How Subprime Loans Are Fueling Auto Sales

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Aug. 1 (Bloomberg) -- Kelley Blue Book's Karl Brauer examines Ford’s July U.S. auto sales and how subprime loans are fueling auto sales. He speaks with Cory Johnson on “Taking Stock.” (Source: Bloomberg)

Because strong demand for suvs sent ford up 9.5 percent in july.

Auto deliveries could also be headed for the best year since 2006. ford looks like things are going great.

What do you see?

What is impressive is how they are managing this transition.

They have to stockpile the current f1 50 because they have the new one coming.

The new ones have a new material, it is made out of aluminum.

I am impressed ford is increasing sales on the f1 fit the one it is at the end of its lifecycle and they are halfing to taper down production of it.

What about other vehicles?

What is doing well?

Big trucks and suvs, people are buying suvs again.

It is interesting because in my opinion people felt guilty buying them for a while between the gas prices, and the economic grass rice -- and the economic downturn.

Gas prices are not good.

We are paying over four dollars in northern california.

It is really expensive.

There are people who, these vehicles are very functional for them.

They enjoy them.

The newest ones have great ride quality.

Even the new gm trucks.

So these people want one.

I have felt -- they feel like they have gone without and now they want to reward themselves.

I am concerned about the role of subprime lending in vehicles.

I'm worried about the bleed over fact should there be a problem.

How much is subprime a role here?

It is a role.

We have low interest, so people are looking for other ways to make money and subprime is a way to do it.

You have to be careful because this got us in trouble before.

The difference is that the rate of subprime loans, people getting the loans is still not as high as it was before.

And the default rate from the subprime people is not at a scary level.

There are defaults in every type of loan, the percentage has not been anything to set off alarm bells.

They don't default until they do default when they do default and the default a lot.

But when you look at the history of people who have done subprime, there has not been any jump in its like there has been in the past.

There is nothing to indicate they are on the verge of a big default by the subprime people, like we have seen in the past.

Which carmakers are more exposed to subprime for the sale than others?

It is pretty universal, actually.

I do not think the luxury automakers do it as much, obviously.

A lot of the volume players.

This text has been automatically generated. It may not be 100% accurate.

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