Auto loan fraud stats, vehicle inventory update, Tesla's European concerns

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1. Auto loan fraud poses serious threat to the industry

Top line: Auto lenders lost roughly $7.9 billion in 2023 to auto loan fraudsters, according to new data from Point Predictive.

1. Fraudsters may exaggerate their income to appear more creditworthy.
   

2. They also create falsified documents, often from online sources, to support their inflated income claims. Fake documents such as paystubs, bank statements, W2s, and 1099s typically cost $5 to $100.
   

3. Some individuals fabricate their job titles or even entire employers to make it seem like they have stable employment. Income and employment fraud accounted for 45% of all auto loan fraud, costing lenders $3.6 billion.
   
   

4. Credit washing risk rose 30% year-over-year. This involves disputing negative tradelines on a credit report. They do this not as reporting errors but as outright identity theft. The goal is to remove bad credit history. This will improve credit scores artificially. Then, they will qualify for loans they normally wouldn’t receive.
   
   

5. Synthetic identity fraud involves creating fictitious identities by combining both made up and real information. These synthetic identities are then used to secure loans or other financial products. Synthetic identity and credit washing made up 29% of fraud risk, resulting in $2.3 billion in losses.

• Instead, dealers need to watch out for fake paystubs, W2s, and bank statements. Thieves use them to drive off with vehicles and never pay, leading to costly losses.

Luxury brands are by far the most targeted brands for auto loan fraud. The appeal of luxury vehicles, amplified by social media, drives demand for these cars.

• Mercedes Benz dominates the top 20 most targeted models, with 6 models on the list, followed by BMW with 4 models. 

• 8.2%, or nearly 1 in 12, of the Land Rover Range Rover Velar's loan applications were found to be fraudulent. 

• The Tesla Model Y had a 6.81% fraud rate, about 1 in 14 applications.

What we’re watching: Auto lending's newest threat is Fraud as a Service (FaaS), which is quickly gaining popularity as auto lenders tighten their lending standards.

• Professional fraudsters advertise their services on social media platforms like Facebook and Telegram. Generative AI is used more and more to completely fabricate fake documents that are harder to detect.

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2. New and used vehicle inventory rise at the start of May

At a glance: At the beginning of the month, vehicle inventory levels varied widely from brand to brand. Nearly a dozen automakers had over a 100 days' supply. These brands pulled the national average days’ supply up to 76 from 74 month-over-month. 

Zooming out: The total U.S. supply of available unsold new vehicles was 2.84 million units as of May 2. 

• That is 961,000 units more or a 51% year-over-year.

• Compared to 2019, the volume of new vehicle inventory at the start of May was down 26%, and the days’ supply was lower by 19%.

• Stellantis brands at the start of May, continued to have days’ supply well above the national average. Days’ supply at Jeep rose 21% and Ram was up 14%. Both brands have more than double the industry average.
  

• Dodge had 151 days’ supply with Chrysler, which was marginally better at 143 days.
  

• MINI saw a sharp uptick (56% month-over month) to 108 days' supply, and Mitsubishi increased inventory by 26% to 115 days. 
  

• Acura, Buick, BMW, Chevrolet, and GMC all hovered within 6 days of the industry average.
  

• Days’ supply at Toyota, Honda, and Lexus is under 50 days. At the lowest end of the spectrum, Toyota had an average of 30 days worth of supply.

What’s more: Considering inventory by price level, it’s no surprise that more affordable models have less supply. Inventory prices above $50,000 have increased to an average of 90 days’ supply, a 5.5% increase month-over-month.

Used car inventory crept up in May as well to 2.27 million units, more than both last year's levels and April's numbers. 

• As tax refunds dried up, the days' supply ticked up slightly to 46 days. But, used car affordability remains a challenge, especially for vehicles under $15,000 (only 36 days' supply). 
  
  

• While average used listing prices remain steady compared to April, they're down 6% year-over-year.
  
  

• Popular used car brands like Ford, Chevrolet, Toyota, Honda, and Nissan continue to dominate sales (49% share). Their prices average 9% below the average used car listing price of $25,571.

The bottom line: The jury's still out on whether this rising inventory translates to a full-blown buyer's market. While brands with high days' supply will likely offer steeper discounts, prices are still higher than they were pre-pandemic.

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3. European leasing companies have a gripe with Tesla

Big picture: Tesla is facing some backlash from European leasing companies and fleet customers over repeated retail price cuts, which are tanking fleet values. Corporate customers are also taking issue with Tesla’s slow service and expensive repairs.

• Competition is also on the rise, especially from Chinese EV makers like BYD. 
  
  

• However, these price cuts have hurt leasing companies, which calculate leases based on the expected resale value of the cars. 
  
  

• Sudden price drops hurt these values, causing losses for the leasing firms.
  
  

• The automaker faces the same resale-value problem with other rental-car companies. Hertz which has been selling off Teslas in the thousands in the U.S. market.

To address this, Tesla started offering unofficial discounts on Model 3 and Model Y vehicles to leasing companies. This was compensation for the devaluation of their fleets, according to an anonymous source. These discounts were not officially announced but were communicated to leasing companies privately.

• Autoworkers at a Mercedes Benz plant in Alabama voted against joining the United Auto Workers union Friday

• Tim Kuniskis, CEO of Stellantis' Dodge and Ram brands, is retiring after 32 years with the automaker

• The U.S. auto safety regulator said on Monday it has opened a recall query into an estimated 51,500 Volkswagen America's EVs

• Tesla drops Steam gaming support inside its vehicles.

• Japan and the Association of Southeast Asian Nations (ASEAN) plan to create their first joint strategy for automobile production and sales in China.

We’ve got tons of great jobs hitting the CDG Job Board right now. Here are some standouts for anyone looking for their next move.

• Have a background in digital marketing? Foundation Direct is hiring several remote roles, including an Account Executive and Regional Performance Manager.

• Feel at home in the service drive? Tom Whiteside Chrysler Dodge Jeep Ram, near Columbus, OH, is hiring an FCA Technician.

• SaaS company BizzyCar has put the call out for account executives in Los Angeles and Orlando (remote).

Looking to hire? Add your roles today—it’s 100% free.

Thanks for reading everyone. See you right back here tomorrow.

— CDG