Boston, MA -- (SBWIRE) -- 04/12/2013 -- After growth of almost 6% in light vehicle sales in 2012, BMI expects a more modest expansion in 2013, in the range of 2%. While this is partly due to the base effects created by strong growth in a largely saturated market in 2012, we are also concerned by the rising levels of auto loan growth, which appears to be outstripping other forms of consumer debt. Although delinquency levels are actually lower than these other loan types, there is still a major risk to the industry should rates go up in the short term.

With interest rates held at 1.0% since 2010, the mindset of spending rather than saving has taken hold. By Q412, the average auto captive debt was CAD19,345, up 9% from the CAD17,759 of Q411. Loan terms are also being made longer to make repayments more manageable, with terms of up to seven years available, where four years was previously the industry norm.

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This does begin to ring alarm bells, particularly given the central bank's efforts to slow down borrowing, led by new mortgage regulations introduced in 2012. However, the upside is that the delinquency level on auto captives has remained relatively stable at 0.10% and even dipping to 0.08% in Q212. An increase in interest rates would pose a risk to this credit boom, but for the moment, BMI does not expect this to be an issue until at least 2014.

In terms of the competitive landscape, one of the biggest moves in 2012 came at the top of the table, where Chrysler, including the Fiat brand, leapfrogged General Motors Company (GM) for second place in the market as sales grew 5.5%. This was in contrast to GM's 6.6% slide. Ford stayed at the top but saw its market share cut back to 16.5% from 17.4% in 2011.

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