The agendas for Auto Finance News’ week-long event, Auto Finance Accelerate, is now available on AutoFinanceAccelerate.com. The series of three events will take place May 13-16, 2019, at the Omni San Diego.

The success of the Auto Finance Risk Summit, now in its 12th year, and the 4th annual Auto Finance Innovation Summit made way for the first annual Auto Finance Sales & Marketing Summit. Participants will gain insights on increasing volume in a declining sales environment, developing a direct lending marketing strategy, technologies to improve marketing efficiencies, and more.

Produced by Auto Finance News and Royal Media, the week-long Accelerate event will consist of one-on-one chats with top executives, as well as presentations and panel discussions with prominent the industry’s most thought- leaders. The full agenda can be found here.

Additional topics for discussion will include; how to successfully present your value proposition to attract consumers; 10 innovation ideas for 2020; practical applications for machine learning; the ever-changing landscape of dealer fraud; and how to reduce the cost of funds to improve yields.

To learn more — or to register — for this year’s event, visit the Auto Finance Accelerate homepage here.

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Nissan Motor Co. Headquarters. Photographer: Keith Bedford/Bloomberg

Nissan Motor Acceptance Corp. is looking to extend standard leasing terms to 48 months from 36, in a bid to increase lease penetration to 30% of its portfolio, company President Kevin Cullum told Auto Finance News.

“I’m trying to push internally for our programs to support a diverse portfolio that will enable [NMAC] to take our lease penetration as high as 30%,” from 26% currently, Cullum said. “It will take an organizational and dealer-supported effort to make sure [NMAC] is managing marketing risk appropriately.”

Extending the standard 36-month term to 48 months will keep leases on the books longer. “Stretching [lease terms] a year longer makes sense because the collateral maintains its value much longer than it used to,” Cullum said, noting the change gives NMAC the ability to manage residual risk more accurately.

Parent company Nissan Motor Co.’s plans to release new models in the next 18 months will increase leasing penetration in the latter part of NMAC’s fiscal year ending March 31, 2020, Cullum said. “As we launch our all-new Sentra, Rogue, and Versa, we will be able to take advantage of increase lease opportunities,” he said.

NMAC had $28.1 billion of loans and leases outstanding, as of Sept. 30, 2018, according to a recent S&P Global Ratings presale report.

For more content like this, check out our upcoming event Auto Finance Accelerate, May 13-16 at the Omni San Diego. Visit www.AutoFinanceAccelerate.com to register.

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December auction prices increased 4.3% year over year, bringing the Manheim Used Vehicle Value Index to 137.6, the company announced last week.

“Three-year-old vehicles ended the month worth 2% more than they would normally have been worth had typical depreciation occurred instead of the abnormal appreciation observed this summer,” said Manheim Chief Economist Jonathan Smoke.

Two main factors that drove higher used-vehicle prices in 2018 and will likely continue in 2019 are new tariffs, which are causing vehicle prices to increase, and the Federal Reserve’s interest rate hikes. “Once the news started reporting tariffs, there was a demand increase,” Smoke said.

Barring the tariff and interest rate uncertainty, Manheim anticipates 2019 to be an average year for used-vehicle prices.

As for interest rates, “the Fed raised rates by a quarter-point as expected but was not as dovish as the financial markets had been expecting about the future trajectory of rate increases,” Manheim noted. “They did revise expectations from three increases in 2019 to two, but the market had been expecting them to become more cautious and communicate at most one increase in 2019.”

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KAR Auction Services has plans in motion to make online remarketing platform Openlane accessible on any device and to incorporate more data and analytics into the system, newly appointed president Peter Kelly told AFN. The revamp is slated to be completed by yearend.

“We want to improve the user experience to more modern interfaces that don’t only work on desktops but work well on tablets and smartphones that dealers are using on a day-to-day basis,” Kelly said. The modernization process will integrate data and analytics that will refine the platform’s vehicle valuation and pricing capabilities.

“A lot of this is about worth,” he said. “Is it a good value at this price? Is this vehicle a good vehicle for our dealership? Have we got a history of successful retail outcomes with vehicles like this?”

Also, KAR plans to bolster Openlane’s search capabilities and incorporate better core technologies into the system. The end goal, Kelly said, is “trying to make that whole experience better and more efficient for our buyers and dealers, and in that process, making it an even more viable channel for our sellers.”

Kelly, who was KAR’s president of digital services prior to his promotion this month, will leverage his background in technology to lead the Openlane team, which has been working on this modernization project for the past year. Kelly was previously chief executive of Openlane, which was acquired by KAR subsidiary ADESA Inc. in 2011.

For more content like this, check out our upcoming event Auto Finance Accelerate, May 13-16 at the Omni San Diego. Visit www.AutoFinanceAccelerate.com to register.

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M&T Bank’s auto floorplan business grew $275 million in the fourth quarter of 2018, after the Buffalo, N.Y.-based bank onboarded a few large dealerships at the end of last year, Chief Financial Officer Darren King said in a Jan. 17 earnings call.

“There was a normal seasonal uptick in our auto floorplan balances that also benefited from a couple of large relationships that we onboarded during the quarter,” King said. “We would expect that number to stay around where it is at least for the first two quarters of the year.”

By comparison, the bank’s auto floorplan business grew $123 million in the fourth quarter of 2017.

M&T’s floorplan floorplan balance was $4.1 billion as of Sept. 30, 2018. The bank did not break out specific floorplan volume last quarter.

Separately, M&T’s fourth-quarter consumer loans grew 2% from the prior quarter, with growth in indirect auto and recreation finance loans outpacing continuing declines in home equity lines and loans, King said.

For more content like this, check out our upcoming event Auto Finance Accelerate, May 13-16 at the Omni San Diego. Visit www.AutoFinanceAccelerate.com to register.

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Consumer Financial Protection Bureau Director Kathy Kraninger issued a legislative proposal to Congress on Thursday asking for authority to supervise compliance with the Military Lending Act. 

The move by Kraninger is another step to reverse policies implemented by predecessor Mick Mulvaney, who had announced in August 2018 that the bureau would scrap supervisory examinations of lenders in regards to violations of the Military Lending Act. Mulvaney noted at the time that the bureau lacked authority to do so.

However, under Kraninger’s leadership, the bureau expressed its commitment to the Military Lending Act in a statement:

“The bureau is committed to the financial well-being of America’s service members. This commitment includes ensuring that lenders subject to our jurisdiction comply with the Military Lending Act so our service members and their families are provided with the protections of that law,” Kraninger said. “That’s why I have asked Congress to explicitly grant the bureau authority to conduct examinations specifically intended to review compliance with the MLA.”

The CFPB sent the proposal to House Speaker Nancy Pelosi and Vice President Mike Pence.

The Military Lending Act has been a source of uncertainty for the auto finance industry in regards to the sale of add-on products to military service members. Back in December 2017 the Department of Defense changed how it regulates the Military Lending Act such that GAP waivers and other add-on products must be included in the calculation of the borrower’s military annualized percentage rate (MAPR). Additionally, the law states that MAPR cannot exceed 36%. Since F&I managers at dealerships were inadequately trained to calculate this rate with the add-on products included, many lenders decided to stop funding loans to servicemembers seeking GAP waivers.

The bureau provided no timeline for when it could receive the rights to supervise compliance for the Military Lending Act.

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Despite less loan seasoning in Consumer Portfolio Services’ first securitization of the year, the transaction’s expected loss rate is unchanged from the lender’s previous ABS deal, according to an S&P Global Ratings presale report.

An emphasis on higher-tiered borrowers positively impacted the transaction, according to S&P. Specifically, the percentage of borrowers in CPS’s top three loan programs — called Preferred, Super Alpha, and Alpha Plus — increased to 45%, compared with 42.4% in the October 2018 securitization.

The current transaction also put less emphasis on CPS’s two lowest financing programs, Delta and First-Time Buyer. The Delta program dropped to 4.0% of the credit mix — from 4.9% previously — and the First-Time Buyer program fell to 1.71% from 1.78%.

The expected loss rate for the $254.4 million securitization is in the 17.75% to 18.75% range, according to S&P.

The current securitization excludes “called collateral,” which refers to loans plucked from previous transactions, S&P Lead Credit Analyst Peter Chang told AFN. Typically, called collateral is comprised of seasoned loans, or those that have a history of performance.

Without called collateral, the CPS securitization has average seasoning of 0.63 months, compared with 3.6 months in the October 2018 transaction.

CPS will prefund $98.9 million, or 37%, of the total collateral pool. Prefunding refers to a 45-day period after closing in which the company can purchase additional receivables for the transaction. The prefunding period has stricter requirements than the initial receivables pool, including a 72-month cap on loan terms. Also, loans originated in the top four credit tiers must account for at least 82% of the aggregate principle balance of the receivables.

“All of these limits, compared to the previous transaction, leads us to believe that this one is slightly better,” Chang said.

The loan-to-value ratio for the securitization increased to 114.5%, compared with 113.8% in CPS’s October 2018 transaction.

The current transaction — CPS’s 35^th — is slated to close Jan. 23.

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The auto finance market today has thrown a curveball at lenders with rising interest rates, slipping new-vehicle sales, uncertain regulations, and mounting dealership fraud. The 12th annual Auto Finance Risk Summit will delve into these issues and others of top concern for lenders.

Auto Finance Risk Summit participants will gain insights on fraud risk, learn new ways to communicate with consumers and dealer partners, understand how used-car pricing is influencing origination mix, and much more.

As the concluding event of Auto Finance Accelerate, the Auto Finance Risk Summit commences May 15-16 at the Omni San Diego immediately following the Auto Finance Innovation Summit. Check out the full agenda here.

The event will explore other topics, including strategies to improve risk management through digital transformation; how close the (auto) economy is to a downturn; how to reduce the cost of funds to improve yield; and ways to manage vendor risk. To register, click here.

To learn more — or to register — for this year’s event, visit the Auto Finance Accelerate homepage here.

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Massachusetts Attorney General Maura Healey has ordered Sensible Auto Lending LLC to pay $733,925 to resolve allegations it knowingly facilitated the sale of defective vehicles by certain used-car dealerships.

The Danbury, Conn.-based auto lender agreed to provide relief for consumers who were “cheated” by F&R Auto Sales Inc. and three other Massachusetts dealerships from August 2012 to December 2016, Healey said in a statement.

The AG investigation found that Sensible had provided financing for “defective and inoperable vehicles” despite knowing of consumer complaints against the dealerships and customers’ high default and repossession rates.

Sensible Auto has since changed its business practices to better protect consumers from fraud — namely, tracking consumer complaints and repossession and delinquency rates of the dealerships with which it conducts business, Healey said. Sensible Auto declined to comment.

The AG’s office started its investigation after more than 100 consumers complained of alleged deceptive sales practices. According to the state AG press release, F&R Auto frequently misrepresented vehicle safety and reliability and would dismiss claims or refuse to make repairs when customers found issues with their vehicles.

The investigation also found that F&R Auto failed to assign titles to vehicles or to provide documents about vehicle sales. The now-defunct dealership and its former owner were fined $450,000 in restitution and penalties to resolve the allegations.

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Developments in machine learning, subscription services, and blockchain are spurring lenders to rethink and refine their operations. The 4th Annual Auto Finance Innovation Summit, a part of the week-long event Auto Finance Accelerate, will explore what innovations have true importance to the industry, and how those technologies can be refashioned to break auto finance’s mold.

Join us for two days of sessions featuring executives from financial institutions and cutting-edge startups at this year’s event, which will be held at the Omni San Diego on May 14-15, directly following the Auto Finance Sales & Marketing Summit. Check out the full agenda here.

As the industry’s news source, Auto Finance News is dedicated to uncovering technology disruption and how companies are investing in innovation. The event will feature sessions including the pros and cons of subscription services; making sense of fintech regulation; practical applications for machine learning; 10 innovation ideas for 2020; and more.

Auto Finance Innovation Summit will once again feature DEMOvations, a unique presentation experience in which innovative companies demonstrate their products in front of an enthusiastic and wide audience of auto lending and leasing executives. The demo sessions will take place on May 14.

To learn more — or to register — for this year’s event, visit the Auto Finance Accelerate homepage here.

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Turn Your Bulk Auto Notes Into Cash