Ally Financial SHOCKS the Auto Industry

it's noon here in Venter City New Jersey and our nation's capital Washington DC and this is news that you can use from car Edge Monday July 22nd happens to be birthday boy week okay it's birthday week for that handsome young lad sitting across from me that would be Zach om Ray yes I'm the proud father I do apologize happy birthday hansome thank you Dad um already the freaking vergers Today's Show brought to you by us car edge.com um 29% off of what having a tough day hansome I'm sorry to hear that all right let me compose myself either that or you can share with 29 million viewers and it's not that many there's only 226 people here and birthdays birthdays are tough um but this will be fun all right let's do it go buddy all righty we're through car.com sponsor of today's show 29% off car Edge insights dead take advantage of invoice pricing back on the website all right Dean thank you Dean it it wouldn't let me pick $29 as an amount happy birthday birthday Zack when people sign up for your service do you already have pre-negotiated deals with certain dealers or do you negotiate each deal individually we negotiate each deal individually but Dean we got to go we'll acknowledge that even more in just a moment we got to go to the big story which is Ally Financial dad Ally Financial had their earnings last week and their auto loan delinquencies keep going up I pulled from the latest quarterly earnings 4.33% auto loan delinquencies do you have a guess what it was just one quarterback uh three 3725 per. we needed one more decimal place there 3.88% dad Financial continuing to experience autoone delinquencies going up and they're lending less than ever before we talked about this a bit last week but there are all sorts of cracks in the financial Foundation it's also making it more difficult to get to proove for an auto loan what do you make of the fact that allies auto loan delinquencies keep going up up up um well you you we know delinquencies across the border auto loan credit card personal loans whatever we know those delinquencies are are going up across the board what we didn't know was that there there's a dip in the number of loans that they're originating now what is causing that dip are there fewer applications that are be that that are being sent their way for them to review are dealers trying to place U car loans with other lenders and not Ally um or has Ally um made it known to their lenders that because of the increased amount of repossessions they're seeing that they're going to suddenly become more selective and well you if it's if they're not gold don't send them to us so um that's the more scary part is why are there loan originations down and and what what is behind that now David oops thank you Rebecca David has an Insight here friend of his Southeast mandrier Ally and if you do not have a 650 or higher you're not getting a loan so I wonder if we're going to continue to see more and more restrictions around Auto lending and less options for folks for example US Bank actually had a huge increase year-over-year in their in their Auto lending but Ally is down so I think certain banks are going to take on more risk other Banks aren't Ally delinquencies going up that significantly quarter over quarter though is an indication of some of the financial pain that they're feeling right now I I just I think allies making a a concerted effort to improve their loan portfolio and how do you improve your loan portfolio you look for for higher quality uh uh people to lend the money to so yeah 650 and above anything below that you ain't getting a loan um so that that should cut back on the amount of potential repossessions they have moving forward but it would also be a reason why there would be a dip in loan originations um yeah I you know I it probably could help San Tander and our and our good friends at Credit Acceptance Corporation who you know want to knock your socks off with the interest rates but now I said US Bank was up excuse me US Bank was actually down significantly it was chase that is up year over-year so here's your chart of outstanding loans by each of the financial institutions that we have data for and I said Ally shocks the Auto industry they're actually down the least in terms of their outstanding maybe that was the shock yeah the shock is look at some of these other Auto Lenders they have significantly pulled out of lending for autos and and I think that that's a a sign of the times and it also Dead comes on the heels of I don't know if you saw this initial jobless claims in uh in early may have increased they're the most that we've seen excuse me since early May they're the highest that we've seen so I think the strength of your borrower is also impacted in this uh and is challenged well people are are impacted because of many things um we know credit card usage is way up yep you know and and that means that there's a certain lifestyle level that that many Americans uh live at whether they can afford that level or not and many have used credit as a way to maintain that that lifestyle yeah and if people are finding it more difficult to utilize credit or they've utilized all the credit they can um then it makes it harder to do other things like I don't know pay your car loan um insurance rates have gone up dramatically so that that exacerbates the situation uh maintenance costs are up everything you look at is up so if if you've been utilizing your available credit lines in order to maintain a lifestyle that well really isn't a lifestyle that you can afford you're going to see a drop off in in loan originations you're going to see an increase in repossessions it is it is part of the of the education of the American Consumer that needs to be had and that is trying to teach the American Consumer to live within their means yep and and you know the past 60 70 years uh the advertisements have been anything but living within your means it's how can you you can have everything you've ever wanted that you didn't even know you needed or wanted we're going to be able to make it available to you you and and now as as somebody once said in the movie Airplane the poop's going to hit the fan yeah and and I want to pull up you mentioned uh repossessions are up 23% in the first half of 2024 so it is an interesting landscape want it just take a second we had some thoughtful contributions coming through and thank you everyone for the birthday wishes really really means the world to me looks like Pops needs to reset his mic so this is a perfect time for me to bring Brian his super sticker up is pops capable of dancing and fixing a mic at the same time probably not there it is folks that is a sight to behold there it is but it's your birthday you should be the son of a gun doing the dance today again from Dean earlier Dean that was a very very very kind contribution appreciate it and again to reiterate we work every single deal individually we might in the future be able to get some pre-negotiated deals on the website if we do we'll let everyone know but every single deal that we use for car Edge concierge is done individually thank you for celebrating my birthday with me and lumber Jeff thank you Lumber Jeff really appreciate that happy birthday Zack have like a thousand beers haven't drank in three years Lumber Jeff um but I'll have some athletic so so my guess is it would only take maybe one or two to to like I don't know get you drunk as opposed to that thousand if you haven't had anything to drink in three years as opposed to the beard so yeah Dad we've got repossessions up 23% we've got autol loan originations falling off a cliff and we just talked about and demonstrated that delinquency rates are going up up up and so I want to now transition our conversation to the decision that some of the automakers have made that may have led to this and I'm going to show that on my screen now this actually comes by way of car dealership guy we've got from a credible Source on stellantis CEO Carlos Taris shot down all the brand heads on their requests for aggressive incentives and pricing support don't expect a significant increase you're still on mute pops don't expect significant increase in incentives on stantis products anytime soon so the prices of these vehicles are also through the roof as there's fewer loans and a lack of ability to be able to purchase them what say you of this father well did you see my my tweet my response to that proving yet again that your manufacturer partner is not really your best business partner they never will write you a check at the end of the year to to make you whole never um listen this is this is just stantis this is Carlos TOA saying hey guess what you were stupid enough to buy a cdjr dealership you were stupid enough to believe in US in US you were stupid enough to keep taking our inventory off our hands now you gota you got to feel the pain and figure out a way to get rid of it CU we ain't going to help you that's a business partner you got to love how do you think this interplays with the autol loan delinquencies with the repossessions like is there an intersection here expensive new vehicles and now people not paying off paying them off and no incentives from the manufacturers to move the new inventory like is there a connection there um I I don't know that there's a connection there the the connection I see is that if you are a cdjr dealership and and you're trying to sell your dealership um this is significantly going to impact the value of your dealership when your business partner your manufacturer partner says we're not helping so you know what is a potential buyer going to look at uh if they're looking at your store as a potential purchase well let's see we've got a manufacturer that's manufacturing four different brands for us um sales are down on all of them and inventories we lost you again pops why don't you move over to your other microphone sorry you're having challenges today it's never fun but you can persevere you got it you got it you got it in the meantime I'll pull this up from prophetes Wendy Williams prophetic Inspirations thank you Wendy really yeah we can hear you Pops thank you so much Wendy really really appreciate that what were you saying dad I I was saying that it's going to significantly impact the the value of cdjr dealerships that that are that are offered for sale I mean if if a potential buyer knows that your that your dealer partner the manufacturer isn't going to help well that that's got to lower the value of your dealership the desirability of owning that dealership so this this could be a way for stellantis to try and thin the herd um and and just cause a lot of economic pain for many of its dealers and cause them to go out of business because Who the hell's gonna buy one I wouldn't buy one look at this comment also on Twitter from Scott when I drove by an auto park Dodge dealership this week their employees had to park on the road because every single spot in the lot has a new car in it inventory overload prepare for a Slowdown and I will just demonstrate and show you know car Edge insights 2.0 went live today 29% off back at car edge.com if you're do it yourself or you want to buy a car in the next couple months get car Edge insights 2.0 let's look dad we'll do the ram first we always love looking at our Ram trucks gonna go to new ones all right let's see the 2025 Ram lar me look at that invoice price showing up love that Dad invoice price is back onar edge.com you will now see the invoice on all vehicles and let's see the Moment of Truth 500 Days Supply no wonder there parking cars in the streets but it is I mean to your point about partnership it is wild then that the CEO of the organization is saying do not expect incentives and pricing support what are you what are you doing 500 Days Supply people aren't buying them uh dealers are going to be forced to make a decision and the decision is going to and they know they already know what the decision is and that is that they're going to take a bath on every one of these vehicles when they sell it they're going to lose money and the hope is going to be that they can make that money back in the finance and insurance office um that's their only hope because the manufacturer is not coming to their rescue okay there there's no one that's coming to their rescue they're going to have to eat the loss they're going to have to decide how they want to move forward when it comes to replenishing their inventory yep because you know everyone and we have friends in the industry that are cdjr dealers we know that the factory reps call the dealer and beg them to take extra inventory I need you to do me a favor I need you to take another 25 cars we'll make it up to you um you know those those uh hot Challengers that you want will get you five extra whatever it is they're going to try it's called bribery okay you you buy 25 more of the cars you don't want from us and we'll figure out a way to get you five of the ones that you can make some of that money back on and that's what they're going to do and so at a certain point if it were me and it were my dealership um you know I would tell them the same thing I told my Spalding rep when I had my golf store and he told me that he wasn't going to sell me Spalding golf balls unless I bought the entire Spalding line of golf equipment that I never made a penny on when I stocked the stuff I threw them the hell out of my store um you know and at a certain point if you're a cdjr dealer you're going to throw your factory rep out of the store you're going to tell them not the bother them to call you anymore and you're going to do everything in your power to sell your store now part of the issue is going to become that in most franchise agreements the manufacturer reserves the right of first refusal as to who you can sell your damn store to um it could get ugly but at a certain point dealers are just going to bail on them I mean the price and the prices have to go down eventually one of the best videos First videos we ever did what happens to unsold new cars they don't get unsold they get sold eventually the prices keep going down somewhere yeah which we can kind of see that in our data so for example we looked at a 2025 and we are in 3087 I don't know where that zip code is but that's where my location is currently set to and we can see were in Atlanta the other day I Atlanta yeah so we can see the invoice price of this vehicle the fair price you should be shooting for obviously below invoice and a 500 day supply on a 2025 Ram so let's do this because this is actually going to demonst what dealers are are having to do let's find a 2024 on here here we go this dealer has had this vehicle it said it oh right there 152 days and there's only a 45 days Supply and the reason there's only a 45 day supply is because it's a 2024 if we could find a 2023 so they're going deeper and deeper on the discounts on the older model year so that's a demonstration of what is going to have to happen eventually because cars just don't go unsold and David reminding me that there are still 2022 is on dealer Lots yeah no they they do they either eventually make their way to the auction and they get sold as a used car even though they have no miles on them y um so they all get sold you know there there are people who honestly believe um that that dealers send these unsold vehicles to dirt Lots somewhere in the middle of America and just let them sit there and rot or bury them what's it for them to do that they've already paid for the damn thing um you know that that's not a sustainable business model I mean what the hell are we talking about here yeah I'm gonna buy all this inventory I'm gonna pay for it and then I don't know I'm gonna bury it in the middle of a field in America that that that is not a business model that that that leads to success yes guaranteed lot rot that way yes but I'm telling you they all get sold so they either either they get wholesale to another dealer they get sold as a used vehicle with no miles at the auction and whoever buys it at the auction gets to sell it for less than a new dealer would because well they bought it for well less uh they ultimately always all get sold there there are no Lots out there where the dealers and the manufacturers are taking their vehicles just so they can crush them yeah understood I will say Dad there are 33 2022 new Ram 1500s for sale on dealer Lots Nationwide right now and you know what the day suppli is going back up because I think people don't really want the 2022 632 days on that dealer is a lot absolutely absurd Dad let's come back here to the chat we've got from Oregon goon thank you Oregon goon happy bday and thanks for all you do that very very very appreciate the uh greatly appreciate the happy birthday wishes from squeegee kid great to see you squeegee kid thank you happy birthday Zach thanks to car Edge for the information that you provide thank you thank you thank you thank you from danis thank you danis I got an ally loan um in April decent APR and I'm just over 650 made mistakes in the past but I'm improving I turned 29 two days ago happy birthday to USC thank you danis thanks for being here and happy belated birthday to you yes and great job bill back on your credit and baron thank you Baron Ram TRX trucks as old as 2022 with 30,000 miles selling for over $70,000 they have lost their mind they are still too high happy birthday Zach the specialty Vehicles still command quite quite the price premium dad um well do they command it or do dealers just ask for it there's a there's a difference between the two you can ask anything you want doesn't mean you're going to get it yep just means you asked for it let's go to our favorite segment of the show really you've got to be kidding me you can ask for it folks you might not get it but you can ask for it buy two get $35,000 off this is how desperate some dealer groups are becoming this is from Carl Auto Group your dealer for Life Jeep Wrangler 4 by and Jeep Grand Cherokee 4 by buy two get 35 big ones off dead have you ever seen anything quite like this well first of all let's be honest it's buy two get $20,000 off the other $115,000 is in the T EV tax credits that you may or may not qualify for so have I ever seen a dealer go hey buy two and save 20 grand absolutely have I seen a dealer say buy two and maybe save $35,000 uh I just did so this is a really you got to be kidding me because the price is insane 35,000 is just an absurd absurd excuse me number and it's also really got to be kidding me because it's deceitful advertising you know the the next thing the next thing Carl is going to do in my opinion would be to take a page out of the Tesla Playbook and then also factor in another $10,000 worth of gas savings over the three-year life of of of having that those Vehicles y might only be $5,000 per vehicle you know and then you can advertise get $45,000 in savings um can advertise whatever the hell you want evidently uh well yes yes yes you can Will and many dealers are yeah I will say are 29% off for my 29% or my 29th birthday say is very real folks so you can take advantage of that dad the other really you got to be kidding me same brand us is probing 150,000 Ram and Jeep Vehicles experiencing sudden engine stalls the investigation on relatively new Ram and Jeep vehicles Dead uh RAM trucks and Jeep SUVs 2022 Ram 1500s and 2022 Jeep wagoners the vehicles are experiencing a sudden quote loss of motor power Motive Power due to elect electrical concerns causing the engine to shut down with intermittent ability to restart 80 complaints have been filed thus far may may I suggest that what they do instead of looking at that because that's you know what that's not a big deal truck going 6570 miles an hour suddenly I don't know losing power and stalling out I mean what could go wrong what they really need to look at is why my damn microphone goes in and out that's what they really need to look at that that's what we need to investigate that's what we need to investigate folks you heard it here first yeah is it is it I hate to say it do I have a bad dongle or do I have a bad computer now I did get the new computer that just sent to me but I'm too afraid to try and figure out how to set that damn thing up because you know when I screw that up it'll really be screwed up for sure I want to come here to fly Chomper fly I'm here for the brand inventure where we be talking about that we're actually going to launch it tomorrow doing final testing early this morning so stay tuned tomorrow Brandon from C questions answered will be joining us and we are launching our car questions answered by car Edge collaboration you'll be able to purchase vehicles from Brandon car questions answered online through car edge.com get it shipped to your home really excited about that yeah dad we'll stay on afterwards we'll figure out what's going on going on with your mic but yeah another mechanical issue or in this case an electrical issue that becomes a mechanical is pling a brand that is trying their best to keep up with Ford in terms of the most recalls annually and another example of I hate to say it but pandemic vehicles vehicles made during the pandemic that are having challenges that are maybe of lesser quality and we're seeing that show up again and maybe that's the rationale behind not wanting to help the dealers move their existing inventory because they don't want to get any more of them bad Vehicles out on the road maybe maybe that's why stanus is doing it maybe it's really a philanthropic type of thing where where where they're trying to save the world from Bad automobiles actually being on the streets of countries no probably not yeah probably not although we do get um automaker earnings over the next days and weeks and so it'll be interesting to see what's happened to their uh their profit and loss sheets you know like are they making as much money as they were because it seems like the times have certainly turned let's come here Dad from Bradley thank you Bradley for the kind contribution I'm pretty much out on the 392 Charger price is 200 high above the value maybe I'll get a Kia Rio sadness happy birthday Zach yeah but the Rio Rio you're you're you're going to be loving your monthly budget yeah either that or or or get on the way back machine and go way back in time and maybe get like a a a Suzuki Samurai or something like that you know that something that might never really tip over um if you were trying to evade anything like Amara crossing the road like an amarillo that would be an armadillo not an amarillo Amarillo is yellow in Spanish that's what I get for taking Spanish classes dad Today's show was brought to you by us our company year four and a half of doing this thing or crap are we at five years are we at five years no no we're only at four and a half okay geez once once we get to middle of January middle of December it'll be five years wow okay we're running a special for my birthday car Edge insights 2.0 car Edge insights 2.0 includes invoice pricing for new and used vehicles a demonstration of that folks would be when you're on the car Edge car search you now have invoice price right here Dad name a car um how about a uh a Honda Civic and then I have a question for you and the question is how come for my birthday when I turned 73 we didn't offer people 73% off [Laughter] no there you go dad here's the invoice price for this particular Honda Civic 26,1 MSRP $27,800 not a lot of margin thing and then we can also see you know the 2025 is are brand new obviously 1,854 days Supply is not accurate there are 206 advertised for sale but they must have just just come out let's pull up a 2024 if I can find one although there's going to be a ton of 2025 inventory there we go yeah there you go you can see there the touring which is a higher trim level has more margin almost $2,000 and margin built into it and a much more reasonable Market Days Supply take advantage of this information and so much more back at car edge.com insights 2.0 29 percent off happy birthday to Phil it's his birthday today as well happy birthday Phil G thanks for being here happy birthday um so Dad I moved today I moved today and I learned yesterday that uh my new landlord uh her dad or her her boyfriend's dad is a tremendous car Edge fan so just want to give him a quick shout out and maybe maybe we get a little rent reduction is all I'm asking for maybe there's a little not yeah what was that Dad you're not asking for much just no just a little quid qu quidd pro quo that's all I'm asking for quid pro quo yeah yeah yeah we've got here from Drew thank you drew can you define invoice price on a US car is that what the dealer bought it for from the auction or what the invoice price price was originally when new invoice price when it was originally new so it's just a data point that you can reference from when the vehicle is new and you can understand what it was worth way back when Dad I should also mention yes later this week we've got a bunch going on tomorrow we're launching with car questions answered so you'll be able to purchase Brandon's cars online through car Edge on Wednesday we're La launching our fni uh um uh promotion for the week which if I'm turning 29290 maybe $290 off that's a pretty that's a pretty nice discount so that's Wednesday so stay tuned for that and then I think it's on Friday we're launching a free a giveaway for a free car Edge concierge service so big week here on the ray Zac Channel and over on the car Edge Channel that's pretty exciting stuff you you couldn't afford to do any of this nonsense at my age um check for fly Chomper fly check on a um Civic uh type bar on it give me one second folks need to find it here bear with me I'll share my screen we can all do it together yes we we love to do it together all right let's see here uh pull up a tip bar yeah um no interesting okay let me try it a different way so let me go Civic hatchback Maybe and then trim type bar there we go all right here we go there's 766 Moment of Truth there you go so there's uh $3200 in uh in margin there you go FKS is unlikely just use this as a data point this is I I'd be on our car search all day long just looking at this information I think it's super interesting so go check it out again 29 29% off um okay I held it together that wasn't that wasn't that bad that was good well no you you you did pretty damn good I'm I'm pretty damn proud of you and and so's the audience I just really next year on my 74th birthday and and we'll we'll expect people to pay 70 74% more I that's a good idea that's a good idea we can raise the price 74% said for your birthday yeah seems to make perfect sense to me thank you news def deian Intel that's incredibly kind kind and thoughtful thank you for your contribution and your happy birthday happy birthday wishes um yeah all right we just hanging are we good what are we doing I'm good you good you know I think the people probably seen enough of us for one day yeah yeah just saying I me I'll say simply thank you everyone for the birthday wishes thank you everyone that's supported us the past few years and uh yeah glad that glad that I was able to make it through make it through the show love you Dad thanks so much thank you hansome happy birthday my my dear little son