Honda exec says US market near capacity, could hurt subprime buyers

[87accordlxi]

Filed under: Car Buying (http://www.autoblog.com/category/carbuying/), Acura (http://www.autoblog.com/acura/), Honda (http://www.autoblog.com/honda/), Earnings/Financials (http://www.autoblog.com/category/earnings-financials/)
http://o.aolcdn.com/dims-shared/dims3/GLOB/crop/3158x2095+57+0/resize/628x417!/format/jpg/quality/85/http://hss-prod.hss.aol.com/hss/storage/midas/6e312eaf7eefa849ca3223fda033fd90/200501014/515263e9f5e940cfb687b59fb47a8322.jpeg (http://www.autonews.com/article/20140819/RETAIL/140819875/hondas-mendel-says-u-s-sales-near-top-warns-market-may-suffer-from)

Is there a point in the US auto industry where companies should start considering the welfare of their customers ahead of selling more cars? American Honda (http://www.autoblog.com/honda/) Executive Vice President of Sales John Mendel thinks that level exists, and we may be getting very close to it.

According to Automotive News, Mendel believes that finding more customers in the market could require pursuing subprime buyers (http://www.autonews.com/article/20140819/RETAIL/140819875/hondas-mendel-says-u-s-sales-near-top-warns-market-may-suffer-from) and offering longer-term loans. However, he refuses to use those tactics. While selling models this way can improve things briefly, the strategies hurt resale prices and lower vehicle profits over time. The company won't do "stupid things in the short-term that damage the person who bought yesterday," he said to Automotive News. "It's a very, very short-term tactic especially in the subprime area."

American Honda, which combines the Acura (http://www.autoblog.com/acura/) and Honda brands, has seen market share decline from 9.7 percent to 9.1 percent through July 2014, according to Automotive News, and Autoblog's By the Numbers stats showed (http://www.autoblog.com/2014/07/01/june-2014-us-auto-sales-numbers/) it posted falling sales in five of the seven months with data this year. Though, Mendel claims that was partially because the company focused on retail sales over fleets. The delays (http://www.autoblog.com/2014/05/23/2015-honda-fit-delayed-until-june-quality-checks/) of the launches (http://www.autoblog.com/2014/04/22/2015-acura-tlx-launch-delayed/) for the Honda Fit (http://www.autoblog.com/honda/fit/) and Acura TLX (http://www.autoblog.com/acura/tlx/) likely didn't help either.

The rise of subprime loans is an emerging trend in the auto industry. A recent study by Equifax (http://www.autoblog.com/2014/07/31/outstanding-auto-loans-total-higher-than-ever/) found that the total amount in outstanding auto loans was the highest it ever recorded and up 10 percent from a year ago. It also found that the total balance from subprime buyers had reached $46.2 billion, an eight-year high. The feds appear to be getting interested too with GM's financial arm under investigation (http://www.autoblog.com/2014/08/05/gm-financial-investigated-over-subprime-loans/) for how it securitizes its lending to these customers.Honda exec says US market near capacity, could hurt subprime buyers (http://www.autoblog.com/2014/08/21/honda-exec-says-us-market-near-capacity-hurt-subprime/) originally appeared on Autoblog (http://www.autoblog.com) on Thu, 21 Aug 2014 17:28:00 EST. Please see our terms for use of feeds (http://www.3geez.com/rss-term-of-use/).
Permalink (http://www.autoblog.com/2014/08/21/honda-exec-says-us-market-near-capacity-hurt-subprime/) | Email this (http://www.autoblog.com/forward/20949805/) | Comments (http://www.autoblog.com/2014/08/21/honda-exec-says-us-market-near-capacity-hurt-subprime/#comments)

More... (http://www.autoblog.com/2014/08/21/honda-exec-says-us-market-near-capacity-hurt-subprime/)

[Dr_Snooz]

Oh subprime auto loans are the hot thing. One-third of new car sales and 2/3 of used car sales are funded by subprime loans, many of which are "deep" subprime. As soon as those crap loans are originated, they get sold out the back door to suckers. And now the delinquencies are rising as the auto sales bright spot in the economy turns out to be yet another fraud. If it sounds like what happened in 2008, that's because it is.

This is how a debt-based, fiat currency economy dies. One fourth of people jobless, more people on welfare than people working full-time, creative accounting, scams upon scams, anyone who hasn't already had all their stuff repoed is shuffling balance transfers around, and the banker parasites flying off to their armored compounds in the Caymans along with all the money they've stolen from the rest of us. I'd say there is going to be a cataclysmic civil war, but DHS long ago bought up all the ammo and Americans are too unhealthy to fight anyway. No, we're just going to keep eating the GMO food and watching Robin Williams retrospectives until we are disgusting, tumor-riddled monstrosities with hair growing out of our tooth sockets like the lab rats. We're already an international laughing-stock but by the time it's all over, we'll inspire more horror than laughter.

Charlie Foxtrot. Charlie Foxtrot. Charlie Foxtrot.

[87accordlxi]

On the bright side, I don't see the federal government bailing out Santander and Roadloans...

I can see Cash for Clunkers contributing to this. If people were driving around old beat up cars, logic says that they probably couldn't afford a new car loan. But yet the program "worked."

[Dr_Snooz]

On the bright side, I don't see the federal government bailing out Santander and Roadloans...

No, sending free money to European banks is done under the various QE programs. They tracked the money on QE2 or 3 (can't remember anymore) and it all went right overseas to European banks, where it got sat on.

[2oodoor]

Oh subprime auto loans are the hot thing. One-third of new car sales and 2/3 of used car sales are funded by subprime loans, many of which are "deep" subprime. As soon as those crap loans are originated, they get sold out the back door to suckers. And now the delinquencies are rising as the auto sales bright spot in the economy turns out to be yet another fraud. If it sounds like what happened in 2008, that's because it is.

This is how a debt-based, fiat currency economy dies. One fourth of people jobless, more people on welfare than people working full-time, creative accounting, scams upon scams, anyone who hasn't already had all their stuff repoed is shuffling balance transfers around, and the banker parasites flying off to their armored compounds in the Caymans along with all the money they've stolen from the rest of us. I'd say there is going to be a cataclysmic civil war, but DHS long ago bought up all the ammo and Americans are too unhealthy to fight anyway. No, we're just going to keep eating the GMO food and watching Robin Williams retrospectives until we are disgusting, tumor-riddled monstrosities with hair growing out of our tooth sockets like the lab rats. We're already an international laughing-stock but by the time it's all over, we'll inspire more horror than laughter.

Charlie Foxtrot. Charlie Foxtrot. Charlie Foxtrot.
dam so that hairs been growing out of my teethies all this time?

[cygnus x-1]

Hmm. Maybe this will follow the same trend as the housing market then? New cars cost nearly as much as houses now, so maybe the bubble will burst and values will plummet. Then we will be able to buy new cars without huge loans.

C|