The auto industry is struggling amid a weak economy, tight credit, and soaring gas prices. And the housing mess isn’t helping, as consumers can no longer draw down funds from home ATMs. NYT:
Auto lenders and banks, closing their wallets, have prevented hundreds of thousands of consumers from obtaining the financing for a car. Home equity loans, which had been used in at least one of every nine deals, when lenders were more generous, are no longer a source of easy money for many prospective buyers.…
As home values have declined, millions of consumers have maxed out on home equity debt. In hot markets like California, nearly 30 per cent of all consumers tapped into the value of their homes to help finance their new cars, according to CNW Marketing Research. In Florida, about 20 per cent used home equity loans. New car sales in both states are down about 7 per cent.
By the way, what type of cars are being repossessed from delinquents at the highest rate? You guessed it: trucks, SUVs and anything having to do with construction. More bad news for Ford (F) and GM (GM), which barely know how to make anything else.