Car Loans

According to TransUnion.com, a global leader in delivering credit and information management revealed that more people during the 3rd quarter were delinquent on their auto loans than in the previous year’s 3rd quarter. The delinquency rate is based on any payment not received within a 60-day period.

During the most recent period, the rate advanced from 0.80% to 0.81% year-over-year. Delinquencies of more than 60 days are viewed as precursor to a pending default in loan payments, as borrowers are less likely to catch up on their payments. The rate increase from the 2nd quarter to the 3rd quarter of 2009 was even greater, from 0.73% to 0.81%.

Peter Turek, automotive VP in TransUnion's financial services group commented, "The rise in the third quarter 60-day auto delinquency rate is more indicative of a cyclical pattern since the current automotive lending environment has remained consistent in its approach over the last 12 months."

Turek added, "As in recent quarters, both the availability of funding in the market, consumer demand for auto financing and tighter lending standards have contributed to a significant decrease in the number of auto loans in the market, resulting in upward pressure on delinquency rates. As well, the drop in average auto loan debt, although marginal at the national level, reflects the maturation of existing loans and the corresponding decreases in new auto loan originations in the third quarter."

On a state-by-state basis, seven states experienced a drop in their quarter-over-quarter delinquency rates. Meanwhile, 22 showed a drop on a year-over-year basis, an indication that some states could emerge from the recession sooner than others.

The states with the highest delinquency rates were Mississippi and California at 1.53% and 1.33% respectively. The other side of the spectrum showed that the District of Columbia, 0.26%, North Dakota, 0.35%, and South Dakota, 0.37%, were the lowest across the nation.

On average, outstanding auto loans, in terms of dollars, throughout the U.S. decreased slightly during the 3rd quarter, from $12,560 to $12,542. Year-over-year, the total debt owed by borrowers for autos dipped 2.5%.

Analysts from TransUnion believe that the delinquency rate heading into the final two quarters of a calendar year tend to increase because borrowers are more focused on other spending needs, such as holiday purchases. However, that trend seems to dissipate during the first half of the year, as borrowers tend to use their income tax returns to bring their payments back inline.

TransUnion expects 4th quarter delinquencies for auto loans to be near 0.90%.

The delinquency rate comes as sales within the U.S auto industry came in marginally higher in November. For the month, overall sales were 746,000 vehicles, which translate to a seasonally adjusted rate of 10.9 million units sold. That compares to the 10.4 million vehicles sold by November of last year.

Among U.S. automakers, Ford (F) saw their sales remain flat in November, selling just under 123,000 vehicles. Within those sales totals, the company witnessed a 26% surge in crossover sales, as well as a 14% increase in car sales. However, that was offset by a double-digit decline in the sale of trucks and SUVs.

General Motors (GM), meanwhile, saw sales dip 2% across the board, selling just over 151,000 vehicles. The car company did see a slight increase in their core brands, Buick, Cadillac, Chevrolet (up 17%) and GMC (up 8%). Chrysler, which is now a private company, saw sales plunge 25% to a total of 63,000 vehicles sold.

Sales of imports fared much better. Although Honda (HMC) was the only Asian carmaker to post a decrease in auto sales, down 2.9% to 74,000 units, both Nissan (NSANF.PK) and Toyota (TM) showed positive sales figures. Nissan’s sales were up 21% in November, bolstered by significant increase from several models including, Maxima (up 83.8%), Altima (up 43.1%), Frontier (up 71.4%) and Xterra (up 50.9%).

Toyota’s sales were a little tamer in comparison, advancing by 2.6% to more than 133,000 vehicles, with a handful of models leading the way, Camry (up 18%), RAV4 (up 35.1%) and Prius (up 11%). Even Hyundai (HYMLF.PK) saw its sales figures jump 46% during the month, led by the company’s top-selling sedan, the Sonata.

The auto industry remains in turmoil and the recovery of the sector is fragile at best. With two of the “Big Three” entering into bankruptcy this year, companies are showing signs of stabilization, as well as marginal growth. The coming year could provide positive growth within the industry, as projected production of vehicles is expected to increase.

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