Loading ...That said, a look just beneath the surface reveals a slightly different take on the U.S. auto industry. As the Financial Times recently pointed out, auto repossessions in the US are soaring and, with the exception of the “great recession” in 2008 and 2009, stand at the highest levels recorded in 20 years.
A wire fence topped with barbed wire surrounds a packed plot of land, housing a white Jeep, an orange Audi and a host of other repossessed cars. Sergio Tavano, owner of T-Birds Automotive in Red Hook, Brooklyn, sits in his car outside the lot with two of his employees. “The number of repossessions we are doing has definitely risen,” he says. “It’s the highest I have ever seen it.”
Repossessions in the US hit 1.6m in 2015, the third highest level on record for data going back 20 years, falling short of the 1.8m and 1.9m peaks seen in 2008 and 2009, respectively.
That number is predicted to rise to 1.7m this year, according to Tom Webb, chief economist at Cox’s Automotive.
“More and more it is people down on their luck and getting their cars taken,” he says. “You feel bad for some people. You are finding them at financially the worst time in their lives … It’s unfortunate, but it’s business.”
Of course, rising repossessions have come after an unprecedented $400BN surge in new auto loans in the past 5 years as dealers have tripped over themselves to provide $0 down, 0% interest, 70 month financing…all of which feeds the wall street securitization machine and naive pension funds that will do almost anything for an extra 20bps of yield.