Average transaction prices for new models set new high

IRVINE, Calif. - 

The risk auto finance companies absorbed when taking on new-vehicle paper certainly didn’t wane as 2017 closed.

On Tuesday, analysts at Kelley Blue Book reported the estimated average transaction price (ATP) for light vehicles in the United States came in at $36,113 in December. New-car prices increased by $583 (or 1.6 percent) from December 2016, while climbing $66 (or 0.2 percent) compared to the previous month.  

“Average transaction prices closed the year on a strong note, rising nearly 2 percent in December 2017 to set a record high,” said Tim Fleming, analyst for Kelley Blue Book. “Incentive spending was a concern in 2017, averaging 10.4 percent of MSRP, but encouragingly, this figure held relatively flat over the final quarter of the year.

In 2018, interest rate hikes could be another concern, as they threaten to increase monthly payments for consumers,” Fleming continued. “However, Kelley Blue Book anticipates they will help contribute to another down year of new-vehicle sales more than impact prices, which have steadily risen along with the economy since the recession.”

Transaction prices for all of 2017 also finished 2 percent higher than the previous year.

Earlier last month, Kelley Blue Book’s colleagues at Cox Automotive took an in-depth look at what rising interest rates could do immediately after the Federal Open Market Committee (FOMC) at the Federal Reserve opted to push the target range for the federal funds rate higher by another 25 basis points to leave the reading at 1.25 percent to 1.50 percent.

DriveTime seeking new CEO to replace Fidel

TEMPE, Ariz. - 

DriveTime on Tuesday morning announced an executive succession process.

The company said DriveTime chief executive officer Ray Fidel entered into definitive agreements in late November for Fidel's transition out of his role as CEO in December. DriveTime indicated the transition process is complete, and the company is currently searching for a CEO for its retail operations.

"We've built a great foundation for the next chapter in the DriveTime story. While we’re looking for a retail CEO, I’m very confident our current leadership team will get us to the next level,” DriveTime chairman Ernie Garcia said.

DriveTime was founded in 2002 and operates more than 144 corporate-owned dealerships in 27 states, employs over 3,500 people across the country and serves over 100,000 customers each year. DriveTime has sold more than 1,147,329 used vehicles to consumers of all credit types and services a $2 billion portfolio through sister company Bridgecrest Acceptance, a licensed third-party servicer for servicing installment contracts for DriveTime and other affiliated finance companies.

Bridgecrest launched during the second quarter of 2016.

RouteOne and TFS collaborate on contract with remotely captured electronic signature


The days of needing a black-ink pen to finalize auto financing documents appear to be dwindling.

RouteOne announced this week that it has successfully processed what the company claims is the automotive finance industry’s first remotely captured, electronic customer signature on an indirect finance contract. RouteOne insisted this advancement further enables dealers and finance sources to deliver on the demands of convenience and flexibility in the continuously evolving, consumer-driven, vehicle purchasing and leasing environment.

The first remotely executed contract was booked with Toyota Financial Services.

“Consumer expectations are justifiably higher than ever. This exciting technology is an important step in allowing us to make financing even more convenient for customers while maintaining data security,” said Pete Carey, group vice president of sales, marketing and product development at Toyota Financial Services.

RouteOne’s Remote eSign technology enables dealers to grant electronic access to a “signable” finance contract package to a customer, including credit application and all RouteOne generated ancillary documents. Customers may choose to remotely eSign the documents and provide them to the dealer for completion of the contract eSigning ceremony and consummation process. Or the consumer may simply choose to review the document package in advance to improve efficiency at delivery. This promotes an optimal customer and dealer experience.

RouteOne Remote eSign was designed with security as its utmost priority. When a dealer chooses to enable Remote eSign, this invokes a two-step authentication process that generates a secure URL link to the virtual “signing room.” The signing room requires a PIN each time the customer enters and presents the documents to the customer to “sign what they see.”

“As a technology company, RouteOne is continuously evolving so we can deliver tools to our customers that solve their market challenges,” RouteOne chief executive officer Justin Oesterle said. “Remote eSign technology is an integral element of the fully online transaction that consumers are demanding of the auto finance industry. It also creates a new market opportunity for dealers to expand and increase sales by offering a more efficient means of executing contract packages.”

Dealers or finance sources interested in optimizing their F&I experience by implementing eContracting can contact RouteOne at (866) 768-8301 or

Auto Trakk now available on platform

In other company news, RouteOne recently announced that Auto Trakk is now an available finance source for dealers utilizing the RouteOne credit application platform. Auto Trakk is a leading automobile leasing company specializing in leasing to customers with moderate to severe credit issues.

RouteOne’s core credit application system is complementary to dealers and streamlines the credit application process with a single point of entry to a network of 1,400 finance sources, and 150 dealership service providers. RouteOne has an open integration strategy to encourage broad industry utilization of their platform and to provide a complete workflow to dealers and finance sources.

Auto Trakk currently does business with dealers in Delaware, Florida, Indiana, Kentucky, Maryland, Michigan, New York, North Carolina, Ohio, Pennsylvania, South Carolina and Virginia. They offer multiple lease options to customers with moderate to severe credit problems who have had problems obtaining credit for a vehicle.

“As an open integration platform, we strive to build a diverse network and connect our dealers with a wide variety of partners to meet each and every unique business model,” RouteOne chief operating officer Brad Rogers said. “We are pleased to welcome Auto Trakk to our credit application platform, as they offer automobile lease options to meet the needs of dealers servicing customers with credit challenges.”

Auto Trakk chief executive officer Merril Davis added, “It’s all about making it easier for dealers to do business with us. RouteOne is a proven platform and key strategic partner.”

2 Cox Automotive economists dissect implications of third interest-rate rise of 2017


For the third time this year, the Federal Open Market Committee (FOMC) at the Federal Reserve opted to push the target range for the federal funds rate higher by another 25 basis points to leave the reading at 1.25 percent to 1.50 percent.

Based on the expectation that the Fed will increase interest rates three times again in 2018, a pair of Cox Automotive economists on Wednesday projected the possible auto industry implications, including a forecast that has U.S. new-vehicle sales falling below 17 million next year.

The FOMC approved the rate increase by a vote of 7-2 with Charles Evans and Neel Kashkari preferring to maintain the existing target range for the federal funds rate when the Fed hosted its last meeting. The committee’s statement explaining its action reiterated how the group is charged with fostering maximum employment and price stability. The policymakers then turned their attention to what’s happened during the last two quarters of the year.

“Hurricane-related disruptions and rebuilding have affected economic activity, employment, and inflation in recent months but have not materially altered the outlook for the national economy,” the committee said in its statement. “Consequently, the committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market conditions will remain strong.

“Inflation on a 12‑month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the committee’s 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the committee is monitoring inflation developments closely,” the group added.

The Fed’s actions now have pushed interest rates a full percentage point higher than a year ago. Cox Automotive chief economist Jonathan Smoke explained what those decisions have meant to dealerships trying to get vehicles rolled over the curb and finance companies looking to fill their portfolios with performing paper.

“We are already seeing the impact of higher rates and tighter credit on auto sales as the Fed increased short term rates three times over the last year,” Smoke said in a statement distributed by Cox Automotive. “Comparing this November to last November, we are seeing higher lease payments and fewer new leases. The average interest rate on new-vehicle loans, however, has only increased by 20 basis points, resulting in only a $12 increase to the average monthly payment. For lower credit borrowers though, the increase has been far more substantial, rising by nearly a full percentage over the last year.

“The monthly payment matters,” Smoke emphasized.

The latest metrics from Experian Automotive showed that the average payment was $502 per month for new vehicles, increasing by $6 over the previous year, while used-vehicle payments averaged $365 per month, up $3 from the previous year. Those averages arrived as the volume of deep subprime market share sunk to the lowest point analysts have ever seen.

“When rates rise, many consumers do not have an option to pay more. We believe higher rates have already led the automotive market to see some shift away from new and into used,” Smoke said.

“In 2017, it has meant sales of nearly new pre-owned vehicles increased dramatically at the expense of new vehicles as borrowers who would have qualified for a new loan or lease a few years ago are now more likely to buy used. As rates go higher, we expect this trend to continue,” he continued.

Cox Automotive senior economist Charlie Chesbrough echoed many of the points Smoke made, stressing that the Fed’s decision this week likely won’t trigger desolate scenes at dealership showrooms and finance company underwriting departments. But Chesbrough did concede that if the Fed keeps pushing interest rates higher, the rippling impact could spread.

“The Fed’s move today will not derail the market from its strong pace,” Chesbrough said. “Over time though, higher rates will have a negative effect on sales. Consumers could face slightly higher costs for all their borrowing — credit card balances, student loans, financing a house or a car.  At the same time, higher rates drive up the cost to provide low-rate financing, which eats into profit margins and hurts the carmakers as well.”

Ally chooses PNC exec to be next chief financial officer


Ally Financial made a move on Tuesday to ensure a smooth transition involving one of the highest positions at the company.

Ally announced that Jenn LaClair will be joining the company as chief financial officer designate, effective Monday, with the intent that she be appointed to succeed the company’s CFO, Chris Halmy.

Ally indicated in a news release that Halmy will retire as CFO after eight years of dedicated service with Ally, effective March 1. LaClair will report to Ally’s chief executive officer, Jeffrey Brown, and be based in Charlotte, N.C.

“Since joining us in 2009, Chris has been a driving force in nearly every important and transformational initiative we've successfully undertaken as a company — from funding the business during the height of the financial crisis, to our initial public offering, to our efforts to grow and diversify Ally with new lines of business and offerings, he has been instrumental,” Brown said.

“Beyond his contributions from a financial perspective, Chris has served as a true champion of our culture, and a tremendous partner to me, the board and the rest of the executive team. I want to thank him for his contributions, service and leadership at Ally,” Brown went on to say.

LaClair joins Ally from PNC Financial Services Group where she spent 10 years in business and finance roles. Most recently, she served as the head of the business bank and was charged with setting strategy, driving performance and managing risk. Prior to that, she served as chief financial officer for all of PNC's lines of business.

Earlier, LaClair consulted with McKinsey and Company where she focused on strategy, efficiency improvement and operational transformations.

“Jenn brings significant experience from the financial services industry which will be key as we accelerate our growth and evolution as a leading digital financial services company, and we are pleased to welcome her to the Ally team. Beyond her deep financial acumen is a strong cultural fit with the leadership team, which will enable a seamless transition with Chris,” Brown said.

The appointment of LaClair arrives a few weeks after Ally shored up its efforts in Washington, D.C., with a new managing director for public policy and government affairs.

New roles for 2 executives at Toyota’s captive

PLANO, Texas - 

Among seven executive changes made by Toyota across its North American operations, two involve top leaders at the automaker’s captive finance company.

Effective Jan. 1, the company said in a recent announcement that Scott Cooke will be group vice president and chief risk officer at Toyota Financial Services (TFS), where he will have responsibility for risk management across the Americas region, dealer credit and information security.

Furthermore, the OEM indicated Cindy Wang will be group vice president, treasury, at TFS in Plano, Texas, where she will have responsibility for leading Treasury and Vendor Management Office (VMO) business units within Toyota Motor Credit Corp. (TMCC), including responsibilities for Global and Americas Region Treasury.

The other announced changes include:

—Susan Elkington is named Toyota Motor Manufacturing, Kentucky, (TMMK) president in Georgetown, Ky., where she will have responsibility for all manufacturing and administrative operations.

—Kent Rice is named group vice president quality at headquarters in Plano, Texas, where he will have responsibility for promoting overall North America Toyota Quality direction including Product Quality and Service Support.

—Sean Suggs is named Toyota Motor Manufacturing, Mississippi, (TMMMS) president in Blue Springs, Miss., where he will have responsibility for all manufacturing and administrative operations. He also will assume the role of TMMMS Administration vice president.

The company also highlighted a pair of retiring executives, including:

—Wil James will retire in February after completing more than 30 years of service. He most recently served as TMMK president in Georgetown, Ky.

—Bob Waltz will retire on Jan. 11 after completing more than 32 years of service. He most recently served as group vice president of Product Quality and Service Support (PQSS) in Plano, Texas. He will serve as executive adviser of PQSS until his retirement.

“These appointments will bring new insights into strengthening Toyota’s ability for more collaboration enterprise-wide, helping us respond more quickly to the market and our customers’ needs,” said Jim Lentz, chief executive officer, Toyota Motor North America (TMNA).

Free FICO webinar to share strategy to handle accounting changes for credit losses

SAN JOSE, Calif. - 

FICO is hosting a free webinar to sort through the details of an important accounting change that might be giving auto finance companies grief in meeting new standards that change how institutions account for expected credit losses.

FICO experts plan to explain the Current Expected Credit Loss (CECL) requirements outlined by the Financial Accounting Standards Board (FASB) during a 60-minute webinar set for 1 p.m. EST on Tuesday.

“Beginning Dec. 15, 2019, most organizations will have to comply with these new standards. Doing so will require a substantial shift, not just for accountants, but for those in line-of-business, risk, collections and modeling teams within the U.S. auto finance industry,” FICO said.

“While these standards create significant challenges for auto finance, they also create opportunities. Winning institutions under the new model will place an increased reliance on data and analytics to aggressively compete for new business while ensuring tight compliance,” FICO continued.

David Binder, senior director of FICO Advanced Ventures, and Yuly Oentario, principal consultant at FICO, intend to share strategies to prepare for the deadline, demonstrate compliance and drive business performance improvements that contribute to higher levels of return on risk-adjusted assets moving forward.

Other specific topics on the agenda will include:

—What CECL requires of the auto finance industry and how it’s different than previous standards

—What finance companies will need to demonstrate compliance to regulators and auditors

—The challenges finance companies should expect to face in their analytics, operations, line-of-business, and corporate strategies

—The core steps recommended to meet CECL requirements

—Why CECL requirements provide a unique opportunity for competitive advantage for those who deploy the right strategy to comply

—A timeline that will help finance companies achieve consistent progress towards full compliance by December 2019

Finance companies can sign up for the free webinar here.

Huntington elevates Porrello to lead auto finance segment


Huntington Bank looked within its ranks to fill a position set to be open because of a retirement as the institution has promoted industry veteran Rich Porrello to president of its auto finance business.

Since 2010, Porrello has served as managing director of the auto finance division where he oversees day-to-day operations and 180 professionals serving nearly 4,500 dealerships across 23 states in the Midwest and New England. As president, the bank said Porrello will continue these duties as well as assume oversight of business strategy.

Porrello joined Huntington’s auto finance organization nearly 30 years ago and has held a variety of progressive leadership positions, including sales, credit administration, compliance, collections and underwriting. The business has grown to be one of the prominent finance companies nationally with an $11.6 billion portfolio that ranks 15th in origination production, according to recent Experian data.

“I’m honored for the opportunity to continue leading our auto lending business,” Porrello said. “We have built a best-in-class organization that has allowed us to serve more dealers and consumers than ever. Our mission will always be to help dealers sell cars and consumers buy them.”

Porrello’s promotion comes as Nick Stanutz, Huntington’s executive managing director of auto finance and commercial real estate, retires at the end of the year. Porrello and Stanutz have worked together closely for more than 25 years.

“Our auto lending business has prospered under Rich’s leadership, thanks to his vision, expertise and passion for dealers and consumers,” Stanutz said. “I can’t think of a better suited, more capable and customer-focused person to lead our organization. He’s grown up in the culture of our company and knows what matters most to our customers.”

Following Stanutz’s retirement, Porrello will report to Sandy Pierce, Huntington’s private client group and regional banking director.

Dealertrack and DealerCenter partner to help independent dealers’ F&I efforts


More service providers are working together to help dealership finance departments. This week, Dealertrack and DealerCenter announced a strategic integration partnership delivering a more connected F&I workflow.

Independent dealerships using DealerCenter's DMS platform can seamlessly connect customer information to Dealertrack’s open F&I platform, allowing for a smoother workflow with credit application processing.

The companies highlighted this integration can improve the deal-making process by reducing manual entries and errors on credit applications submitted by dealers, which in turn enables faster origination decisions from their finance companies.

“The partnership between Dealertrack and DealerCenter has one main goal in mind: to enable dealers to get business done, while reducing the opportunity for error and duplicate data entry," Cheryl Miller, Dealertrack’s vice president of lender solutions, said. “Dealertrack is continuing its market-leading efforts to enable a more seamless workflow through our open platform, and this milestone integration with DealerCenter is indicative of our innovative vision.”

DealerCenter president Jay Kamdar added, “DealerCenter is committed to collaborating with our strategic partners, such as Dealertrack, to create industry-leading technology solutions for our dealership customers. This integration combines the best of both worlds — the power of DealerCenter’s full-feature DMS software with the convenience of Dealertrack’s open F&I platform.

“DealerCenter prides itself on being a dealer-driven platform and we are thrilled to be the first to provide this revolutionary solution that enables dealers to not only send credit applications to any of their lenders on Dealertrack, but also receive lender responses without ever leaving DealerCenter,” Kamdar went on to say.

For more information on this integration partnership, visit Dealertrack’s website or DealerCenter’s website.

5 major auto financing metrics move higher in November


Each of the five metrics involving used- and new-vehicle financing that Edmunds tracks each month moved higher in November. That collection includes averages for terms, monthly payment, the total amount financed, APR and down payment.

Edmunds manager of industry analysis Jeremy Acevedo pinpointed a reason why the metrics edged higher year-over-year and are all well above where they stood five years ago.

Acevedo said, “2017 has been the year of the SUV. Consumers have proven time and time again this year that they’re not afraid of the bigger price tags, higher APRs and longer loan terms.”

The following charts summarize Edmunds’ latest finance data.

New-Vehicle Finance Data
  November 2017 November 2016 November 2012
 Term  69.26 months  68.77 months  65.17 months
 Monthly Payment   $524  $518  $471
 Amount Financed  $31,433  $31,022  $27,126
 APR  4.81 percent  4.53 percent  4.09 percent
 Down Payment  $3,906  $3,616  $3,622


Used-Vehicle Finance Data
  November 2017 November 2016 November 2012
 Term  67.06 months  66.86 months  63.60 months
 Monthly Payment  $389  $382  $363
 Amount Financed  $21,494  $21,269  $19,127
 APR  7.66 percent  7.36 percent  7.83 percent
 Down Payment  $2,475  $2,345  $2,181