U.S. auto sales seen as best since 2007 on low financing

‘No Question’

Banks are “awash in deposits” and putting them to use in lending to auto buyers with the best credit, said Michael Carpenter, Ally’s CEO.

“There’s no question, for I think understandable reasons, that the automotive market bounced back first,” Carpenter said in an interview at the NADA convention. “You’re not making a bet on a housing recovery and what’s happening to house prices. You’re making a bet on a loan over four years on a vehicle” that is “indispensable” to millions of Americans.

GM and Chrysler Group LLC are letting deals with Detroit-based Ally expire this year that have guaranteed a minimum percentage of their vehicles sold with so-called subvented loans, those made to consumers at below-market rates. Chrysler this month agreed to form a financing venture with Banco Santander SA.

Before settling on Santander, Chrysler received a “number of proposals” from financial companies that weren’t interested in the automaker three or four years ago, Reid Bigland, Chrysler’s U.S. sales chief, said in an interview.

‘Very Attractive’

Credit availability and low interest rates were “tops on the list” of reasons why U.S. auto sales rose 13% last year, the biggest annual increase since 1984, Bigland said at the NADA convention. The Auburn Hills, Michigan-based company probably boosted sales by 4.4% in February, the average of 11 estimates.

“The returns in the auto business over the last few years have been very attractive,” Trip Hall, president of Capital One Auto Finance, said in an interview. “That’s caused increasing competitive activity in the market, new entrants and players expanding from where they have been in the past.”

Honda Motor Co. may have increased sales in February by 0.7 percent and Nissan Motor Co. deliveries probably slipped 3.3%, both the average of eight analysts’ estimates.

Analysts estimate that Seoul-based Hyundai Motor Co. and Kia Motors Corp. may have combined to sell 5.1% fewer vehicles in February compared with a year earlier, the average of six estimates.

February had 24 selling days, one fewer than in 2012.

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