VodkaPundit

Detroit Blues

The housing credit crunch ain’t the only bad news in town. Detroit is stuck in the same trap:

Detroit’s reliance on”zero percent for anyone with a pulse” financing to move moribund metal is coming back to haunt them. The Wall Street Journal (WSJ) cites a study by Lehman Brothers that reports that 4.5 percent of ’06 auto loans were at least 30 days delinquent as of the end of September. That up from October’s 2.9 percent, and represents the biggest one-month jump in at least eight years. And here’s the really worrying bit: that’s the stat for “top-rated borrowers.” At the lower end of the food chain, 12 percent of subprime borrowers were delinquent on their 2006 auto loans as of September. That’s up from 11.1 percent the previous month; it’s the highest level since 2002. Seen from another perspective, “In the second quarter, borrowers were at least 30 days behind on 2.77% of all auto loans made by nonbank lenders, the main players in the market, according to the American Bankers Association. That was the highest delinquency rate since 1991.” Although the WSJ has some soothing words for nervous auto execs, we reckon this one’s gonna blow-up good. Tightened credit will remove one of Detroit’s most effective sales devices (low-cost loans) and a flood of repo’ed cars