些指控已引发两项联邦调查。代表三色公司法院指定托管人的律师查尔斯·吉布斯本月在德克萨斯州法庭表示，初步报告"显示出可能存在系统性的欺诈行为"。
豪斯表示："虽然'Tricolor'的失败未必预示着整个行业即将面临的情况，毕竟存在特殊背景，但我仍认为这是一个经济预警信号。"
阿姆斯特朗同样不愿将企业倒闭和收回抵押品案例增加称为一种趋势。"但这已近在咫尺，"他补充道。