Without being too much of an alarmist, Cox Automotive economist Tom Webb asked a question that perhaps auto finance company executives are pondering as well: Are financial markets pointing to credit contraction?

Webb delved into the topic as a part of the latest Manheim Used Vehicle Value Index, which came in at 125.2 in January and virtually unchanged from a year ago.

Besides giving his usual update on the wholesale vehicle market, Webb reflected on what’s been happening since the beginning of 2016 on Wall Street and elsewhere in the investment community, acknowledging that “violent swings in equity and debt markets are notorious for giving false signals of imminent doom. But the root causes of those market movements cannot be ignored.”

The Cox Automotive economist described the characteristics of possible global economic slowdown as containing a “devil’s brew” of ingredients, including:

— Aggressive Bank of Japan and European Central Bank actions

— Collapsing oil and other commodity prices

— Currency manipulation

— Capital controls

— Large amounts of dollar-denominated debt held by countries and companies that can ill afford it

To explain what those developments have to do with the availability of used-vehicle financing, Webb shared that a key industry reaction trigger might be if auto delinquencies and loss severities rise in the first quarter.

“It will be viewed with concern, even if both of those ratios remain low from a historical perspective,” Webb said.

SubPrime Auto Finance News on Friday asked Webb to elaborate about the assessment, especially if finance companies appear to be on sure footing with their portfolios and capital access.

“The issue is as I’m hearing from the financial markets and analysts is that obviously what we saw in January was a lot of turmoil in the market,” Webb said.

“Even if you look at the great credit crunch we had in 2008 and 2009, auto lending got caught up in that and they were not a part of it. The auto lending cycle had not run its course yet. It got caught up in housing,” he continued.

“So to the extent that there’s problems in the overall credit market could be an issue for auto lenders even if their underwriting standards are impeccable,” Webb went on to say.