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There is news that GM is in crises mode. 93% of General Motors' 2012 profits were based on subprime loans. GM auto increased loans to customers with FICO scores below 660 rose from 87% to 93%. This is risky lending practices again. Exactly what happened with the housing crash, now GM is taking a failed approach to increase sales. Stock prices are $19.70. For the taxpayers to get their money back the stock price would have to sell for around $50 - $54
It's a recovery goosed by government fiat under the static condition of a bad (jobless) economy. The GM subprime auto loans puts a damper on President Obama's claims to have rescued the automaker and restored it to financial health.
There is news that GM is in crises mode. 93% of General Motors' 2012 profits were based on subprime loans. GM auto increased loans to customers with FICO scores below 660 rose from 87% to 93%. This is risky lending practices again. Exactly what happened with the housing crash, now GM is taking a failed approach to increase sales. Stock prices are $19.70. For the taxpayers to get their money back the stock price would have to sell for around $50 - $54
It's a recovery goosed by government fiat under the static condition of a bad (jobless) economy. The GM subprime auto loans puts a damper on President Obama's claims to have rescued the automaker and restored it to financial health.
While I agree that GM's profits and "return as the largest auto manufacturer in the world" is mostly smoke and mirrors, I hardly consider lending to a consumer with a <660 score to be some sort of high-risk maneuver. The *average* score in the US isn't even 660 (some places claim it's in the 670's, but FICO modeling indicates that the average is actually about 630).
What I would be interested in is how many of the loans were issued to people with scores below 600. I doubt GM is in "crisis mode", as Ally Bank (GM's financial arm, for all intents and purposes) has passed every stress test. But from an investor's perspective, GM is clearly not as well run as F in the domestic space.
There is news that GM is in crises mode. 93% of General Motors' 2012 profits were based on subprime loans. GM auto increased loans to customers with FICO scores below 660 rose from 87% to 93%. This is risky lending practices again. Exactly what happened with the housing crash, now GM is taking a failed approach to increase sales. Stock prices are $19.70. For the taxpayers to get their money back the stock price would have to sell for around $50 - $54
It's a recovery goosed by government fiat under the static condition of a bad (jobless) economy. The GM subprime auto loans puts a damper on President Obama's claims to have rescued the automaker and restored it to financial health.
As someone that follows lending standards in the auto industry....that's an industry-wide phenomenon as banks have loosened lending standards.
It would also be good if you provided a link to your source.
Lastly, if you want to make a solid point you should show what the industry is doing or one of their competitors etc.
The stock price is no doubt a problem but your "risky lending practice" schtick is garbage and comparing home loans to auto loans is even worse.
Now if they were pushing cheap leases hard then that would be scarier.
What I would be interested in is how many of the loans were issued to people with scores below 600.
The answer to your question is in red.
The worse the FICO score, the bigger the increase. From Q4 2010 to Q1 2012,
GM Financial loans to customers with the worst FICO scores.
Fico score below 540 shot up 79%.
The second worst category, 540-599, rose 28%
I myself prefer to know how our investment is going. Numbers tell a story without a swing to the right or left. What can I say. If you don't understand what this means I could care less. I am just reporting how "our" investment is doing.
Several factors contributed to the quick recovery of auto lending. Both banks and auto lenders can reap large profits on new loans, since interest rates near zero have kept the cost of their funds extremely low
Quote:
In addition, auto lenders, unlike home lenders, have long issued loans expecting that the vehicle will start to lose value as soon as it is driven off the lot. That helped them avoid the costly mistakes of mortgage lenders, who underwrote loans during the boom on the belief that prices would keep going up. In fact, auto loans fared better than almost any other loan category during the crisis.
New-vehicle buyers received an average annual percentage rate of 5.23 percent from Ford in September, from 5.07 percent in August, according to Edmunds.com. The rate among GM buyers rose to 5.25 percent from 5.23 percent, the Santa Monica, California-based firm said.
As a fellow stockholder\taxpayer in GM....I'm glad to see that they are issuing more sub-prime loans and are thus able to make larger profits....which will help *our* stock price.
The graph is the first link (left column) shows the history which is also enlightening.
If you work in the industry this is hardly new or scary news.
P.S. You seriously think that it was the loans made by the manufacturers that got them in big trouble? When the economy collapsed in 2008 they couldn't sell cars....which is what got them in trouble. It was the home loans that crashed GM etc.
There is news that GM is in crises mode. 93% of General Motors' 2012 profits were based on subprime loans. GM auto increased loans to customers with FICO scores below 660 rose from 87% to 93%. This is risky lending practices again. Exactly what happened with the housing crash, now GM is taking a failed approach to increase sales. Stock prices are $19.70. For the taxpayers to get their money back the stock price would have to sell for around $50 - $54
It's a recovery goosed by government fiat under the static condition of a bad (jobless) economy. The GM subprime auto loans puts a damper on President Obama's claims to have rescued the automaker and restored it to financial health.
You forgot to tell us what the crises is? When I took a loan to buy a car, I didn't borrow the money from the car manufacturer, but from a bank.
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