Auto delinquencies hit record high
Although the U.S. auto market is finally showing signs of bottoming out, the delinquency rate on new car loans has jumped to a record high. Per a new American Bankers Association report, 3.42 percent of all indirect auto loans are 30 days past due while 3.01 percent of all direct loans are past due - that latter a new record for the ABA.
During the first quarter of 2008, only 2.03 percent of direct auto loans were 30 days past due. However, that figure jumped to 3.01 percent during the first quarter of 2009 - marking the first time that figure has crossed the 3 percent mark - reflecting the large number of U.S. job losses.
"The number-one driver of delinquencies is job loss," James Chessen, the ABA's chief economist, told Automotive News. "When people lose their jobs, they can't pay their bills. Delinquencies won't improve until companies start hiring again and we see a significant economic turnaround." About 6 million Americans have lost their jobs since the start of the recession.
The 3.42 percent delinquency rate of first quarter indirect auto loans is actually a slight improvement over the fourth quarter of 2008 (3.52 percent), but is still close to the record high. Last year was also a record-setter for vehicle repossessions with 1.67 million cars repossessed.