2017 S550
01-22-2021, 09:51 PM
#26
MBWorld Fanatic!
Join Date: Oct 2002
Location: Cincinnati
Posts: 4,240
Received 991 Likes
on
726 Posts
2010 E350 4Matic
@chassis , I hope you are correct. That will save my financial institution a ton on money.
However, at this point of the recession, bankruptcy filings, repossessions and voluntary turn-ins are beginning to accelerate. Current forecasts put the likelihood of auto loan delinquencies, repos, and charge offs quadrupling from 2020 levels at close to 70%. If these forecasts are correct, or close, the flood of vehicles to auction will drive prices for most car segments down. Pair that event with a significant decline in available jobs (read qualified borrowers) because the new administration wants to create a national minimum wage of $15.00/hr while many privately owned service business cease to exist; and it looks pretty ugly for car prices later this year.
I believe this might hold true even for the S-Class. Why? Because there won’t be enough qualified buyers to take the trade-ins and lease turn-ins. The only wrench I see for that prediction is how unappealing the W223 is and that the other new alternatives like the BMW 7 Series and Audi A8 are also pathetic options. This might just make used S-Class versions highly desirable and therein more valuable.
Again, here is to hoping you are correct! CHEERS!
However, at this point of the recession, bankruptcy filings, repossessions and voluntary turn-ins are beginning to accelerate. Current forecasts put the likelihood of auto loan delinquencies, repos, and charge offs quadrupling from 2020 levels at close to 70%. If these forecasts are correct, or close, the flood of vehicles to auction will drive prices for most car segments down. Pair that event with a significant decline in available jobs (read qualified borrowers) because the new administration wants to create a national minimum wage of $15.00/hr while many privately owned service business cease to exist; and it looks pretty ugly for car prices later this year.
I believe this might hold true even for the S-Class. Why? Because there won’t be enough qualified buyers to take the trade-ins and lease turn-ins. The only wrench I see for that prediction is how unappealing the W223 is and that the other new alternatives like the BMW 7 Series and Audi A8 are also pathetic options. This might just make used S-Class versions highly desirable and therein more valuable.
Again, here is to hoping you are correct! CHEERS!
I think the two perspectives reflect where you are in the income strata as the pandemic has had very different impacts. Case in point the stock market vs the number of people whom are going to face evictions in the coming months. If you are in the late model S Class strata then I think that Chassis hypothesis fits. I suspect the hypothesis above will be applicable to those in the lower incomes.
01-23-2021, 01:05 PM
#27
Out Of Control!!
Join Date: Sep 2018
Location: unbegrenzt
Posts: 13,346
Received 3,934 Likes
on
3,098 Posts
2017 GLE350 4MATIC
@chassis , I hope you are correct. That will save my financial institution a ton on money.
However, at this point of the recession, bankruptcy filings, repossessions and voluntary turn-ins are beginning to accelerate. Current forecasts put the likelihood of auto loan delinquencies, repos, and charge offs quadrupling from 2020 levels at close to 70%. If these forecasts are correct, or close, the flood of vehicles to auction will drive prices for most car segments down. Pair that event with a significant decline in available jobs (read qualified borrowers) because the new administration wants to create a national minimum wage of $15.00/hr while many privately owned service business cease to exist; and it looks pretty ugly for car prices later this year.
I believe this might hold true even for the S-Class. Why? Because there won’t be enough qualified buyers to take the trade-ins and lease turn-ins. The only wrench I see for that prediction is how unappealing the W223 is and that the other new alternatives like the BMW 7 Series and Audi A8 are also pathetic options. This might just make used S-Class versions highly desirable and therein more valuable.
Again, here is to hoping you are correct! CHEERS!
However, at this point of the recession, bankruptcy filings, repossessions and voluntary turn-ins are beginning to accelerate. Current forecasts put the likelihood of auto loan delinquencies, repos, and charge offs quadrupling from 2020 levels at close to 70%. If these forecasts are correct, or close, the flood of vehicles to auction will drive prices for most car segments down. Pair that event with a significant decline in available jobs (read qualified borrowers) because the new administration wants to create a national minimum wage of $15.00/hr while many privately owned service business cease to exist; and it looks pretty ugly for car prices later this year.
I believe this might hold true even for the S-Class. Why? Because there won’t be enough qualified buyers to take the trade-ins and lease turn-ins. The only wrench I see for that prediction is how unappealing the W223 is and that the other new alternatives like the BMW 7 Series and Audi A8 are also pathetic options. This might just make used S-Class versions highly desirable and therein more valuable.
Again, here is to hoping you are correct! CHEERS!
Last edited by chassis; 01-23-2021 at 04:16 PM.
01-23-2021, 01:53 PM
#28
Member
@chassis , you are correct, I am in the Financial Services industry.
I wish there was some solid data stream I could share. There isn’t.
In mapping strategies for 2021-2023, modeling what-ifs is where I develop these scenarios. Aside from what I mentioned earlier, the major variable is rent and mortgage payments. What happens when the eviction moratoriums cease? Will cash strapped people chose to pay for their cars, credit cards, or their lodging payments? Traditionally, mortgage/rent comes first. When there isn’t enough left to cover their consumer debt payments, the dominoes begin to tumble.
Again, I hope you are correct. For my credit union, the swing could be up to $8,000,000 in charged off consumer balances. If the best scenario happens, I will sleep much easier.
Cheers!
I wish there was some solid data stream I could share. There isn’t.
In mapping strategies for 2021-2023, modeling what-ifs is where I develop these scenarios. Aside from what I mentioned earlier, the major variable is rent and mortgage payments. What happens when the eviction moratoriums cease? Will cash strapped people chose to pay for their cars, credit cards, or their lodging payments? Traditionally, mortgage/rent comes first. When there isn’t enough left to cover their consumer debt payments, the dominoes begin to tumble.
Again, I hope you are correct. For my credit union, the swing could be up to $8,000,000 in charged off consumer balances. If the best scenario happens, I will sleep much easier.
Cheers!
The following users liked this post:
chassis (01-23-2021)
01-23-2021, 04:23 PM
#29
Out Of Control!!
Join Date: Sep 2018
Location: unbegrenzt
Posts: 13,346
Received 3,934 Likes
on
3,098 Posts
2017 GLE350 4MATIC
@chassis , you are correct, I am in the Financial Services industry.
I wish there was some solid data stream I could share. There isn’t.
In mapping strategies for 2021-2023, modeling what-ifs is where I develop these scenarios. Aside from what I mentioned earlier, the major variable is rent and mortgage payments. What happens when the eviction moratoriums cease? Will cash strapped people chose to pay for their cars, credit cards, or their lodging payments? Traditionally, mortgage/rent comes first. When there isn’t enough left to cover their consumer debt payments, the dominoes begin to tumble.
Again, I hope you are correct. For my credit union, the swing could be up to $8,000,000 in charged off consumer balances. If the best scenario happens, I will sleep much easier.
Cheers!
I wish there was some solid data stream I could share. There isn’t.
In mapping strategies for 2021-2023, modeling what-ifs is where I develop these scenarios. Aside from what I mentioned earlier, the major variable is rent and mortgage payments. What happens when the eviction moratoriums cease? Will cash strapped people chose to pay for their cars, credit cards, or their lodging payments? Traditionally, mortgage/rent comes first. When there isn’t enough left to cover their consumer debt payments, the dominoes begin to tumble.
Again, I hope you are correct. For my credit union, the swing could be up to $8,000,000 in charged off consumer balances. If the best scenario happens, I will sleep much easier.
Cheers!
01-23-2021, 05:10 PM
#30
Member
You spend enough years doing this and you come to realize there are always dark clouds on the horizon. You live in Kansas long enough and you know most often they don’t amount to much, but when they do, you take cover. The point is not about what is the current state of DLQ on CC, no. The point is that the stage is set for an ugly storm system to develop. The dry line is set, the humidity is high, the jet stream is perfect and temperatures are ideal: it is a PDS. (Particularly Dangerous Situation) Will it develop? I don’t know, but I am ready for it and if it develops, auto values will correct in a hurry. It truly isn’t a matter of if, it is always a matter of when.
Semper
Semper
01-24-2021, 02:14 PM
#31
MBWorld Fanatic!
Join Date: Oct 2002
Location: Cincinnati
Posts: 4,240
Received 991 Likes
on
726 Posts
2010 E350 4Matic
I am not a financial guy but something seems amiss. It seems rather unlikely that the pandemic caused delinquency rates to drop. I know that my credit union deferred $7.6 million in payments last year. It is as though that there has been a hold put in the processing of delinquencies that is altering the statistic.
Last edited by MBNUT1; 01-24-2021 at 02:20 PM.
01-24-2021, 02:16 PM
#32
MBWorld Fanatic!
Join Date: Nov 2014
Location: Land of Political Criminals and Urban Shootings
Posts: 4,010
Received 477 Likes
on
364 Posts
2015 S550
Yes, lenders offering forbearance to every Tom, Dick, and Harry, even if COVID has had no negative affect on them is skewing the numbers.
The following users liked this post:
MacMP (01-24-2021)
01-24-2021, 02:28 PM
#33
MBWorld Fanatic!
Join Date: Jun 2015
Location: Maryland
Posts: 5,409
Received 2,679 Likes
on
1,718 Posts
2020 S560 4Matic
Delinquency rates have dropped because they are no longer reporting delinquencies. The real delinquency rate is WAY higher.
01-24-2021, 02:52 PM
#34
Member
Yes, this is exactly what happens when Uncle Sam directs all Federally Insured FI’s to go out of our way to allow people to skip payments. Some as many as six payments skipped in the last eight months of 2020. It is terrible: it hides DLQ, it piles on interest as principle pay downs and loan maturities are extended. There is a huge storm brewing! Both individuals, and the Federal Government, are piling on the debt without immediate consequences. I can barely wait for my Year End CPA Audit...none of these directives come close to complying with Generally Accepted Accounting Standards (GAAS).
