While the hastily signed Congressional Tax Reform Bill had many phoning their accountants at the end of 2017, the real questions are quickly emerging in 2018 as tax season looms. A strong stock market close in 2017 has been tempered with a predicted return of inflation, thanks to the Federal Reserve signaling interest rate hikes. How will lenders weigh the risk versus reward for the automotive credit market in 2018?
No doubt there are some bright spots on the horizon for the automotive market. Talk has abounded at this week’s Detroit Auto Show around advanced technology and improved models. Consumers signaled in December that demand is still high for the right type of vehicle – i.e., light trucks and SUVs. However, OEM incentives also reached record highs in 2017. And, while the volume of lease returns spiked, used car inventory continued to tighten in certain parts of the country struck by natural disasters.
Many economists and investment firms are remaining cautious for the beginning of 2018. Credit Suisse Group AG issued an interesting comment, stating, “After a year of strong investment returns on risk assets, we enter 2018, a year likely to see sustained economic growth and good, albeit more limited returns. We believe the next generation, or Millennials, will emerge even more strongly as a major driving force in key realms of life.” Continue reading