Aussie auto delinquencies surpass GFC high

By Leith van Onselen

Hot on the heels of the heavy 15% decline in new car sales in 2018, along with the 9% decline in motorcycle sales, Moody’s has released the below chart showing that delinquencies for Australian auto loan asset-backed securities (ABS) has surpassed Global Financial Crisis (GFC) levels:

Auto loans are non-revolving with a fixed interest rate so they are decent guide to true credit stress and do not paint a great picture of underlying Australian financial stability.

[email protected]

Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

Latest posts by Leith van Onselen (see all)

Comments

  1. 30+ day delinquencies +44% y-on-y
    90+ day delinquencies +70% y-on-y

    Seasonally October should be a low. People ditching their cars to hang on to the house?

  2. So expect discounted AMGs and Audis at the auctions over the next year. Grab yourself a bargain. Me? I’m going to get a Maserati and drive around surrounded by the lingering ghosts of conversations about mortgage application fraud and dodgy settlements.

    • What would be a good solid car in that category? Something that will go for 15 years easily with sensible maintenance requirements. Like a German Camry or Landcruiser….

      Anyone?

      • We have an Audi Quattro via a demented grandparent( don’t ask).
        Reliable,staggeringly expensive to maintain and service,and l don’t know how they managed to make a car that size with a microscopic boot- doesn’t take a set of goal clubs.
        I’d look elsewhere.

      • “go for 15 years”, “Sensible maintenance costs”, “German”… I think you forgot this: /s

      • Divide et impera

        Peachy – I’ve had European cars, Fords, and plenty of Asian ones.

        Honestly european cars are absolutely ridiculous – they are fantastic to drive, however absurd to maintain.

        Asian cars are great to drive, cheap to maintain – but don’t have that road feel.

        I then bought a Prado – changed my world forever. I would never have driven across multiple states in a “Forester” or Outback – but wow – its like driving a rolls royce.

        For the city would even consider the new Rav.

        They are insanely good.

      • Not Euro. If you must get a “brand” for your not-Camry, try Lexus? (fancy Toyata). Although on the downside, US rappers apparently like them.

      • Volkswagon Tiguan. Mine never needed much more than an oil change over 10 years. Bought a newer Tiguan allspace 7 seater last year I was so pleased with the last one.

      • If you’re asking for advise here than you don’t know what you’re doing and probably can’t DIY any of the tasks.
        If this is even semi accurate than stay away from all European cars unless you enjoy lubing up and touching your toes.
        Even if you do know what you’re doing from a mechanical stand-point companies like BMW and Mercedes make is so difficult with lots of proprietary software / and test/measurement systems and validation procedures. On many of these cars you can’t fix something as simple as a broken electric window requires that the car recognize that the window you install is authorized to be on that car (that particular car not just that make / model)
        It’s a nightmare.
        wit the more modern German car (newer than 2010) all this enable information is encrypted so basically you have to get the enable codes from the factory. Lots of independent mechanics are really annoyed by this because it makes the work they could do worthless if it all has to be enabled by factory/dealer, the mechanic might charge you a couple of hundred to repair / replace the window regulator and than have the factory demand $2K to enable the replaced regulator.

      • I’ve heard many good reports about Kia regarding reliability and reasonable maintenance costs. A few car hire places I’ve spoken to have said that the Rios have been more reliable than the Corollas.

      • Certain cohorts don’t like to spend money on the silliness that is maintenance. And they get surprised when they need to call RACV to get road side assistance.

      • TailorTrashMEMBER

        Knew a chap who had a top line Bentley ( yes there are classes of Bentley as one would expect of the British )……got a scrape in a car park ……one doesn’t repair a door on a Bentley…….one replaces it ……the door replacement cost more than a new TOYATA ….

      • Knowing a chap, and having the cojones to buy a Bentley are two different things. As for repairs, at least mine will be done bh warranty, unlike an Opal apartment owner.

    • Kia and Hyundai are almost the same company. They share a lot of DNA with Mitsubishi and that’s partly why they are now so reliable. If you want a cheaper Prado get a Pajero (the 3.2 diesel is a very good motor)

      • Pajero is a monocoque frame, Toyota Prado and Mitsubishi Challenger are steel frame ladder chassis.

      • @Hadron
        The steel ladder frame is supposed to be stronger, although I have seen photos of utes with ladder frames bent like bananas. Never seen a monocoque do that without a high speed impact.

    • They are already there(cars). I’ve been waiting for this to hit on here for about a year now. I watch the auction market very closely and stocks in the “back lot” are increasing daily. I give this another 6 months and auction houses will be forced to flick built up stock. As for the AMG, BMW ect these go to auction and the highest bid gets referred, this happens 2-3 times before the finance company finally comes to market. However the market (like me) are sitting on the sidelines waiting for this blood bath to play out. Cars like most things in Australia are so overpriced and out of wack with the real world that once housing stops being used as the credit card….it all falls down.

    • There seem to have been a disproportionate level of AMG Mercs on the roads in relation to our population…. though lately, I think I have seen a drop-off in numbers.
      It seems that a regular Benz is not quite good enough for status-whoring Aussies.
      Even as a second hand buy, the servicing costs on a “prestige” German brand will be painful for naive players.
      You’d be far better off buying a second hand Lexus.

      https://www.youtube.com/watch?v=mACzv6NCRwk

      https://www.youtube.com/watch?v=yq-sGQdzYGU

      John Cadogan can be annoying in his delivery but is generally on the ball in his advice.

      • pingupenguinMEMBER

        The schadenfreude-gasm is so strong. After years of saving our tits off and feeling like a second class citizen despite having a two high-level incomes it is about time things came back down to reality.

        I always wondered how it was that despite being in the top quintile of household income we could never justify buying a brand new fancy car or justify taking on a $1M mortgage and yet it seemed that every bogan in Sydney was happy to spend $1.2M on a house in outer western Sydny and drive a brand new $80k ute or SUV.

        Turns out everyone was just super happy to get into shitloads of debt. No-one was sympathetic on the way up so fvck-em on the way down. No sympathy.

      • @penguin

        I swear I could have wrote that. One caveat I would add is sometimes in life cans can be kicked for a long time. So need to pick the right moments of which this is one.

      • Lol I agree with you both. Never bought a new car, no idea what it’s like to be the first person to add a scratch or dent to it. Then again the new car plastic smell gives me a headache.

  3. Yes, cars are starting to appear on the side of the road for sale in Brisbane now, not as bad as 2010 yet. Around here many families have 3 old cars and use one as back-up for savings when the part-time jobs start going, you can always get another beater when you get a job again
    The lesson from the GFC overseas was you need a car, a smartphone and a room to stay in the game these days, not a house.

    • Which part of brissie? wouldn’t mind a look. Top of my street’s popular at sale time, but only odd one or two so far.

    • I would like a 2017 Mercedes-Benz AMG GT in that yellow mustard colour (kind of like my old Datsun 240z in Safari Gold shade). 1 of the best looking modern cars getting around.

      • I’ve got my heart set on a Lexus LFA but I’m guessing I probably won’t find one in the repo section.
        I wan’t one soooo bad.

  4. Mining BoganMEMBER

    I have a question relating to Peachy’s question.

    We all know that the costs of maintaining a flash euro is ridiculous but is that just another Australia Tax we must all suffer? What’s the cost of running these rigs in their own countries?

    • TailorTrashMEMBER

      A lot of the big service operations seem to have more guys in white shirts than mechanics out the back
      Their job it appears is to “explain “ why you need to spend 4 grand on top of your service costs .
      This is particularly so with nice shiny things like Range Rovers ….guess they think the owners are easy to stiff and besides one doesn’t want to talk to the trades
      when one can get flattered and called Sir by these latter day hall boys or under butlers .

      • Isn’t that the truth. I’ve had that experience at both Honda and Audi (dealerships). Now all our cars are serviced by experienced independent mechanics. Honest and straight and worth their weight in gold.

    • When I lived in the UK it was ridiculously cheap to own the Euros and the servicing wasn’t that bad — but then I checked out how much the same was costing in mainland Europe and was furious. Strayan prices for both vehicles and servicing (for Eurotrash) makes the UK look super-cheap. No wonder they love sending all their unsold shiiite over here. It’s all coming down.

  5. Convex Buccaneer

    Just picked up my 2005 V8 100 series from it’s 250k km service – usual story – nothing to do.
    My local mechanic had a 2018 GLI 6.3 AMG in for engine repair – junk apparently…

    • Ugh, so if I want a landcruiser I’ll have to get a landcruiser not a Bavarian special?!

      Fine, will wait for some tradies to go bust. Sell the boat and the trailer. Then the landcruiser, seeing there is nothing to tow anymore.

      • Convex Buccaneer

        Don’t forget the jet ski…
        Other thing about the Merc – comes with a deflated space-saver spare (good for a couple’o 100 kms) with a pump to inflate if needed…wtf?

      • From what I’ve heard that the boat’s are cheaper if someone has already repoed the landcruiser.
        i’m not sure what happens if there’s still a loan outstanding on the boat and you buy it on Gumtree?
        Maybe the trick is to not immediately re-register the boat / trailer that way the repo man has no idea where to look for it. I guess you’d need to remove the Boat-code (drill out four pop rivets) and than scratch up the old Identification number.

      • If you’re after a reliable 4wd check out what the cops drive in the area you’ll be driving in.

      • Afterthought Peachy. My brother’s spent the last 25years in the remotest outbacks all around Oz. They all go for cruisers as they’re the only thing that hold together on corry roads & you can always get a spare part for one wherever you are. And they’re a bit tougher if you hit a bull…… might depend on speed…… Presuming you intend to use it off road they’re good rock crushers too. FWIW.

    • The LandCruiser Sahara is the top of the range model.
      About $130-140k+ new. Visiting Sydney and coastal NSW recently, I couldn’t believe the amount of newish ones getting around. I suspect there’ll be plenty of these popping up at the repossession auctions in the near future.

  6. Is it me or do others get stuck behind BMWs blowing blue smoke? I guess paying for servicing is the first expense cut before missing payments, but would be wary buying a second hand one.

    • There’s no need for servicing costs when you have a Ganesha figurine on your dashboard to protect you.

      Remember, Brahmins don’t break down.

    • Common in the bmw x5 (v8 4.4 n62 motor etc)
      Oil leakage in the valve stems or CVV.
      Usually after a long idle.
      Billowing clouds like James Bond stuff.
      Clears away on a good surge.

      Probably the best car in its day in terms of design, agility & power esp the larger 4.8 V8, but once over 80k usage, everything starts to go…

    • Not sure about the motors but the f*cking owners get up my nose. Worst behaved motorists on the road.

      • Yeah, bmw / cocoon of arrogance.
        White elitists, Asian flashy & then hand me down to the Lebs to trash. That’s pretty much the buyer group & type of drivers, esp the v8 suv : x5 & x6 lozenge.

      • I hadn’t Simon. Euro tax on repairs & wary of dual clutch costs. I’d thought they’d be pricier….. Any tips on problems with them?

      • Sorry Colin, I’ve a mate working for Mercedes who’s who I’ve been meaning to catch up with. I’ll ask.

    • Oh yeah, the mining bogans car of choice. Surely Perth must be leading in second hand Mustangs for sale.

      • mustangs’ll show up when the ss / clubsport copbait sales have dried up….musing now….y not buy the senator / grange for the money?? that always confounded me….anyway its moot now.. RIP

      • me & my brother restored a Celica GT-Four Calos Sainz over the last year. It doubled in value over that time. It seems 80-90’s ‘demographic’ cars are shooting up while the exotics / classics are going sideways. Next project might be a Subaru EA81 / Fiat 500D when those greedy folk stop wanting 30k+ for one (strewth)…

  7. Does anyone know what to track for the Harvey Norman type finance deals? They must be showing a bit of stress by now too. What are they going to do, repo the jism stained couch?

  8. HadronCollision

    All this explains why I am having trouble selling a 40D body and a bunch of canon glass cheap (so i can upgrade to a 5D not because I’m behind on my cayenne payments …. yet)

      • HadronCollision

        We have a macro no longer needed and I had a 10-20 sigma wide for landscapes in the alps and Pyrenees and close ups of the TDF peloton plus an APS-C specific magnificent canon 17-55 is usm f2.8

  9. Indian & Pak Uber, Illegal taxi & delivery drivers?
    A lot of them got car loans & now are abandoning the payments?
    Be interesting to see that stats on how many of these cars were so called ‘private use’ but run as legal & illegal commercial vehicles.

  10. A mate of mine who owns 7 dealerships in Sydney and on the central coast told me his sales were off 30% end of 2018 but the hail has saved him in December.

  11. https://www.afr.com/business/banking-and-finance/mortgage-brokers-and-small-banks-spared-from-royal-commission-crackdown-20190125-h1ahs2

    “Mortgage brokers and smaller lenders are set to escape a major crackdown in in the Morrison government’s response to the royal commission into financial services, because Treasurer Josh Frydenberg wants to maintain competitive pressure against the big four banks and keep credit flowing to the economy.”

    I thought credit didn’t matter? I thought prices where high because of supply and demand??

  12. – Question: Who is holding those auto ABS securities ? Pension funds ? Self Managed Super Annuation Funds ? Banks ? Foreigners ? Mutual funds ?

  13. Great Discussion but I like the Skoda Octavia as our all purpose vehicle. Done 147,00 km and no issues – cant justify changing at this point.