As Ontario auto industry consultant Dennis DesRosiers once noted: “Americans, from an attitudinal point of view, believe it’s their God-given right to own as much vehicle as they possibly can.”
Problem is, those car buyers don’t have nearly as much equity as they used to. And over the past year, that “right” handed down from heaven smacked squarely into financial reality.
So when Ford Motor Co.’s (F) credit arm last week told fixed income analysts that it repossessed fewer vehicles in the second quarter than the first and that its percentage of 60-day loan delinquencies also fell over the same time, Brett Hoselton at KeyBanc Capital Markets Inc. saw it as a sign the skies may be clearing.
“While one quarter does not make a trend, we would view this data as an indication of a healthier consumer,” he wrote in a report July 24.
Don’t crank up the idled assembly lines just yet though. This year’s comparisons are still worse than last year. The repossession ratio increased from 1.98% in the second quarter 2008 to 2.76% in Q2 2009. Delinquencies increased from 0.2% to 0.23%.
Ford Credit last week reported a pre-tax profit of $646-million for the three months ended June 30, reversing a $294-million pre-tax loss in the same period last year.
