The COVID-19 pandemic has brought the US economy to a halt, touching nearly all industries including the auto industry.
The shelter in place orders enacted by state and local governments affects 95% of the population. These social distancing measures are impacting the auto market in several ways including:
- US factories closed, suspending production of new vehicles.
- Dealerships closed, halting auto sales.
- Increasing supply of vehicles at auction and wholesale markets as demand from dealers falls.
These factors have resulted in auto sales dropping over 38% as compared to the prior year. With lower sales comes lower auto loan originations.
In addition to a significant decline in auto loan originations, risk to your existing auto portfolio can be affected by the current economic conditions. Record crashing unemployment means borrowers may not be able to repay an existing auto loan.
While some lenders are offering programs for payment relief, it may not be enough for borrowers. With the depth and breadth of the pandemic uncertain, the ability for these borrowers to regain employment is unknown.
Valuating your auto loan portfolio is more important now than ever. Understanding your exposure will be key to understanding your potential for loss. In addition, understanding your borrowers credit behavior is critical. By looking at different credit attributes you can identifying borrowers who demonstrate financial behavior suggesting they’re more likely to be adversely impacted by a short term loss of income.
We know this is a difficult time for consumers and businesses alike. At 2020 Analytics, we have reviewed over $10 million auto values providing actionable insights into our clients’ auto loan portfolios. We are offering financial institutions a subset version of our multi-dimensional portfolio analysis for auto valuation. Provide us with loan level data including VIN, make and model and we can provide you a comprehensive analysis with updated auto vales from our partner at Black Book, allowing you to make informed business decisions. In addition, with our partnership with TransUnion, we can provide analysis into your members credit history to help you identify higher risk borrowers.
Contact 2020 Analytics today to learn more.