"On the retail side of the business, as you know, our underwriting standards don't change. We are very consistent in that," said Mike Seneski, CFO of Ford Motor Credit Co.
Ford Credit predicted last week it would finish the year in a range centered around $100 billion in total receivables, including auto loans, leases and dealer commercial loans. That would be an increase of about 6.5 percent from March 31. As of March 31, total receivables were $93.9 billion, up about 9 percent from a year ago.
Seneski said most of Ford Credit's growth is coming from leasing and from commercial loans, while retail auto loans were getting paid off at about the same rate as new ones are being made. Originations for U.S. loan and lease contracts combined were up about 15 percent in the first quarter from a year ago, to 272,000, Ford Credit said.
"Our retail portfolio is pretty flat, so the new originations are offsetting the liquidations. And we are seeing growth in the lease industry," Seneski said in a conference call.
Separately, Capital One Financial Corp. CEO Rich Fairbank said in April that Capital One Auto Finance purposely let its auto originations in the first quarter decline by 11 percent from the year-ago quarter, to about $3.8 billion.
"The year-over-year decline in originations reflects increased competition and our choice not to chase growth that might compromise the sustained returns or resilience of the business," he said.
Even so, he said returns on new originations likely would decline as competition in auto lending continues to heat up. "We still see solid overall profitability and above-hurdle returns in new originations, but we expect that increased competition will drive returns from our current levels closer toward cycle average," Fairbank said.
Charles Bradley, CEO of Consumer Portfolio Services, said he also would leave it to others to chase unprofitable volume. CPS, a subprime lender, says it hasn't changed its approval standards, but it did acknowledge cutting its dealer fees to attract more business.
Bradley didn't name any competitors, but there are a number of startups in subprime auto lending. Bradley said that's typical at this point in the business cycle, when subprime auto lending is on an upswing.
"I think you sort of have a combination today of a few what we'll call overly aggressive companies out there," he said in an April 17 conference call. "And for the most part, you let those people run on toward the cliff, whatever they're doing, and you don't worry about it."