The fallout of the housing crisis is affecting many more people than just those who purchased a home on dicey terms (or who provided the loan, or now owns the debt). In several posts we will highlight how the current crash has been cause for concern in some unexpected places.
Today’s New York Times has a story examining how the housing crisis has hit the auto industry. The tightening of the credit markets has closed off the flow of easy financing for prospective car buyers with poor credit histories or others who would, in better times, tap into their home equity lines.
Sales of pickups (a contractor favorite) are way down.
How bad is it? Sales of new cars are down to their lowest levels since 1995. More loans are going delinquent, leading to higher losses on bad debt and swelling inventories of used cars. Subprime lenders like AmeriCredit project they will loan out just a third as much money in 2008 as they did the year before.
“It is a bleak picture, and it all hinges on the availability of financing,” said William Ryan, a financial analyst at Portales Partners who has followed the auto business for years. “The whole universe related to the auto industry is touched in some way — parts suppliers, manufacturers, salespeople, trucking people, the paint and metals industries. Even semiconductors.”