Automotive News - November 10, 2008 - (Page 26) 26 • NOVEMBER 10, 2008 finance & insurance Report: Past-due subprime loans jump Alysha Webb awebb@crain.com The rate of delinquencies among subprime auto loans that are bundled by lenders and sold to investors is at an 11-year high, a new study says. In September, 4.3 percent of subprime loans included in asset-backed securities were at least 60 days past due — a 40 percent increase over September 2007, according to Fitch Ratings. Figures were unavailable for October. A subprime customer has credit problems and a credit score that generally falls between 550 and 619 on a scale that ranges from 300 to 850. By contrast, 0.7 percent of prime loans in assetbacked securities were delinquent for at least 60 days in September, Fitch says. That rate has been stable for much of the year and is up 9 percent from the year-ago month. Prime borrowers have credit scores of 680 and higher. Hylton Heard, director of Fitch’s asset-backedsecurities group, says a rising U.S. unemployment rate is stoking subprime-loan delinquencies. The U.S. jobless rate exceeded 6 percent in the third quarter. Longer vehicle loans and looser underwriting standards also have contributed to the boost in delinquency rates, Heard says. “We do expect losses in the prime and subprime to continue to rise through the end of the year,” Heard told Automotive News. Auto lenders sell securities backed by loans and leases to raise money. Lenders have had greater difficulty selling those securities amid the financial meltdown of recent months, aggravating the global credit crunch. At the same time, Heard says, auto lenders are working to reduce their credit risks and build reserves to offset expected increases in consumer loan defaults. As a result, Fitch is generally upgrading its ratings of prime asset-backed securities, although at a slower pace than last year. “This is probably the most stressful period we’ve seen in a long time,” Heard says. “But these deals are structured in a way that they should be able to withstand further increases in the unemployment rate.” c Toyota aims to win loyalty with credit card Donna Harris dharris@crain.com Card file Toyota Financial is issuing a Toyota-branded Visa card aimed at building customer loyalty. Cardholders can Earn rewards points for charges at Toyota dealerships and elsewhere Apply those points to the cost of new-vehicle purchases or leases, service, parts and accessories Qualify for low introductory interest rates and bonus points After finding success with a Lexusbranded Visa card, Toyota Financial Services is launching a similar credit card for Toyota owners. Executives of Toyota’s finance company expect the new card to boost customer loyalty at Toyota dealerships. The Toyota Rewards Visa card, issued by Toyota Financial Savings Bank, lets owners earn points they can apply to the cost of service, parts, accessories or a vehicle purchase or lease. Since Toyota Financial introduced the Lexus Pursuits Visa card in June 2005, more than 60,000 cardholders have redeemed about $4 million in awards points. Lexus Pursuits cardholders tend to shop more often at Lexus dealerships than do other Lexus owners, says Toyota Financial spokeswoman Kerry Rivera. They also spend more money per visit than other customers, Rivera says. Mike Wells, group vice president of Toyota Financial, says the new card will help Toyota’s “incredibly loyal” owners “get more out of their Toyota relationship.” Toyota Financial declined to forecast how many Toyota owners will sign up for the new card. The Toyota Rewards Visa card has no limit on how many points cardholders can apply to the purchase or lease of a new vehicle. There is no annual fee. and risk management. Pat Coll, U.S. Bank’s executive vice president of retail payments, says the card offers “one of the most generous rewards programs in the auto industry.” The card is limited to U.S. residents. Cardholders earn five points for every dollar spent at participating Toyota dealerships and one point for every dollar charged to the card elsewhere. The card does not carry an annual fee. There is no limit on how many points cardholders can apply to the purchase or lease of a new vehicle. Incentives include a low interest rate during the first six months of card ownership and 2,500 bonus points after the first purchase with the card. Pat LeClair, service manager of Toyota Financial’s Mike Wells: The Visa card will help owners “get more out of their Toyota relationship.” Greentree Toyota in Brookfield, Conn., says his dealership is taking part in the program. Although none of the dealership’s customers has applied for the card, LeClair said, the promotion “could be a great thing.” “It builds customer loyalty and retention for the dealer.” LeClair told Automotive News. Lexus dealers like their credit card program. Walt Kinney, finance manager of Sheehy Lexus in Annapolis, Md., says the dealership’s service business has increased since Lexus started issuing the branded Visa card. Using cash advances During the current credit crunch, Kinney says, some customers are signing up for the card so they can use a cash advance with an introductory 0 percent interest rate as a down payment on a new vehicle. Customers typically obtain credit limits of $10,000 to $11,000, he says. “They can use that card in the dealership immediately,” Kinney says. “If you get somebody who is upsidedown on the trade-in, this is another avenue to find money.” c Bank partners Toyota Financial Savings Bank is distributing the Visa card in partnership with U.S. Bank, which oversees the program’s marketing support http://www.cso.com http://www.cso.com
Table of Contents Feed for the Digital Edition of Automotive News - November 10, 2008 Life at 11 million: Slash, rethink The options: Bailout or disaster Can Toyota reheat the frozen Tundra? Chrysler dealers cheer halt to merger talk VW will unveil roadster at Detroit auto show BMW boosts dealers' year-end ad money Mercedes' $220 million flagship Mercedes hit hard in Northeast, once a sales stronghold Mercedes will kill CLK, add larger coupe, convertible Mitsubishi reclaims its finance business Toyota's Esmond to speak at congress Loss is more: Europe snatches bigger share of U.S. market Cash burn rates threaten GM, Ford GMAC: We're nobody's captive As losses mount, suppliers risk cash-flow crunch Tata: Yes to Jaguar XF derivative, no to SUV U.S. aid is needed now, but not to help Cerberus They are too big to fail Why should we help GM and Chrysler? First and foremost, you must be flexible U.S. trade policy gives it all away To the Editor: A rough ride is nothing new for autos Dealer's politics were pertinent Chrysler's 1st electric: Probably a cargo van Auto meltdown forces Mercedes to scrap prediction of sales record Boosting mpg will bump up stickers, too Adding up the tab for fuel economy Camaro Black: Eye-catching, affordable and available Honda sees green in Civic HFP's street performance Honda offers peek at future Fit Ford F-150 Raptor flies off-road Souped-up, tricked-out â and headed for the showroom Report: Toyota plans $5,000 car Amid gloom, Mazda chief sees revival in 2009-10 Report: Past-due subprime loans jump Toyota aims to win loyalty with credit card Study: Car buyers turn green for different reasons Thanks, buddy Hyundai helps Dealers Metaldyne offers pennies to bondholders Obituaries Personnel As expected, Oct. sales sank Another Chinese automaker plans Mexico factory Honda backs off U.S. clean diesels Industry pal, foe vie for key post in Congress Industry expects more activism from D.C. N.A. output falls 19.9% Toyota moves in striking distance of GM's U.S. sales crown Going, going . . . An ex-GM exec's view: It's going to get nasty Sex, Nazis, chicken and BMW: A scandal that puts fiction writers to shame Recession rips up roadster market Toyota takes heat for 'the herpes of the advertising world' Want to boost mpg? Turn up the heat on AC Cutting energy loss: A nibble here, a nibble there ... Carbon slashes weight, but it's still too pricey Carmakers shift to gears in search of mpg gains Natural gas draws interest as alternative fuel Friction? Ay, there's the rub Electric for a week Automotive News - November 10, 2008 Automotive News - November 10, 2008 - (Page Intro) Automotive News - November 10, 2008 - (Page Bellyband1) Automotive News - November 10, 2008 - (Page Bellyband2) Automotive News - November 10, 2008 - The options: Bailout or disaster (Page 1) Automotive News - November 10, 2008 - The options: Bailout or disaster (Page 2) Automotive News - November 10, 2008 - VW will unveil roadster at Detroit auto show (Page 3) Automotive News - November 10, 2008 - Mercedes hit hard in Northeast, once a sales stronghold (Page 4) Automotive News - November 10, 2008 - Mercedes hit hard in Northeast, once a sales stronghold (Page 5) Automotive News - November 10, 2008 - Loss is more: Europe snatches bigger share of U.S. market (Page 6) Automotive News - November 10, 2008 - Loss is more: Europe snatches bigger share of U.S. market (Page 7) Automotive News - November 10, 2008 - As losses mount, suppliers risk cash-flow crunch (Page 8) Automotive News - November 10, 2008 - As losses mount, suppliers risk cash-flow crunch (Page 9) Automotive News - November 10, 2008 - Tata: Yes to Jaguar XF derivative, no to SUV (Page 10) Automotive News - November 10, 2008 - Tata: Yes to Jaguar XF derivative, no to SUV (Page 11) Automotive News - November 10, 2008 - First and foremost, you must be flexible (Page 12) Automotive News - November 10, 2008 - First and foremost, you must be flexible (Page 13) Automotive News - November 10, 2008 - Dealer's politics were pertinent (Page 14) Automotive News - November 10, 2008 - Dealer's politics were pertinent (Page 15) Automotive News - November 10, 2008 - Auto meltdown forces Mercedes to scrap prediction of sales record (Page 16) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 17) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 18) Automotive News - November 10, 2008 - Boosting mpg will bump up stickers, too (Page 19) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 20) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 21) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22a) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22b) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22c) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22d) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22e) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22f) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22g) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22h) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22i) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22j) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22k) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 22l) Automotive News - November 10, 2008 - Adding up the tab for fuel economy (Page 23) Automotive News - November 10, 2008 - Souped-up, tricked-out â and headed for the showroom (Page 24) Automotive News - November 10, 2008 - Amid gloom, Mazda chief sees revival in 2009-10 (Page 25) Automotive News - November 10, 2008 - Toyota aims to win loyalty with credit card (Page 26) Automotive News - November 10, 2008 - Hyundai helps (Page 27) Automotive News - November 10, 2008 - Dealers (Page 28) Automotive News - November 10, 2008 - Personnel (Page 29) Automotive News - November 10, 2008 - Personnel (Page 30) Automotive News - November 10, 2008 - Personnel (Page 31) Automotive News - November 10, 2008 - Personnel (Page 32) Automotive News - November 10, 2008 - Personnel (Page 33) Automotive News - November 10, 2008 - Personnel (Page 34) Automotive News - November 10, 2008 - Personnel (Page 35) Automotive News - November 10, 2008 - Personnel (Page 36) Automotive News - November 10, 2008 - As expected, Oct. sales sank (Page 37) Automotive News - November 10, 2008 - Honda backs off U.S. clean diesels (Page 38) Automotive News - November 10, 2008 - Industry expects more activism from D.C. (Page 39) Automotive News - November 10, 2008 - Industry expects more activism from D.C. (Page 40) Automotive News - November 10, 2008 - N.A. output falls 19.9% (Page 41) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 42) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 43) Automotive News - November 10, 2008 - Toyota takes heat for 'the herpes of the advertising world' (Page 44)
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