rebuild.org finance news:

Back to Latest News Headlines

Detroit auto show heralds strong year for car makers, auto loans

[Jan 9, 2012.]


For most of us, the North American International Auto Show in Detroit doesn't open until Jan. 14. But press access begin today, and the industry gets its sneak preview later this week. Expect bigger and better stands, brighter lights, broader smiles, more new models, and generally superior razzle-dazzle this year than you've seen this side of the credit crunch. Because Motown is on a high as it celebrates a Lazarus-like reawakening after it almost literally flat-lined in 2008-09.

Auto makers optimistic

The Financial Times of Jan. 8, identified three reasons why car makers are so upbeat:

  1. This year, the U.S. is likely to be a world leader when it comes to demand for new cars.

  2. American sales of light vehicles grew 10 percent in 2011, and are expected to increase by nearly 9 percent this year. That's 13.8 million units, down on pre-recession highs, but very healthy compared with recent years.

  3. Demand for SUVs and pick-up trucks is likely to be particularly strong, and those are the types of vehicles that American manufacturers excel at producing.

If there's a fly in the ointment, it's that the strength in demand in this country is drawing foreign motor manufacturers here. On Jan. 4, The New York Times published a piece under the headline "Good Year for Autos, but a Test Waits in '12." It warned that American car makers "will be hard-pressed" to keep in 2012 the 47 percent of market share they held last year.

In addition to foreign manufacturers targeting the U.S. market, another contributory factor that could challenge Detroit's market dominance is that Japanese companies lost some share last year as a result of supply problems stemming from its tsunami.

Auto loans now more available to those with troubled mortgages

Clearly, much of the industry's recent success is a result of the increased availability of auto loans. And a Jan. 5 report in The Wall Street Journal suggests that that availability is continuing to widen.

When times were hard, any one who had suffered a foreclosure or who had recently been 60 days or longer behind with their mortgage payments was highly unlikely to see their application for a car loan succeed. However, the Journal quotes recent data from Experian, one of the big-three credit bureaus, that suggest that's changing fast.

Even before the credit crunch, a poor mortgage repayment record was likely to count badly against you if you were applying for auto loans. For example, during the first three quarters of 2006, only about 80,000 people in that position had their applications approved. However, during the same period in 2011, that number increased dramatically: up to 205,000 loans. The Journal appears to expect this trend to continue, allowing more with troubled financial histories to borrow to replace their cars.

Auto loans for you

Whether or not you've had problems with your mortgage or other forms of credit in the past, you probably stand a better chance of being approved for car finance now that at any time for some years. Just be sure to shop around for the best deal, starting with online quotes for auto loans.


About Author:

Peter Andrew has been writing about -- and for -- business for more than two decades. For the last couple of years, he has found himself increasingly specializing in the U.S. financial sector.

news subscription:

Easily subscribe to the rebuild.org news feed.

Read our news without even visiting our site!

Subscribe to our news


news archive:

Rebuild.org monthly news archive