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Inside this issue
Moody's Analyst Counters Thoughts of Auto Loan Bubble
Ford, Chevy Dangle New Deals as U.S. Sales, Share Lag
Japanese Auto Jobs in U.S. Slow as Mexico Woos Carmakers
GM to Invest $2.8 Billion in Brazil Over Five Years, Barra Says
Treasury to Begin Sale of Final Ally Shares
Large Solar Array Planned at Ford Headquarters
Green Garage Challenge to Host NADA Manager for Webinar
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Moody's Analyst Counters Thoughts of Auto Loan Bubble

Moody’s Analytics senior director Cristian deRitis chimed in this week, refuting the notion that rising auto lending volume is creating a bubble similar to the one that burst in the mortgage space and sent the U.S. economy into recession. deRitis insisted that credit quality is better today than prior to the recession, or at any time since the American Bankers Association began tracking delinquency rates for auto loans in 1980. “The critics’ concerns notwithstanding, it is difficult to view the increased availability of credit as a negative,” deRitis said. “The steady availability of credit is a major reason for the auto industry’s growth over the past few years, while other sectors such as housing and retail sales have struggled.

[Referencing Equifax data,] deRitis pointed out payment performance has improved with each passing month since delinquency rates peaked in 2009. “The fact that this is true across all stages of delinquency (30, 60, 90 and 120 days past due) is particularly encouraging,” he said. The Moody’s analysts emphasized that instances of fraud and questionable financing practices that’s been highlighted in media reports this summer need to be addressed before they become systemic issues. “Yet in some respects, auto lending is a victim of its own success,” deRitis said. “While auto credit contracted during the Great Recession, it was the first consumer credit sector to fully recover."

“Unlike private label mortgage-backed securities, the market for securities backed by auto loans did not collapse, continuing to function throughout the recession,” he continued. “Although significant, the losses suffered by auto finance companies and banks were tolerable and did not alter the shape of the financial system.” deRitis reiterated the point made by dealers and finance companies to regulators — that access to reliable transportation is critical to securing and retaining employment to generate steady income. “For some, the ability to purchase a vehicle meant the difference between keeping a job and unemployment,” deRitis said.

“Tightening compliance and increased education are important to insure that borrowers are qualified and understand their loans, as is punishing unscrupulous dealers and lenders. “But restricting credit too severely has its own consequences and will ultimately push consumers into the shadow banking system with little if any regulatory protection,” he continued.
Source: SubPrime Auto Finance News

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Ford, Chevy Dangle New Deals as U.S. Sales, Share Lag

Ford and Chevrolet are getting a jump-start on summer clearance deals to spur sluggish U.S. sales and stem market-share losses. The two top-selling brands in the United States have launched Labor Day and summer promotions offering 0 percent financing for 72 months across wide swaths of their lineups. Chevy is sweetening the deal with 90 days of deferred payments on some of its most popular nameplates. "We're not going to wait until the end of the month," Chevrolet Vice President Brian Sweeney wrote in a memo sent to dealers on Wednesday. "We need to get it going." Chevrolet and Ford are leading the way with a new round of deals as analysts project an overall increase in industry incentives in coming months.
Source: Automotive News
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Japanese Auto Jobs in U.S. Slow as Mexico Woos Carmakers

Japanese automakers and their suppliers added jobs in the U.S. at a slower pace in 2013 than in 2012, as they continued to expand in Mexico and elsewhere to reduce the impact of currency fluctuations. Automakers from the Asian nation directly employed 82,816 workers in the U.S. last year, up 2.2 percent from 2012, according to a study commissioned by the Japan Automobile Manufacturers Association. That rate compared with a 12 percent jump in 2012. Mexico passed Japan as the No. 2 exporter of cars to the U.S. as of June, bolstered by new plants from Japanese carmakers Nissan Motor Co., Honda Motor Co. and Mazda Motor Corp.
Source: Bloomberg
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GM to Invest $2.8 Billion in Brazil Over Five Years, Barra Says

General Motors Co. will invest 6.5 billion reais ($2.8 billion) in Brazil over the next five years, CEO Mary Barra said. Speaking to reporters in Brasilia after meeting President Dilma Rousseff, Barra said the new investment will be spent on new products, technology and maintaining plants. She said there were some mid-term challenges ahead, but that GM was committed to one of its most important markets. Brazil's auto industry, which makes up one-fifth of the country's manufacturing output, has slashed production by 16 percent in the first seven months of the year as the economy declines.
Source: Reuters
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Treasury to Begin Sale of Final Ally Shares

The U.S. Treasury Department said Thursday it will begin its effort to complete its exit of Detroit-based auto lender Ally Financial Inc. by selling additional shares of its 75.1 million remaining shares. Treasury — which gave the auto lender $17.2 billion in total bailouts in 2008 and 2009 — holds about a 16 percent stake in Ally. Treasury has a written stock sale plan, based in part on market conditions, but doesn't make that public. The government will start selling shares Thursday.
Source: The Detroit News
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Large Solar Array Planned at Ford Headquarters

Ford Motor Co. said Thursday it's teaming up with Detroit-based utility DTE Energy to build a 68,000-square-foot solar array at the automaker's Dearborn [Mich.] world headquarters. The solar panels, which will top a series of covered parking spaces in front of Ford's world headquarters in Dearborn, will help power electric vehicle charging stations and corporate offices. It's part of Ford's commitment to showing it's environmentally friendly, which includes everything from saving water to building lighter, more fuel-efficient cars and trucks. And it's the latest example of an automaker harnessing the power of the sun.
Source: The Detroit News
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Green Garage Challenge to Host NADA Manager for Webinar

The National Green Garage Challenge program has announced that Lauren Bailey, manager of regulatory initiatives for National Auto Dealers Association (NADA), will be the guest speaker for an educational webinar entitled, “How EPA Educates Green Dealerships.” The program will take place Aug. 28 from 10 to 11 a.m. PDT. This webinar is part of an ongoing series to educate vehicle service and repair professionals on accepted standards and practices that aid both the industry and the environment. Attendees will learn how NADA has partnered with the Enivronmental Protection Agency (EPA) to educate dealerships on energy reduction and cost saving opportunities and strategies. “Our goal is to create a performance rating for dealerships to earn an ENERGY STAR designation,” said Bailey. To register, click here.
Source: Body Shop Business
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Quotable

"Unlike private label mortgage-backed securities, the market for securities backed by auto loans did not collapse, continuing to function throughout the recession."

   
-- Moody's Analytics senior director Cristian deRitis, refuting the notion that rising auto lending volume is creating a bubble similar to the one that burst in the mortgage space and sent the U.S. economy into recession, SubPrime Auto Finance News, Aug. 13

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