According to Reuters, the German government is considering setting up a new body to test for vehicle emissions. There has been something of a loss of faith in the existing system, and replacing the old body will help to restore consumer confidence, the government hopes.
Friday, 30 June 2017
US: Congress argues about legislation on autonomous cars
Members of Congress have differed over legislation on autonomous cars - but, this being the US, the arguments go beyond the rules themselves: it's a matter of who should be doing the legislating, states or the Federal authorities. Democrats argue that it's NHTSA that should be making the rules, while Republicans have a different take. The prospect of cars that stop working at state borders is not one that will help the prospects for the industry.
Read more, if you want to, from Reuters here.
Read more, if you want to, from Reuters here.
US: New dealer protection law in Florida
Automotive News reports the enactment of a new law in Florida to give dealers (enhanced, presumably) protection in two important areas - the frequency with which manufacturers can require them to upgrade their premises, and the application of sales-effectiveness criteria, both matters of great importance to dealers against which they would be hard-pressed to find any protection in UK law.
US: Dealers take action against second Tesla store in Virginia
According to Automotive News the Virginia Automobile Dealers Association has received consent from a judge to proceed with an appeal in its attempt to block Tesla from opening a second store in the state. The appeal is against Virginia DMV Commissioner Richard D. Holcomb's decision to allow Tesla to open the second outlet, and the judge (Judge Gregory Rupe) decided that the VADA has standing to bring the appeal.
Three Bosch managers targeted as German diesel probe expands
Automotive News reports (from Bloomberg) that a German investigation in Stuttgart has focussed on three employees of Robert Bosch who are considered to have been involved in the development of cheat software for VW group. All are managers in the company. Bosch is also being investigated by the U.S. Department of Justice. German authorities in Braunschweig are also carrying out investigations into that the car manufacturer has done.
'via Blog this'
'via Blog this'
McLaren CEO says post-Brexit UK must try to influence EU car rules
Automotive News Europe reports remarks from McLaren Automotive's Mike Flewitt about the importance of retaining the benefits of having uniform technical legislation for vehicles after the UK leaves the European Union. Failure to do so might lead to having to comply with two sets of rules - exactly the sort of problem that we solved by joining the European Community, especially with the completion of the single market in 1992.
Special rules on emissions for low-volume manufacturers, of which the UK has more than other EU countries (perhaps more than all of them put together), are seen as a particular issue. Will the "rump" EU be as keen to give McLaren and similar companies a good deal after we have gone? That's a rhetorical question.
He also elaborated on steps that the company is taking to mitigate the effects of immigration controls, boosting its graduate recruitment scheme.
'via Blog this'
Special rules on emissions for low-volume manufacturers, of which the UK has more than other EU countries (perhaps more than all of them put together), are seen as a particular issue. Will the "rump" EU be as keen to give McLaren and similar companies a good deal after we have gone? That's a rhetorical question.
He also elaborated on steps that the company is taking to mitigate the effects of immigration controls, boosting its graduate recruitment scheme.
'via Blog this'
Wednesday, 28 June 2017
Bank of England on risks of car finance crash
The Bank of England publishes its Financial Stability Report every six months. The June 2017 edition has just come out, and in it there is a very interesting and somewhat worrying analysis of the car finance market (starting on the page numbered 18 in the linked document, which is the relevant chapter of a prohibitively extensive publication).
What sounds worrying is that there is so much PCP finance around these days. Back in the days when dealership car finance was all about standard hire-purchase agreements, things would have looked better, but Personal Credit Purchase schemes - although they are a form of hire purchase - are different. The cost to the consumer is kept down by fixing a value for the car at the end of the loan period (the car being the subject of the loan, not money). When the term finishes, of course, the consumer can choose to make a balloon payment and take ownership of the car, or hand it back: and if the used car market is weak at that point, then first of all the consumer will prefer not to make the payment because it will be on the high side compared with what the car is worth, and secondly the dealer won't be delighted to get the car back in satisfaction of the credit agreement because it won't be worth enough to wash its face.
Although dealership finance has gone up by some 20 per cent a year since 2012, increasing by £30 billion over that period, it still accounts for a relatively small part of banks' lending. So although 85 per cent of car sales use dealership finance, mostly PCP, the Bank estimates that even a 30 per cent shortfall in residual values would have relatively little impact on banks' capital ratios. In addition, car finance being secured on the car is inherently less risky than other types of consumer finance, so the sector should be pretty stable - and the Bank acknowledges that arrears are less of a problem in motor finance than other areas. Of course they are - the finance company takes the car back if the arrears get too high.
But it strikes me that the same might have been said of mortgage lending before 2008. And we live in times which are, to say the least, uncertain.
Postscript: today (30 June) Bloomberg highlights the growth in vehicle finance in Europe, remarking that the continent is heading down the road already taken by the US. Explaining how securitisation deals - finance companies selling off their consumer debt - are to a large extent based on residual values, the Bloomberg piece makes me wonder about the BoE's assessment that even a substantial fall in the used car market would have little effect on banks' capital ratios. Perhaps the point is that it's not the impact on capital ratios that we should be worried about.
Also, a day earlier, the Telegraph reported that the FCA had been consulting with US authorities to gain a better understanding of the emerging problems, given the fact that the Americans have more experience of the impact of this type of secured lending in the automotive sector.
What sounds worrying is that there is so much PCP finance around these days. Back in the days when dealership car finance was all about standard hire-purchase agreements, things would have looked better, but Personal Credit Purchase schemes - although they are a form of hire purchase - are different. The cost to the consumer is kept down by fixing a value for the car at the end of the loan period (the car being the subject of the loan, not money). When the term finishes, of course, the consumer can choose to make a balloon payment and take ownership of the car, or hand it back: and if the used car market is weak at that point, then first of all the consumer will prefer not to make the payment because it will be on the high side compared with what the car is worth, and secondly the dealer won't be delighted to get the car back in satisfaction of the credit agreement because it won't be worth enough to wash its face.
Although dealership finance has gone up by some 20 per cent a year since 2012, increasing by £30 billion over that period, it still accounts for a relatively small part of banks' lending. So although 85 per cent of car sales use dealership finance, mostly PCP, the Bank estimates that even a 30 per cent shortfall in residual values would have relatively little impact on banks' capital ratios. In addition, car finance being secured on the car is inherently less risky than other types of consumer finance, so the sector should be pretty stable - and the Bank acknowledges that arrears are less of a problem in motor finance than other areas. Of course they are - the finance company takes the car back if the arrears get too high.
But it strikes me that the same might have been said of mortgage lending before 2008. And we live in times which are, to say the least, uncertain.
Postscript: today (30 June) Bloomberg highlights the growth in vehicle finance in Europe, remarking that the continent is heading down the road already taken by the US. Explaining how securitisation deals - finance companies selling off their consumer debt - are to a large extent based on residual values, the Bloomberg piece makes me wonder about the BoE's assessment that even a substantial fall in the used car market would have little effect on banks' capital ratios. Perhaps the point is that it's not the impact on capital ratios that we should be worried about.
Also, a day earlier, the Telegraph reported that the FCA had been consulting with US authorities to gain a better understanding of the emerging problems, given the fact that the Americans have more experience of the impact of this type of secured lending in the automotive sector.
Subscribe to:
Posts (Atom)