Author Archives: BEBdata

BK Filings – A Tidal Wave on the Way?

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So far, a surge of personal bankruptcies has been avoided during 2020 and to date, bankruptcy filings are trailing last year’s numbers.

Even though the federal stimulus payments and other government programs most likely have a lot to do with 2020’s decline in consumer bankruptcies, it could also be attributed to people borrowing less. However, consumer bankruptcies are likely to rise if unemployment and income loss continue.

Some industry experts forecast a “tidal wave” of filings starting in the fourth quarter of 2020 and gaining momentum after the first of 2021.

Mortgage forbearance nearing its end could also be the start of a significant bankruptcy filing surge. You remember that part of the CARES Act allowed homeowners with federally backed mortgages to stop making payments for periods of six months, with a possible extension of six additional months. Starting as soon as October 1, affected homeowners will not only have to resume payment, but banks could demand immediate make up of all missed payments.

Depending on how lenders work with those who exercised the deferral, a wave of Chapter 13 bankruptcies could begin. Chapter 13 allows debtors to set up a repayment plan usually allowing three to five years to catch up on payments.

Bankruptcy booms have happened in the past but it’s unlikely that even Covid-19 could produce anything like the historical peak of filings in 2005. In October of 2005, a new law, the Bankruptcy Abuse Prevention and Consumer Protection Act, went into effect. Because it was seen as less favorable to borrowers, people rushed to court before the law’s effective date resulting in a short-term surge of filings. Soon after, filings dropped (significantly) and stayed low until the housing bubble began to collapse in 2007. The next peak was seen in 2010 as foreclosures skyrocketed.

In any case, looking for trends in this unprecedented time may be futile, as nothing is normal during the “new norm”. We will continue to keep you abreast of current trends as they unfold and share industry analysis and forecasts through our weekly blog.

Up & Down – Which RE Markets Get Hit

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A recent UBS report says that housing prices in areas where the economies depend on leisure and hospitality will be under greater pressure than other areas. The report mentions Las Vegas, Miami and Orlando, which were some of the more disastrous markets during the subprime crisis.

Home prices were hot at the start of 2020. As we muster through the pandemic, gains in values will likely slow. However, prices are not expected to fall nationally. There is a severe shortage of homes for sale which is unlike the subprime mortgage crisis. Home values fell as much as 50% in some markets 10-years back. Now, the supply-demand imbalance favors stronger prices.

Although numbers are still rising compared to 2019, (in the first two weeks of March, new listings were up 5% annually on average), slower gains are indicative to the current market, (the second week of April, new listing were down 47%). There has also been a slowdown in asking prices. In early March, median list prices were, on-average, up by 4.4%. The first half of April reported the slowest growth in seven years with an increase of just under 1%.

Consumer Debt Going Up

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U.S. consumer debt grew in February by the most in seven months with a rise in non-revolving loans, prior to the coronavirus pandemic.

Federal Reserve figures showed a $22.3 billion increase in total credit from the prior month.  Non-revolving debt, which includes auto and school loans, rose by $18.1 billion — the most since 2015 — while revolving or credit-card debt was up $4.2 billion.

The pandemic has quickly spawned financial hardships for many in the US. Uncertain incomes means that consumers are likely to begin to cut back on purchases and borrow less.

Household credit has been expanding over the past few years at about the same pace as it was prior to the 2007-2009 recession.

Nearly 40 Percent of Americans Plan to Use Stimulus to Pay Debt

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720 System Strategies surveyed more than 80,000  students in their credit-score improvement program, many of whom lost thousands of income dollars due to the Corona-virus. 34.95 percent plan to spend their one-time stimulus check and twelve-week unemployment benefits on paying down debt.

In a recent Yahoo! Finance blog, CEO and Founder of 720 System Strategies, Philip Tirone is predicting that the number of 2020 Consumer Bankruptcies will skyrocket past the 2010 high of 1.5 million.

Used Car Market in “Strange Moment”

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Click here to check out this excellent recap of the Used Car Market by our friends at Automotive News.

For the week ended April 12, wholesale auction volume totaled just 19,000, an 83 percent drop from the pre-virus weekly average, according to J.D. Power. Retail used-vehicle sales during the first 12 days of April for franchised dealers tumbled 63 percent vs. the same period in 2019. J.D. Power now forecasts used-vehicle prices to fall 7 percent through June before beginning to recover — though Jonathan Banks, vice president of vehicle valuations and analytics, notes the outlook is fluid and contingent on a gradual recovery in the back half of the year.

Auto Dealerships – A Look Ahead

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Recently, Dennis Ephlin, Auto CoE: Customer Engagement & Digital Transformation at IBM, wrote a blog for Dealer Marketing Magazine about the Future of auto dealerships. Below is an excerpt. Read the blog in its entirety here.

Future Point-of-View
The future of auto dealerships survival will not be enabled by physical inventory and assets or traditional parts and service. No matter how much these departments are squeezed for cost reduction and profit margins, it will not be enough. The future survival and success of auto dealerships will be enabled by those that can create a customer network platform and deliver new goods, services, and experiences into that ecosystem. The future retailers in the mobility industry will be those that offer and deliver on the following:

New Services: These may include mobile servicing, electric vehicle charging and power utility exchanges, storage, rentals, shopping and concierge services.

Fleet and Fleet Management: Offering and managing a fleet of vehicles for consumers to acquire, borrow, or even serve as the outpost for person-to-person and car sharing platforms (pick-up/drop-off) and servicing needs.

Access Models: Retailers of the future will need to think of “offering mileage and mobility” and not just selling inventory. Enabling all ways for consumers of mobility to buy, lease, borrow, rent, and access mobility and mobility needs will be a major service of the future.

Personal Concierge: Serve and meet the multitude of needs that come with the consumer’s entire mobility journey. This includes vehicle access, usage, flexible servicing, full-service provider or manager of mobility needs that include finding and delivering mobility, vehicle options for use, scheduling, pick-up, delivery, insurance, financing, maintenance, and much more.

Customer Mobility Platform: Successful retailers in the future will operate more as customer mobility platforms—arranging and delivering all of the above possible services. This will help them become an “On Demand” mobility access platform for consumers of all kinds, all needs, and all models.

The China Car Cascade

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According to a recent blog published by Electrek*, car buyers in China are coming back in waves.  Personal vehicles have become more desirable  as consumers concern surrounding the safety of public transit rise.

Last month, Ipsos, a global marketing research firm based in France, surveyed first-time car buyers. 41% of new buyers surveyed had a preference for Electric cars. (Approximately half of the respondents wanted Air Conditioning with a germ filter and an interior with antibacterial materials.)

Car sales in China were reportedly down over 95% during the peak of the COVID-19 crisis. In March, sales were only 40% below a year earlier representing a significant climb in a short period of time. The China Passenger Car Association believes sales in the overall vehicle market will rebound to last year’s level by the end of April and reported  approximately 47,000 sales of electric cars in March 2020.

In June, Tesla will offer a Chinese-built electric vehicle with a longer range and only a slight increase in price.  Tesla sales jumped from 3,900 cars in February to more than 10,000 vehicles in March, the company’s best results in a single month and plans on pushing deeper into the Chinese market with a greater variety of products and services.

Volkswagen dealerships in China are reporting customers are once again returning to the showroom floors. There are many signs of recovery, with a good chance that the Chinese car market could reach last year’s level by early summer.

There are a plethora of creative tactics being used to re-start post COVID-19 sales. The Chinese government has launched incentives to increase sales which include extended Electric Vehicle subsidies, in some regions, license plate restrictions are being loosened, and some cities are deploying a program similar to cash-for-clunkers.  Automakers are  offering zero contact  test drives, and GM, which just unveiled its new Baojun electric vehicle, launched a no-questions-asked return policy within 30 days. Even Tesla is providing free charging in China.

It’s clear that Chinese buyers are switching from public transit to personal vehicles. If global auto sales rebound, the shift to electric vehicles could be faster than initially predicted. 

 

*Electrek is a news and commentary site that is tracking, analyzing, and breaking news on the transition from fossil-fuel transport to electric transport.

AI is Listening

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BEBDATA BLOG AI IS LISTENINGArtificial Intelligence (AI) is able to measure tone, tempo and other voice characteristics. Some systems compare those sounds to stored speech pattern libraries that define a plethora of human emotions to determine an individual’s emotional, mental or even physical health.

When this sound technology is used in conjunction with computer vision, the science that allows computers to gain a high-level understanding from digital images or videos, the applications become even more powerful. For example, imagine a vehicle that is able to hear a driver yawning and see the driving dozing off.

Research firm Gartner Inc predicts that within three years, 10% of personal devices will have emotion AI capabilities that include wearables (similar to a Fit Bit) that is able to monitor an individual’s mental health or video games that adapt to the players mood.