Auto Industry, Economics, and the Stock Market

Totally Off Topic- but I thought it’d be fun have a finance related discussion on the AUTO INDUSTRY and perhaps future endeavors and opportunities.

Completely open for discussion and everyone feel free to chime in or stick around for the learning experience.

So the companies in focus for this topic are appropriately AUTO COMPANIES/INDUSTRY. My thoughts- BEAR. I first took notice on LEASEHACKR when certain deals for trucks and American brands were finally hitting that 1% formula. Lease rates for these cars are infamously HORRID throughout the ages and then all of a sudden- they’re priced appropriately as of date.

What peaked my interest was the coupons I was receiving for heavy mark-offs, more specifically (again) on American cars. $44k truck advertised for $32k here in OC (could possibly be lower with some slight haggling).

Furthermore- more bad news slowly and quietly being covered by some analysts.

Rise in Auto Defaults:

Bolt factory shutdown and heavy inventory:

Increase used car supplies, a ticking time bomb:

What do you guys think? Is it time to short? If so- short $GM or $F ?

My bet is that GM craters first. They depend for a good chunk of profit from the upscale Denali trims and seem to have a less diversified lineup than Ford… But if the economy keeps chugging along then there won’t be any crash, they can raise incentives as long as there are buyers…

My strategy is always finding the weakest industry to short in an overvalued market. I still have longs (FANG, especially Netflix which I’ve been holding and will be holding forever). GM has a much lower PE than Ford.

GM may kill 6 car models as it works with UAW to tackle sales slump

“The president of the United Auto Workers union said on Thursday the union is talking with General Motors about the potential threat to plants and jobs from slumping U.S. car sales”

What’s your take on Chipotle. You think their luster has worn off yet?

I shorted $CMG on the news- decent 7% and will probably not cover until it hits about $318-328 or so. $F is about 2% and I’ll hold the shorts probably 11.10 or below 10 I’ll cover.

They have kept the leases high by colluding. Now they will need to lease E300 and 530 for under $300 to pay the fines that will be levied on these greedy capitalist pigs. Trump was right for once lol - the Germans are competing unfairly.

Should we expect for great incentives on August based on this news:

No because a corresponding article in Wall Street Journal talked about the pullback in lease from banks due to lower residuals

Car makers also facing a new problem: lenders are backing away from offering the cut-rate lease deals that kept monthly payments low and sheet metal flying off dealer lots in recent years.

Leasing accounted for 31.1% of all retail sales in the first half of 2017, falling slightly from last year’s record of 32%, according to Buyers had been increasingly reliant on leases—which keep payments low even as car prices rise—until this year.

“For a long time, we were all wondering where the ceiling was for leasing. Now, it has been hit,” said Jessica Caldwell, an analyst for

Swelling used-vehicle supply is accelerating the pullback on leasing, The increased supply comes after used-car values had grown steadily in the years following the 2009 financial crisis.

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@Alex - yup you want to short the Auto industry

Ford to Look Beyond Credit Scores in Sales Push
The auto maker’s financing unit hopes that by assessing credit in new ways, it will be able to better predict risk among a broad array of borrowers…

Ford Motor Credit has decided to look beyond credit scores to find new ways to increase loan and lease approvals for applicants with limited credit histories. Here, a potential customer looks at a 2017 Ford F-250 Lariat FX4 at a Ford dealership in Hialeah, Fla, in January. PHOTO: ALAN DIAZ/ASSOCIATED PRESS
By AnnaMaria Andriotis
Aug. 25, 2017 5:33 a.m. ET
A major auto lender has decided to change its approval process to look beyond credit scores in an effort to pump up sales.

The move by Ford Motor Co.’s financing unit, announced Friday, is expected to unfold in coming years, even as concerns mount about rising auto-loan losses in the industry.

Ford Motor Credit says it is looking at ways to increase loan and lease approvals for applicants with limited credit histories. These consumers are often denied credit because they lack a history of managing debt and as a result have low credit scores. Ford’s credit division plans to review new data to try to determine whether these customers, as well as those with more robust borrowing histories, are likely to repay their loans.

Forgot about this post- covered everything this Monday. Looks like not much finance people on this forum- just testing the market.

.09 drop in leased vehicles doesn’t seem like a significant amount.

We’re looking at the inventory that’s coming back after the lease.

Leasing accounted for 31.1% of all retail sales in the first half of 2017, falling slightly from last year’s record of 32%, according to

I was commenting on the .09 drop in leases. Not much, despite all the statements saying bigger drops.

SMMT blames algorithm for blunder over used car data -

The “shock factor” here is not the 0.09 drop but the fact that nearly 1/3 of so-called record vehicle sales are not sales at all … and will come back to the manufacturer as CPO, off lease inventory … 1/3 of 18 million sales means a flood of 6 million used cars (nearly new) being returned to banks/manufacturers each year …

It will be interesting how Harvey effects auto sales over the coming months. Many vehicles were and are being destroyed by water that will need to be replaced. New and used will be in demand in the area once the recovery and insurance payouts start happening. This will not solve the issues with off lease inventory, but should prop the numbers for the rest of this year.

Nothing but trouble ahead for automakers if they plan on sticking with current business models.

Looks like some of the ridiculous GM lease deals may be drying up in the near future.