In the second quarter, 0.80 percent of car loans were 60 to 89 days past due, up from 0.66 percent during the same period in 2008.  Thirty-day delinquencies rose 14.6 percent in the second quarter to 3.06 percent, up from 2.67 percent the previous year.   Combined, 30- and 60-day delinquencies amount to $25.5 billion in loans at risk. 

Why is this significant?  That’s because it prompts lenders to tighten their lending criteria.  The result is that it pushes many consumers out of the market altogether.  Sure some buy used but many just drop the purchase to wait out the strict requirements being applied.
 
Michigan was among only three states to show a reduction in 30-day delinquencies, according to the study’s findings. The other two were Alaska and Nebraska.
 
At some point the lending markets has to turn so that pent-up demand eases.  However, for right now, it’s a tough market and consumers are not getting much of a break on the cost of financing, that is unless you’ve got a high credit score.  In the meantime, we all wait. 

For the balance of the year SAAR (Seasonally Adjusted Annual Rate) figures will probably close the year out at just under 10 million per month annualized.  Next year by February, we should see things starting to break free.  Let’s hope that prediction holds!

“American consumers and workers were the clear winners thanks to Cash for Clunkers program,” said Ray LaHood, U.S. transportation secretary. “Manufacturing plants have added shifts and recalled workers. Moribund (or bare) showrooms were brought back to life and consumers bought fuel-efficient cars that will save them money and improve the environment.”

Overall, rebate applications worth $2.877 billion were submitted by the Tuesday deadline. This covered 690,114 applications.
 
Top 10 Most Purchased Autos
Of the top 10 most purchased vehicles under the Cash for Clunkers program, only five automakers made the cut. This includes Toyota, Honda, Ford, Hyundai and Nissan. Toyota and Honda each had three models make the most purchased list, while Ford was close behind with two. Nissan and Hyundai meanwhile each had one model making the most popular Cash for Clunkers purchases.

Top Most Traded In Autos
The Ford Explorer 4WD and the Ford F-150 Pickup 2WD were the significant leaders in what was traded in.  Of the vehicles traded-in, 84 percent were trucks with 59 percent of customers purchasing passenger cars. The average trade-in mileage was 15.8 mpg, which leads to an overall increase of 9.2 mpg, or 58 percent climb, as the average new vehicle purchased receives 24.9 mpg.
 
Offering preliminary insight into the impact of the Clunkers program will have on the economy, the White House Council of Economic Advisers predicted the program will ramp up economic growth in the third quarter by about 0.3 to 0.4 percent at an annual rate due to the sales. The gross domestic product will be sustained thanks to increased vehicle production and to fulfill inventory requirements, the group indicated. Furthermore, an excepted 42,000 jobs will be created or saved.

New-Vehicle Manufacturer Percentages:
Toyota: 19.4 percent
General Motors: 17.6 percent
Ford: 14.4 percent
Honda: 13 percent
Nissan: 8.7 percent
Hyundai: 7.2 percent
Chrysler: 6.6 percent

There is, as we’ve mentioned many times, a large gap in opinions of just how successful the program was.  However, what it did do is create an artificial spike in consumer spending.  If you think about it, the conclusion that was most promoted by the non-objective major newscasters who thought of this as a good idea, was to proclaim its success. 

With the direct lending markets still in mourning from the failed practices of many banks mortgage fiasco, a huge market still exists for auto loans and refinancing for everyone who does not have a 720+ FICO score.  In the meantime, and still a “nightmare” is the fact that dealerships are still waiting for their money, and most have stopped junking the trade-ins in fear of Uncle Sam failing to reimburse them under the program.  Time will tell.  What do you think?  Good or bad, let us know.

The new Government owned GM emerged from the remains of bankrupt General Motors Corp. last Friday, aiming for 18.5 percent of U.S. auto sales with four car lines, down from eight.  According to Autodata Corp, the four surviving brands, Chevrolet, Cadillac, Buick and GMC, accounted for 16.5 percent of the market in June, and Ford’s share was 17.2 percent, excluding Volvo, which it is selling.
 
An industry analyst with IHS Global Insight of Lexington, Massachusetts, John Wolkonowicz said that surpassing GM would validate Ford’s strategy to go it alone and spurn government aid. While GM and Chrysler LLC seek to change themselves through bankruptcy, Ford benefits from its status as the only independent major U.S. automaker as it builds momentum.

Well, it sure looks like Ford is on a hot streak right now but will it last so that Ford overtakes GM?  It’s going to mean that our Government owned GM must keep some customer loyalty with Pontiac customers, which it is discontinuing to create the “NEW” GM.  That is clearly going to be a major challenge.  A lot of Pontiac buyers, young, blue-collar women, really do not like the rest of the GM lineup and they are certainly not going to buy a Buick anytime soon.

As the story goes, GM first overtook Ford in 1927 as Henry Ford halted production to switch from building the Model T to the Model A. Ford recaptured the lead in 1929-30. GM pulled ahead in 1931 and never looked back, until now.  Why did they over take Ford? No ‘Natural Reason’.  As for DM, defending its 78-year-old U.S. sales supremacy will be challenging, even after Volvo is sold.  They will have four brand and Ford will have three and thus, there will be a parsing out of who the winner will be between the two. 

It’s interesting that Ford has already overtaken Toyota Motor Corp. in U.S. sales by selling 773,242 cars and trucks while the Japanese automaker sold 770,449 vehicles in the six months through June, according to Woodcliff Lake, New Jersey-based Autodata, a research firm that compiles automotive sales data. Toyota has outsold Ford in the U.S. the past two years. Ford continues to trail Toyota this year by 26,953 vehicles when Volvo is excluded.  GM’s four surviving brands sold 804,371 cars and trucks in the first half of this year, according to Autodata, down 38 percent from the same period in 2008. Ford’s U.S. sales, excluding Volvo, are off 33 percent.

What, if anything, did GM learn from discontinuing Oldsmobile?  GM failed with customer loyalty when they dropped Oldsmobile and did not hold on to many Oldsmobile buyers after it killed that brand in 2004. So now it’s all going to be about sophisticated electronic marketing techniques to target Pontiac owners and GM is expanding its other model lineups to offer alternatives.

Ford gained U.S. market share among individual car buyers in seven of the past eight months, according to George Pipas, the automaker’s sales analyst. The Michigan-based automaker’s 17.2 percent U.S. market share in June excluding Volvo was up from 14 percent in the same month last year.  Basically, the key benefit of Ford Not Taking Aid, (that is avoiding bankruptcy and staying off federal aid,) is helping Ford win new customers. 

GM, which had filed for Chapter 11 on June 1, is receiving about $65 billion in federal aid. Chrysler, which filed for bankruptcy April 30, has taken $12 billion in U.S. assistance.  Ford won almost three times as much support as  the Government owned GM and more than six times as much as Chrysler among U.S. consumers asked about their preferences for a new auto, according to researcher AutoPacific Inc. of Tustin, California.

In an online survey of 900 people in June, 43 percent said they were likely to buy or lease a Ford, compared with 15 percent for GM and 7 percent for Chrysler. Ford matched Toyota’s score and beat Honda Motor Co.’s.  Ford will gain more market share on its domestic rivals when it launches two small cars next year. The automaker is estimating that it will sell 310,000 Fiesta subcompacts and redesigned Focus compacts annually by 2012, Global Insight estimates.
 
It’s certainly going to be an interesting battle and with free enterprise going against Government and Union owned GM, Ford should be a clear winner when it’s all said and done.  One thing that continues to confuse me is with the billions of dollars going into this restructure and government ownership, how will it succeed if the financial markets do not loosen up credit and let car buyers purchase transportation with auto loans?  Hey Mr. President, how about kicking some of these “cautious” banks into helping out the American people!  What do you think?

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We’ve been discussing this topic with Heather Dietel, Director of Business Development at myAutoloan.com, a licensed auto loan refinancing lender.  She has indicated that if you are paying more than what you think you should, it a pretty easy task to inquire and find out if you can save money.  So where do we begin?

When and How to Refinance
Consumers can refinance their car loan after three on-time payments, Dietel explains. Three to six on-time monthly payments is usually the minimum and there’s no point at which it’s too late to refinance. The more on-time payments you have, the more chance you have to increase your credit score. But you don’t want to wait too long since you want to start paying a lower interest rate as soon as possible.

So how do consumers start the process of refinancing? Usually, the easiest way is to go online and fill out an application with a lender that does auto loan refinancing Dietel says.  “It’s so easy to do it online, it’s not worth the time to try and get your current lender to match any lower rates you’re offered,” she says. “Plus, you’ll get responses within minutes. This can help you make a good decision. It’s almost always a different lender that will refinance you. Not everyone who applies is approved though. You can get rejected by making a late car payment and not taking care of your credit.”

If you still don’t have a prime credit score, you may look like too much risk to the lender who is considering refinancing your car loan. Dietel says to try your local credit union if you were denied online.  “Generally, the new lender refinances your current auto loan for the amount left in the current term,” Dietel says. “For example, if you have 42 months left in your current term, they will refinance you at 42 months at a lower interest rate so you will pay less for the same vehicle in the same amount of time. However, your term is flexible and may be shortened or lengthened to accommodate your particular refinance needs.”

Once you apply online and get approved, a loan agreement will be mailed overnight or will be available online, Heather explains. Then you sign and return the paperwork to the lender. A check for the remaining balance of your old auto loan is sent to your current lender and the loan is paid in full to your former lien holder. Then your vehicle’s title is transferred to the new lien holder and you start making payments to your new lender.  “As with anything related to the Internet and money, you need to be careful about which sites you approach to apply for a refinancing loan,” Dietel says.

Information to have ready when applying for a refinance car loan:
• VIN number
• current mileage
• current lien holder
• current loan information – requested amount to be refinanced, monthly payment, date of first payment
• vehicle make, model and style

Our last entry is going to cover additional areas of an auto refinance loan and detail some of the benefits associated with taking the time to investigate.  See you then.

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