First disappointing May auto sales, now Jamie Dimon sounds the alarm on auto loans
While some see a booming auto market, there are reasons to be concerned as subprime loan volumes mount. Yes, those two dirty words are once again back in vogue, kicking up memories of the housing crisis and giving rise to thought the automotive market could be over inflated at best and at worst preparing for a pop. Following May sales declines at Ford, GM, Volkswagen of America, Honda, Toyota and Nissan, Dimon’s comments are likely to question the vector and velocity of the domestic automotive market in the coming quarters.
Auto-loan balances surpassed $1 trillion in the first quarter, a record, growing 11% from the year-earlier period, according to credit reporting firm Experian. That is fueled by the growth in car sales in recent years as well as loosening underwriting standards that also have made it easier for subprime borrowers to get financing.
The volume of car loans held by subprime consumers increased by 11%, outpacing the 9% increase for prime customers, according to Experian.
“Auto is clearly a little stretched, in my opinion,” the JPMorgan Chase CEO said Thursday morning, speaking at the AllianceBernstein Strategic Decisions Conference in New York. “Someone is going to get hurt. … We don’t do much of that.”
