I’ve been watching the Hispanic-flavored “Operation Repo” series on truTV. All I can say is, man, obesity sucks. And if you need proof that carmakers have been selling too much car to too little brain, here it is. (Sweet G37 BTW.) For months, I’ve been telling my MSM contacts that repos are so bad that the collection agencies can’t keep up. In some cases, banks are not calling the repo man– to avoid the cost of recycling the cars and taking the hit to their bottom line. In other words, the headline figure above– representing a mere 12 percent rise of repos over 2007’s stat– could well be the tip of the iceberg. Tom Webb disagrees. Speaking with Automotive News [sub], the economist for auction giant Manheim says the worst is over. “[Repos] will certainly be up in first half of this year, and with the labor market deteriorating so substantially, it might be up quite a bit and might offset the decline I expect in the second half of the year. We won’t have a 12 percent increase, but I would expect something in terms of less than a 5 percent increase.” So “only” 1,753,500 repos for ’09, then. Even if that’s true, with new vehicles flooding the market, and used vehicles flooding the market, and repo vehicles flooding the market, prices are headed down. And if prices are headed down, residuals are in the crapper. And if everyone’s backwards on their existing loans, they’re not going to trade in for a new vehicle. You see where this is going? Nowhere.
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The reason there were so many repos (of cars and everything else) is the same reason all the auto manufacturers are hurting.
CAUSE PEOPLE LOST THEIR JOBS AND ALOT OF PEOPLE LOST THEIR SAVINGS.
NO CREDIT – NO MORE…
Leave it to the republicans to try and make it seem as if the Big 3 just don’t make good vehicles. All those lies trying to break the union’s back.
Flashpoint:
I must have missed something. How is this the republicans’ fault? Wait. Don’t answer that. Please.
If you need insight into the problem, have a look at what happened to Mitsubishi NA when they wrote a lot of bad paper. Now magnify that by 100 fold and you’re just beginning to approach the magnitude of the disaster created by handing the keys to brand new cars to hundreds of thousands of people who couldn’t afford them. A discovery that they’re just now beginning to make.
People who now can’t afford to trade them in even if they CAN pay the note.
There’s plenty of blame to go around here: customers, dealers, bankers, regulators and automakers. But the automakers should have known that their business was an enormous sandcastle built at low tide. Plenty of people could see it coming, with or without the subprime mortgage meltdown. With, of course, is bad squared.
And now the D2.8 want to use your money to return to that business model. What are they, NUTS? Well, yes, obviously.
This is a game of musical chairs. A number of seats have been removed. The music’s stopped. There aren’t enough chairs anymore, and there’s not a damn thing your tax money can do about it.
Repossessed cars can be good deals as long as they are new. Older repos are POS usually sold through buy here pay here lots.
In Delaware they have title loans. You can get loan against your car with the title as collateral. The interest rates are obscene and if you are a day late on the last payment, you lose the entire car. They usually don’t want their money back, they want the ride.
But the drop in car values coupled with no one having clear title has hit their business hard.
It’s a shame this is all happening just as cars were really getting good. We have reliable, fuel efficient, fast modern cars these days.
congress is going to give us toyota echos and other crap econoboxes from detroit.
Flashpoint:
Ok, so why were the Detroit automakers losing money during the boom?
And please cite the Congressperson that said the Detroit automakers’ problem is bad current cars.
I heard a lot about bad management, huge amounts of corporate debt and overpriced labor, but nothing about bad cars. Some of the Detroit automakers’ cars are competitive, but their business structures and debt loads are horrible.
The UAW is an embarrassment to good Unions. They’ve never made any real concessions to keeping the Detroit automakers afloat, they simply threw new workers under the bus by cutting new workers’ pay in half. Something that will do nothing for the Detroit automakers since they are not hiring anyone new.
Didn’t you buy an Accord with your girlfriend’s credit or something like that?
Yes, the repo market is one more factor in making new car sales worse. I am not so sure they will effect used car sales that much, their numbers are not that great. I suspect that those needing a replacement car will be more inclined to buy a used car than a new car. And considering the current credit squeeze, many will find that the only choice.
If I were a Big 3 car dealer I would sell the dealership and put up a used car lot.
Many of the D2.8 dealerships already are used car lots that also happen to offer new cars and service.
Has there ever been a better time to buy used?
This is BAD for all manufacturers, really.
RF, is there any breakdown of the make/model of vehicle being repo’d? Anyone willing to bet that the share of make/model’s DO NOT mirror manufacturer market share?
I’ve got a friend that lives in Northeast Pennsylvania, in a new housing development. I went out to visit him a few months ago, and I noticed that the house next door was foreclosed and vacant. There were two relatively late model cars parked in the driveway with weeds growing around them. According to my friend, the cars had not been moved since the former “owners” flew the coop — about 8 months. I asked about the cars, and was told that the former “owners” couldn’t, or wouldn’t, pay on either one of them. Whoever held the notes on those cars didn’t bother to retrieve either one. The cars remained in the driveway until the bank found a new buyer for the house. Both cars were then hauled away, presumably for scrap.
is there any breakdown of the make/model of vehicle being repo’d?
A guy at my club owns a repo business. He said he was taking back an awful lot of Dodge Ram Trucks from kids that should not have been sold them in the first place.
There’s plenty of blame to go around here: customers, dealers, bankers, regulators and automakers.
Add everyone that bought a house, refinanced, took equity out, tried to flip property, got a student loan, invested in stock etc. whether they were responsible and paid their bills or not. Everybody took advantage of cheap credit. While we’re at it, let’s add municipal and state governments, who may be the most irresponsible of the lot. And then there’s the feds, who are off the charts.
@ Ronnie Schreiber
Are these not two party transactions? Your argument is valid, BUT, the providers of credit to people who should not be taking it are usually described as predatory lenders. For a good reason. Cheap credit was SOLD to everyone.
Should we really believe that Municipal Authorities sough out ways to invest in CDOs? I’m not so sure of that.
(Actually “Cheap Credit” is wrong – it should be “Unadjusted-For-Risk Credit” or “No-One-Rated-It-Properly-So-It’s-Cheap Credit”).
Obesity sucks? Sucks for over half the population Bob.
As usual, the public is to blame for the current liquidity crisis – predatory lending my ass. At the end of the day, the person taking out the loan makes the final decision. If you’re don’t have enough money to make ends meet, then don’t add a house and car to the problem. Simple enough. Even a child can understand that.
@ DeanMTL
You’re not “following the money”.
If you don’t have enough money to make ends meet….
If you don’t, the predator lender can see you don’t too, but goes ahead and writes it anyway because they pocket a commission.
Even a child can understand that.
Then a sizable count of the US population are apparently pretty god-damn dumb evidently….
Obesity sucks on so many levels. A lot of people won’t fit into econoboxes. I’m convinced it’s part of the reason SUVs were popular. Everyone in America “fits” into an Explorer. Less than half of us “fit” into a Fit.
We’ve all heard about energy consumption of TVs, fridges, washing machines, dryers, electric toothbrushes, etc. But what about all the people who only need 2100 calories per day but take down 2400?
This is the area where Health Policies and Energy Policies and Transportation Policies collide, and it’s not much different than when that whale carcass exploded on a flatbed truck in a downtown Asian metropolis a couple of years back.
PeterMoran: If you don’t, the predator lender can see you don’t too, but goes ahead and writes it anyway because they pocket a commission.
It’s still the borrower’s decision as to whether or not to sign the papers and take the loan.
Another factor is that more than a few of these borrowers are minorities, and borrowers were accused of “racial discrimination” for not extending them credit.
No one forced these people to buy cars they couldn’t afford. Just like the mortgage lenders didn’t force people to take out a mortgage they couldn’t afford.
A large majority of people simply made poor financial decisions, period.
Even if you complain that many folks have lost their jobs it still goes back to not extending your debt percentage over a certain amount to protect yourself from situations like that.
(Oh and no one made them fat either!)
@ geeber (& 8rings)
It’s still the borrower’s decision as to whether or not to sign the papers and take the loan.
I’m not saying there isn’t an element of what you suggest, but the balance of the problem is certainly toward the lender.
It is way too simplistic to suggest that the borrowers are the only culpable ones.
PeteMoran: I’m not saying there isn’t an element of what you suggest, but the balance of the problem is certainly toward the lender.
Unless the borrower signed the loan papers under duress, I don’t see that. Especially when the lender gets criticized for “discriminating” against borrowers who happen to be minority, if said lender does not make the loan…which is what happened in the 1990s (and helped get this whole, messy ball rolling).
I’m 6’4 and weigh 340 pounds. I drive a Fit comfortably every day, and while I’m sure I’d have to have a shorter dude up front for total comfort, I could ride in the back pretty well too. Honestly, I’ve been in SUVs that were not as spacious.
You certainly have a point as to public perception though; everyone thinks there is way less space in the Fit than there is. They really haven’t gotten rid of that much space in the passenger compartment, its the rest of the car that they’ve shrunk.
I’m 5’11” 205 or so — not small by any means, and I fit into my neon (compact as rated by gubment) and sti (subcompact) with no problems.
how big _ARE_ people that can’t fit into compacts & subcompacts?
I even fit into the backseat of my father-in-laws vw polo in brazil (1.6L 100hp. leather, ac, power everything) although my head was about 1″ or less from the top of the car.
Instead of referencing “Operation Repo”
I’m suprised you didn’t go for the 1984 movie “Repo Man”.
One of the best movies ever made. One of quotes from the IMDB web site
Bud: Credit is a sacred trust, it’s what our free society is founded on. Do you think they give a damn about their bills in Russia? I said, do you think they give a damn about their bills in Russia?
Otto: They don’t pay bills in Russia, it’s all free.
Bud: All free? Free my ass. What are you, a f*****’ commie? Huh?
Otto: No, I ain’t no commie.
Bud: Well, you better not be. I don’t want no commies in my car. No Christians either.
@8rings
No one forced these companies to loan money to these people who couldn’t afford it. Just like people didn’t force the mortgage lenders to make loans to people who couldn’t repay them.
A large majority of lenders simply made poor financial decisions, period.
Even if you complain that many lenders have lost their shirts it still goes back to not extending your debt percentage over a certain amount to protect yourself from situations like that.
(Oh and no one made them fat either!)
@ geeber
Unless the borrower signed the loan papers under duress….
The lender (or the broker) would usually be considered the more financially literate.
Writing a loan document when the lender/broker would be staring at personal financial statements that should scream out that the individual can’t possibly pay is the very definition of PREDATORY LENDING.
If I were apportioning blame I would suggest 80% lender, 20% borrower.
I accept your point about minorities.