Everyone’s pandemic car loans could bite them into debt

GMC vehicles are on display at the Sterling McCall Buick GMC dealership on February 2, 2022 in Houston, Texas.  Record sales prices boosted General Motors' profits by 56% to $ 10 billion last year.  Due to the global shortage of computer chips, high demand and scarcity of vehicles have pushed up prices, helping General Motors increase its net revenue by 56% last year.

Everyone in 2020 took a look at the car market — with supplies drastically low and demand drastically high — and borrowed a new car anyway. That was … fine for now, but it could haunt us again. All this and many other means The Morning Shift for March 23, 2022.

1st gear: What happens when car prices fall?

The The Financial Times gave a fun story for car loans taken during the pandemic, noting that everyone decided to buy a personal car at the same time for some reason. (We all suffered from Covid.)

This has been a relatively stable situation so far, because, well, people are still buying greedy cars and the car industry is still struggling to get cars out the door. We are still riding the wave, so to speak.

But what is to come must collapse, as the FT points out:

The Americans made big purchases for cars during the pandemic. According to the Federal Reserve Bank of New York, car loans in the US reached a record $ 734 billion in 2021. Total outstanding debt in the industry increased by $ 84 billion to $ 1.46 trillion, exceeding the increase student debts and credit cards together. Federal Reserve Chairman Jay Powell has called for more aggressive monetary tightening this week, signaling an increase in credit risk.

[…]

The high interest rates on these debts put the car lenders’s funds. The rise in prices for used cars has also made it easier for banks to recover their funds in the event of bankruptcy. Used car prices are not far from the highs of the decade in the US, according to data from Manheim.

However, rising interest rates, sharply higher gasoline prices and the eventual easing of car shortages all threaten to put a brake on the car loan boom. Ally Financial and Capital One shares have already followed the broader US Russell 1000 financial index since last summer.

When used car prices fall, lenders who have taken out large loans may have a different view of collateral. From July, automatic defaults increase again, according to the S & P / Experian Auto Default Index. It’s early, but shareholders will want to fasten their seatbelts.

I love the Financial Times because they do not see it as a problem for consumers, for ordinary people. Ordinary people do not read FT. This article is about wealthy people investing money in this subject.

2nd gear: Production of Corvette in idle due to lack of spare parts

Speaking of car companies that are still struggling to build cars, even their best-known vehicles: Workers assembling the new C8 Corvette remain idle for a week due to spare parts problems, as well as Automotive News References:

General Motors cut the first and second shifts in Corvette plant in Bowling Green, Ky., to temporarily limit parts, said spokesman Trevor Thompkins Automotive News.

“Our supply chain, construction and engineering teams work closely with suppliers to mitigate further impact on production,” he said.

[…]

GM declined to say which component was missing, but spokesman Dan Flores confirmed that the shutdown was not due to a lack of semiconductor chips. No other genetically modified plant is receiving spare-related downtime this week, he said.

Gear 3: The former GM boss moves to ExxonMobil

The warm relationship between the automotive and oil industries continues to this day, with former GM and Cruise executive Dan Amman moving to ExxonMobil. He says he will be there to help get rid of the carbon emissions, even though it sounds a bit like putting a fox to take care of the coop. From Automotive News:

Dan Ammann, the former General Motors chairman abruptly left his place In December, he was appointed CEO of ExxonMobil Low Carbon Solutions as CEO of Cruise.

[…]

He said to one Post on LinkedIn On Tuesday, he will lead the construction of new businesses at ExxonMobil with a focus on the carbon offset of the industrial economy.

“We will significantly move the needle to zero in the most difficult industries, in a cost-effective way and urgently,” he wrote. “To do this, we will leverage the vast resources and know-how inside ExxonMobil today, along with the best outside ideas and an initial $ 15 billion commitment the company has made to build this business and emission reduction “.

4th Gear: “Right To Charge” is my new favorite EV phrase

I love this strange moment in the history of electric cars, in which there are growing offers for electric vehicles but inadequate charging infrastructure. In some places, there are too many chargers, as in Japan. The UK is facing the opposite problem, such as Bloomberg References:

A successful transition to e-mobility is possible only with significant improvements in the infrastructure that give drivers the “right to charge”, warned an industry body.

The CEO of the Society of Motor Manufacturers and Traders (SMMT), Mike Hawes, said the industry was “ready to challenge” the phasing out of new petrol and diesel cars, but that its efforts must be accompanied by huge investments in public chargers.

[…]

Last year’s ratio of about 16 EVs for each standard public charger is likely to deteriorate to around 32 EVs per charger this year, with significant regional fluctuations, Mr Hawes said.

He warned: “Things are getting worse because of this rapidly changing market share for EVs sales.

“We need the infrastructure to make up the difference.”

I just like the phrase Right To Charge. You have to fight! For your right! To devour electrons at 150 kWh!

5th Gear: You have two months to receive $ 2.9 billion in new transportation financing

The Department of Transportation under Pete Buttigieg is donating a new $ 2.9 billion and you have two months to get your hands on this sweet, sweet funding as well Reuters References:

The White House will announce on Wednesday a $ 2.9 billion funding opportunity earmarked by the Department of Transportation for major infrastructure projects this year as part of a $ 1 trillion bill passed in 2021.

[…]

Grant financing offers “an opportunity once given to a generation to repair our old infrastructure and invest in major projects for the future of our economy,” Buttigieg said. Applications must be submitted by May 23.

The amount includes $ 1 billion for projects of national or regional importance that are too large or too complex for traditional funding programs, which Buttigieg described as “the cathedrals of our infrastructure.”

We will build cathedrals to our wheel gods, honor and love them.

Conversely: I can not believe this was a year ago

On March 23, 2021, Ever Given got stuck in the Suez Canal. In my heart, it ‘s still there.

Neutral: How are you?

I think I can finally take advantage of this hot weather as an opportunity to paint a bike for the first time. It will go very wrong, I’m sure.

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