Auto sales expected to increase in U.S. and China, fall in Europe

Fitch Ratings Recent Findings

The growth in consumer confidence and bank lending has sparked increased spending and borrowing across a few different industries, including mortgages and, most recently, credit cards. And now, to add to the list, Fitch Ratings found that auto sales in China and the U.S. are expected to rise in 2013, potentially prompting auto loan originators to prepare for a surge in applications.

Fitch Ratings announced in a recent report that light vehicle sales in the U.S. could reach up to 15 million if next year sees a similar increase as 2012 in purchases. The report noted this trend could continue for the next few years – but still remains lower than the 17 million annual peak seen in the decade before the recession.

China, too, is expected to see growth in its auto sales, although not at the levels experienced before 2011 when the auto market was booming. Premium brands, compared to mass market brands, will also likely see a larger increase due to fewer government regulations.

Auto purchases in Europe, on the other hand, are expected to fall next year after a particularly hard year – auto sales decreased by 8 percent in 2012. Representing the European debt crisis, France, Spain and Italy saw the greatest impact in the past year in terms of sales, but Germany too is expected to see negative effects in 2013.

For the U.S. and other countries with similar trends, the surge in car sales and the loan applications that will likely follow may encourage financial institutions to invest in loan processing software. With more efficient ways to combat the increasing applications, banks can originate more loans to turn the growing car sales into profits.

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