Auto Loan Approvals Start to Recover, Says CNW Research

(MoneyWatch)  Auto loan approvals have improved two months in a row after bottoming out in October, according to CNW Marketing Research.

CNW noted the opposite trend last September, as the credit crunch began to bite. Auto lenders cut back in part because they themselves were having trouble borrowing money with which to make loans.

The recent improvement is a "glimmer" of positive news for the auto industry, but two months of improvement do not constitute a trend, said CNW President Art Spinella. "I don't want to read too much into the data. It's way too early to do that," he said, in a Jan. 8 note.

Specifically, CNW said that for "prime"-risk applicants, auto lenders approved about 83.9 percent of credit applications in December. That's up from 77.4 percent in October, and roughly even with the year-ago month.

"Near-prime" approvals rose to 76.8 percent in December, up from 73.7 percent in October, but lower than the year-ago level of 85.2 percent, CNW said. Subprime approvals climbed to only 16.9 in December. That's up from 14.3 percent in October, but far below 60.7 percent a year earlier.

GMAC and Chrysler Finance probably accounted for more than their share of the downturn, since they cut back sharply on loan and lease business in recent months, while rivals like Ford Credit and Toyota Financial Services stayed in the market. Chrysler stopped offering leases altogether, last summer.

GMAC, which had cut off credit to all but the most creditworthy customers, got a government bailout late last month and almost immediately announced it would get back into the market.

That should help improve auto-loan approval rates even more, starting in January.