A dubious doomsday scenario: Subprime autos won’t trigger crisis
Cox Automotive Chief Economist Jonathan Smoke dispels industry fears
A persistent automotive doomsday thesis that continues to have favor with some in the media and on Wall Street is that subprime auto loans are booming and creating the next great financial crisis. Don’t believe it. As an economist who covered housing during the mother of all bubbles and subsequent financial crisis, I can confidently assert that what is happening today is not setting the stage for 2008 all over again.
It is true that record volumes of auto loans have supported strong growth in new vehicle sales in recent years. According to Equifax, a record 29 million auto loans and leases were originated in 2016, helping the industry achieve record levels of new-and-used cars sales.