Autoblog

Chrysler sales growth fueled by subprime loans?

Zach Bowman — Tue, 05 Jun 2012 14:15:00 EST

Filed under: Car Buying, Etc., Chrysler, Earnings/Financials

Automotive News reports Chrysler owes some of its recent sales success to a resurgence of subprime loans. Chrysler has a history of working with customers burdened with questionable finance histories, and lenders have begun to loosen credit restrictions. As a result, 29 out of every 100 auto loans for new Chrysler models went to buyers with a credit score under 680 in the first quarter of this year. Experian Automotive classifies loans tied to that credit score as subprime. What's more, nearly 21 percent of Dodge sales through May went to buyers with annual interest rates of 10 percent or more on an average term of 71 months.

The report says that on the whole, just eight percent of all new car loans have interest rates of 10 percent or more. Even so, Chrysler's sales are up 33 percent through the first five months of 2012, besting the industry average by around 20 percent. On the whole, Automotive News reports subprime lending in the new car market has returned to its pre-recession levels.

Chrysler sales growth fueled by subprime loans? originally appeared on Autoblog on Tue, 05 Jun 2012 14:15:00 EST. Please see our terms for use of feeds.

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Report: Toronto-Dominion Bank may buy Chrysler Financial from Cerberus by week's end

Zach Bowman — Tue, 07 Dec 2010 11:01:00 EST

Filed under: Chrysler, Earnings/Financials

According to Bloomberg, Chrysler Financial may have a new owner in the near future. Canada's Toronto-Dominion Bank may be set to make a deal with Cerberus Capital Management, which still owns the Pentastar's loan arm despite stepping away from its role as owners of Chrysler's carmaking operations. If the sale goes through, Chrysler Financial is expected to go for between $6 billion and $7 billion, which is what the entity is worth not considering liabilities. If Toronto-Dominion lays down that kind of cash, Cerberus will have effectively recouped its money on the venture, allowing the company to return some dividends to investors in the process.

The news comes courtesy of a handful of unnamed sources who say that the deal could still fall through between the Canadian investment group and Cerberus, though they also note that there are other parties interested in Chrysler Financial. Toronto-Dominion is Canada's second largest bank, and the company has been snapping up properties on U.S. soil for awhile now. In fact, the bank now has more branches in the 'Land of the Free' than it does in its home market, and Toronto-Dominion says that it expects to make around $1.6 billion from the U.S. market alone within three years.

[Source: Bloomberg]

Report: Toronto-Dominion Bank may buy Chrysler Financial from Cerberus by week's end originally appeared on Autoblog on Tue, 07 Dec 2010 11:01:00 EST. Please see our terms for use of feeds.

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Report: GM's planned purchase of AmeriCredit questioned by senator

Jonathon Ramsey — Mon, 26 Jul 2010 09:31:00 EST

Filed under: Car Buying, Government/Legal, GM, Earnings/Financials

We've decided to stop trying to guess what General Motors will do before its IPO - which might come next month or later this year or early next year. What we do know is that GM has wanted to secure a captive finance arm before an IPO, a process that looked unlikely, then fell off the radar entirely, and then, BAM!, GM whips out $3.5 billion to buy AmeriCredit. That has made at least one senator do a double-take, asking whether spending that much money and loaning to the subprime market is the best thing for the Detroit automaker to do.

Republican Charles Grassley is quoted by Bloomberg as saying, "If GM has $3.5 billion in cash to buy a financial institution, it seems like it should have paid back taxpayers first," adding that The General should remain "clear of repeating its effort to make high-risk car loans." He has written a letter to the inspector general of the TARP program seeking an inquiry into the purchase.

Grassley has little hope of scuttling the purchase, however. As long as GM stands by the terms of the bailout, it can do just about anything it wants, which includes buying a bank. The move is also explained, of course, as a way to bolster GM's bottom line, something everyone wants. Company CFO Chris Lidell notes that if GM can add just one more percent to the number of buyers - people with credit scores between 500 and 650 - that's a "significant" benefit, as well as the additional leasing it can offer. And that one additional percent of subprime purchasers would still leave it in-line with the industry average.

[Source: Bloomberg]

Report: GM's planned purchase of AmeriCredit questioned by senator originally appeared on Autoblog on Mon, 26 Jul 2010 09:31:00 EST. Please see our terms for use of feeds.

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BREAKING: GM to buy AmeriCredit Corp for $3.5B

Zach Bowman — Thu, 22 Jul 2010 10:56:00 EST

Filed under: GM, Earnings/Financials

General Motors has just announced its intent to acquire AmeriCredit Corp. According to the automaker, the move should give dealers an added finance option when it comes to putting car shoppers into a new vehicle. Since GM and GMAC parted ways back in 2006, buyers looking to purchase a car or truck from The General have faced tougher financing terms than in the past. Supposedly, the new deal with AmeriCredit will provide new opportunities for sub-prime borrowers. The total cost of the deal? A cool $3.5 billion in straight cash.

GM says that putting AmeriCredit under its wing is the next logical step in moving toward an IPO, and most analysts seem to agree. The carmaker had been criticized for not having an in-house financing arm in the past, but the new move should afford the company and its dealership network an added level of financing flexibility. It should also allow GM to return to leasing in a big way. The two companies have been working together extensively in recent months, and GM says that over 4,000 of its dealerships already have relationships with the lender.

The purchase has already been approved by the boards of both GM and AmeriCredit, and pending approval from the lender's stockholders, The General will purchase the finance company for $24.50 per share. As of writing, the company's stock is currently trading at $24.07 - up $4.36 on news of the purchase. Hit the jump for the GM press release. Thanks for the tips, Jeff and Sea Urchin!

[Sources: General Motors, TickerSpy]

Continue reading BREAKING: GM to buy AmeriCredit Corp for $3.5B

BREAKING: GM to buy AmeriCredit Corp for $3.5B originally appeared on Autoblog on Thu, 22 Jul 2010 10:56:00 EST. Please see our terms for use of feeds.

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NADA opposes Senate's financial reform bill

Dan Roth — Thu, 24 Jun 2010 18:32:00 EST

Filed under: Car Buying, Etc., Government/Legal

Congress is working on reforming financial oversight in the wake of the sub-prime mortgage meltdown, and if the House and Senate come together on a compromise bill, a new Bureau of Consumer Financial Protection will be created. The House's bill exempted auto dealers from more strict lending scrutiny. As currently written, the Senate's bill includes the 18,000 new car dealers in the United States under its umbrella. There is a non-binding resolution that urges adoption of the House car dealer exemption, and dealers suggest they're already regulated plenty.

As a source of financing, auto dealers work like any other lender, including some scams and shady practices that put people into situations they can't afford or insert hidden fees into fine print. Despite the National Association of Auto Dealers protests that auto dealers are already well-regulated, anyone who's fallen prey to these exploitative lending practices would beg to differ. The fight is not resolved, with Senator Sam Brownback of Kansas arguing on behalf of car dealers on Main Street, and the White House arguing on behalf of consumers. Debate is ongoing, but a vote is expected soon.

[Source: The Detroit News]

NADA opposes Senate's financial reform bill originally appeared on Autoblog on Thu, 24 Jun 2010 18:32:00 EST. Please see our terms for use of feeds.

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GM seeking more subprime buyers?

Chris Shunk — Tue, 18 May 2010 11:01:00 EST

Filed under: Car Buying, Chrysler, GM, Earnings/Financials

In a word, yes. The Detroit News reports that General Motors is looking to find a way to tap into the subprime lending market that accounts for 16 percent of the overall car-buying market. There is, after all, plenty of pressure to sell more vehicles to enhance the company's value leading up to its initial stock sale. But while GM would like to strategically go after subprime borrowers, there is one significant roadblock in the way; Ally Financial. The financing firm, which was GMAC until The General sold off its captive finance arm prior to bankruptcy, apparently isn't willing to endeavor into risky loans. Ally, like The General, is owned in part by the federal government, with government cash in its coffers.

Top GM North America executive Mark Reuss reportedly told the Motor City newspaper that the automaker wants to have more autonomy over whom it lends money to, and it's all about moving more metal. Reuss points out the fact that 20 percent of Honda's new car sales are currently to subprime borrowers, adding "it would sure help my sales, the company's sales in North America, if we were able to get access."

If GM were to wrestle back a controlling interest in Ally, the company that could be most concerned with the result could be Chrysler. The Pentastar also depends upon Ally for vehicle financing, and CEO Sergio Marchionne points out that "if they control the lending practices and the degree of penetration and support that they gave to Chrysler, that would make us very, very concerned."

At this point, Reuss claims that GM hasn't yet asked Ally to expand subprime loans, so there is a chance that the two companies will be able to reach an agreement without GM getting back into the loan business.

[Source: The Detroit News | Image: Mark Ralston/AFP/Getty]

GM seeking more subprime buyers? originally appeared on Autoblog on Tue, 18 May 2010 11:01:00 EST. Please see our terms for use of feeds.

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How Thoughtful: Lamborghini offering 0% financing on new Murciélago LP640 models

Chris Shunk — Wed, 14 Oct 2009 13:29:00 EST

Filed under: Car Buying, Convertible, Coupe, Performance, Lamborghini, Earnings/Financials

Lamborghini Murciélago LP640 - Click above for high-res image gallery

A Lamborghini Murciélago LP640 starts at around $350,000 and can quickly crest $400,000 with the addition of a few options and a dropable top, and the LP640-4 starts at $450,000. That's a lot of coin to be sure, but in the spirit of pulling together to ride out this whole "recession" thing, Lamborghini is looking to ease the blow of $7,000 per month financing with a new 0% offer for the 2009 and 2010 Murciélago coupe and roadster. The Italian supercar maker is offering 0% for up to 60 months for customers with credit scores over 740 and down payments somewhere north of 10% (the press release doesn't provide an exact number). That's a pretty big bargain considering a buyer picking up an LP640 for $400,000 with $80,000 down (20%) for $5,333.33 per month over 60 months, while the typical 5.9% interest rate would bring the monthly payment to $6171.63 with $50,297.67 in accumulated interest over the course of the loan.

Lamborghini is also offering 5.9% interest for up to 12 years for customers with 10% down and a credit score of 700. That makes for a monthly payment of about $3,500 per month on a $400,000 LP640, with $143,000 in interest over the course of the loan. While those loan terms sound all right to us, we're sadly still a bit short on funds for the Autoblog garage. Hit the jump to read over the Lamborghini presser.

Gallery: Review: 2008 Lamborghini Murcielago LP640

All photos Copyright (C)2009 Drew Phillips / Weblogs, Inc.

[Source: Lamborghini]

Continue reading How Thoughtful: Lamborghini offering 0% financing on new Murciélago LP640 models

How Thoughtful: Lamborghini offering 0% financing on new Murciélago LP640 models originally appeared on Autoblog on Wed, 14 Oct 2009 13:29:00 EST. Please see our terms for use of feeds.

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Chrysler announces "Double CA$H For Your Old Car" promotion

Chris Shunk — Wed, 22 Jul 2009 10:30:00 EST

Filed under: Car Buying, Marketing/Advertising, Chrysler

2009 Dodge Journey R/T - Click above for high-res image gallery

With Cash for Clunkers slated to go live on July 23, every automaker appears primed to grab a piece of the action. Chrysler is no different, and its new "Double CA$H For Your Old Car" incentive program promises up to match the government's $4,500 "Clunkers" incentive for some vehicles.

Taking $9,000 off the MSRP of the vehicle of your choosing sounds fantastic, but of course, the program isn't that easy. First, obviously, you'd need a vehicle that is eligible for the maximum $4,500 allowance under the government's Cash for Clunkers initiative. Then, you'd need to find a Chrysler, Dodge, or Jeep vehicle that has the maximum $4,500 in incentives. If you can fit both of those criteria, you will receive $9,000 off MSRP. Chrysler is also offering 0% financing for up to 72 months through GMAC as an alternative to cash incentives.

Chrysler's "Double CA$H For Your Old Car" program runs from July 23-August 31. Hit the jump to view Chrysler's press release. Unfortunately, the release doesn't contain any information pertaining to which vehicles are eligible for the full incentive of $4,500.

[Source: Chrysler]

Continue reading Chrysler announces "Double CA$H For Your Old Car" promotion

Chrysler announces "Double CA$H For Your Old Car" promotion originally appeared on Autoblog on Wed, 22 Jul 2009 10:30:00 EST. Please see our terms for use of feeds.

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Keep the receipt: Hyundai buyers can take back the car if laid off

Chris Tutor — Sun, 04 Jan 2009 10:03:00 EST

Filed under: Car Buying, Hyundai, Carsumer Advocacy

If you need a new car but your job at the First National Bank of the City Federal isn't exactly guaranteed, Hyundai has an offer just for you.

The Hyundai Assurance Program gives buyers some peace of mind that if they lose their jobs during their first year of ownership, they won't have to pay back the full amount owed on their cars. Hyundai is teaming up with Walkaway USA to provide the 12 months of protection at no extra charge to buyers.

There are plenty of catches, though. Hyundai buyers must have made at least two payments on their new cars, be current on said payments, and their reasons for unemployment must fall under a list of common causes. The plan also only covers $7,500 worth of depreciation. In other words, if you beat the hell out of your Hyundai and your car's now worth $7,500 less than what you paid for it, you gotta come up with the rest. There's also probably a clause somewhere in there somewhere that also sticks the buyer for tag, title, taxes, fees, etc. etc.

Otherwise, drive your new Genesis for 11 months, re-enact Jack's Smirking Revenge from Fight Club and take the car back.

[Source: The Auto Channel]

Keep the receipt: Hyundai buyers can take back the car if laid off originally appeared on Autoblog on Sun, 04 Jan 2009 10:03:00 EST. Please see our terms for use of feeds.

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