So, what happened today?

[johnola]

Lease companies are going to be broken by the absence of value of EVs at the end of term. Nobody wants em.

 

[Bedfordspurs]

I think it was the court proceedings on commission payments that's been giving them headaches 2bh. The largest vehicle finance providers have been putting millions aside - the recent decision that brokers did not owe consumers a fiduciary duty of care and were able to act with their own commercial interests in mind caused a sigh of relief but the FCA are considering a limited redress scheme so once that uncertainty is finalised i'm sure that will be their major headache gone. Depreciation is factored into lease repayments and the government grant announced will help in pushing EV deals lower.

Leave market has just seen lease plan brought by Ayvens who are mainly focussed on volume and cheaper fleet cars
They wouldn’t supply my last place with mercy because they had massive backlogs due to their price vs spot pricing so they offered up cars from Stellantis… that went down well

 

[Bullet]

Leave market has just seen lease plan brought by Ayvens who are mainly focussed on volume and cheaper fleet cars
They wouldn’t supply my last place with mercy because they had massive backlogs due to their price vs spot pricing so they offered up cars from Stellantis… that went down well

I feel like you are in the business of buying things and negotiating.
But you always without fail use brought rather than bought??

 

[ricky2tricky4city]

Depreciation is factored into lease repayments and the government grant announced will help in pushing EV deals lower.

I know that....but they've miscalculated the rate of depreciation of EVs in the first years of them being popular. Obviously as they had no historical prices to go on.

Plus wasn't there always stories of subprime car loans being the next pack of cards.... literally they could get anyone into a vehicle?

 

[Silly McSilly Face]

I know that....but they've miscalculated the rate of depreciation of EVs in the first years of them being popular. Obviously as they had no historical prices to go on.

Plus wasn't there always stories of subprime car loans being the next pack of cards.... literally they could get anyone into a vehicle?

It wouldn't really be possible for car loans to be the next pack of cards, because the liabilities are short term and they aren't securitised like mortgages are. Sub prime mortgages becoming a pack of cards happened because the loans were securitised off the books of banks into wholesale and capital market instruments like CDOs, so you had investors buying tranches of mortgages off of banks based on duff ratings agency ratings. Largely this was due to loose practices such diversification assessments where the more loans that were securitised into a CDO the better the credit rating (in theory due to the probability of all or most of the loans defaulting reducing). You then had a practice of selling CDS (credit default swap) which is essentially paying investors to accept the liability of defaults on your assets.

A short term downturn in the US economy then led to a snowball effect where junior tranches of bonds began failing with banks suffering the double hit of defaults and liabilities to CDS on the defaults. This led to distrust in the ratings agency ratings and markets and banks stopped lending to each other essentially (i.e. they stopped trading each other's assets). As a bank relies on the ability to liquify securitised assets to meet liabilities to depositors they essentially ran out of money particularly as media reporting of events led to people trying to withdraw deposits in unusually high volumes.

Was just a vicious cycle that despite all the poor practices it exposed actually primarily spiralled due to chance events.

Wouldn't happen with car loans.

 

[ricky2tricky4city]

It wouldn't really be possible for car loans to be the next pack of cards, because the liabilities are short term and they aren't securitised like mortgages are. Sub prime mortgages becoming a pack of cards happened because the loans were securitised off the books of banks into wholesale and capital market instruments like CDOs, so you had investors buying tranches of mortgages off of banks based on duff ratings agency ratings. Largely this was due to loose practices such diversification assessments where the more loans that were securitised into a CDO the better the credit rating (in theory due to the probability of all or most of the loans defaulting reducing). You then had a practice of selling CDS (credit default swap) which is essentially paying investors to accept the liability of defaults on your assets.

A short term downturn in the US economy then led to a snowball effect where junior tranches of bonds began failing with banks suffering the double hit of defaults and liabilities to CDS on the defaults. This led to distrust in the ratings agency ratings and markets and banks stopped lending to each other essentially (i.e. they stopped trading each other's assets). As a bank relies on the ability to liquify securitised assets to meet liabilities to depositors they essentially ran out of money particularly as media reporting of events led to people trying to withdraw deposits in unusually high volumes.

Was just a vicious cycle that despite all the poor practices it exposed actually primarily spiralled due to chance events.

Wouldn't happen with car loans.

I know the detailed history of the sub prime crisis (it drove me out of finance)

It was probably lazy journalism that was using that terminology. But there were many reports pre COVID of boom lending to private buyers (pcp's etc).. basically tranches of rock bottom interest rate loans looking for a place to live. Hence getting anyone into a new car who fancied it. (Whether they could afford it was not considered). That's the parallel with sub prime home loans. And it's probably worse tbh...as all held against a depreciating asset.