In the U.S., the auto loan rate is at the lowest level in years.
A report released Thursday by the National Automobile Dealers Association (NADA) said the U and Japanese auto loan issuers are “collapsing at an unprecedented rate.”
The NADA said the rate of auto loans dropped from 5.9 percent in the second quarter of 2017 to 2.8 percent in 2018.
The agency expects the auto loans rate to fall further over the next several years.
“The industry is at a crossroads, and I think we are heading into a period where the auto industry will be facing many new challenges,” NADA President and CEO Paul Bowerman said in a statement.
“It will take concerted action by regulators and companies to get this economy moving again.”
The auto loan industry was one of the top industries to take advantage of the Great Recession, but its economy has been slow to recover.
NADA and other auto lenders said in the report that the U, Japan, and European economies are all suffering from “economic depression.”
The industry also is facing increasing competition from China, which has been increasing its share of auto lending.
The National Automotive Dealers Council said that auto lending in the U-S.
and Japan has declined from around $1.2 trillion in 2018 to $1 trillion in 2019.
The Nada also said that the share of foreign automakers has dropped from more than 80 percent in 2019 to about 53 percent in 2020.
“Our data suggests that a strong economy is the main driver of the decline in the number of foreign auto loan customers in the United States and Japan,” Nada President and Chief Executive Officer Paul Bowersman said.
“A strong economy, strong financial sector and the emergence of a stronger auto loan market are also the reasons for the decline of foreign car loans in the country.”
The study said the global auto loan growth rate has dropped to its lowest level since 2009, when it was around 9 percent.
The report also said a growing number of auto lenders are looking to increase their investment in new manufacturing, particularly in China.
The decline in auto lending is “particularly troubling” because auto loans are the largest part of the U/Japan auto loan business, NADA added.
In the United Kingdom, the government has imposed a ban on new car loans, meaning those in which the interest rate is higher than the cost of borrowing.
Nada said the government’s move is not being implemented in all countries, and it is “pushing some auto lenders to look at other avenues to access financing.”