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.”

Source: Jamie Dimon just sounded the alarm on auto loans

About the Author

Chris Versace, Chief Investment Officer
I'm the Chief Investment Officer of Tematica Research and editor of Tematica Investing newsletter. All of that capitalizes on my near 20 years in the investment industry, nearly all of it breaking down industries and recommending stocks. In that time, I've been ranked an All Star Analyst by Zacks Investment Research and my efforts in analyzing industries, companies and equities have been recognized by both Institutional Investor and Thomson Reuters’ StarMine Monitor. In my travels, I've covered cyclicals, tech and more, which gives me a different vantage point, one that uses not only an ecosystem or food chain perspective, but one that also examines demographics, economics, psychographics and more when formulating my investment views. The question I most often get is "Are you related to…."

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