ATLANTA -

Manheim chief economist Tom Webb projected repossession volumes will climb next year while also explaining why that growth will be tempered.

Webb estimated a “relatively small increase” in repossession volume for 2013, “say in the neighborhood of 75,000 units or so.

“To be sure, the number of contracts outstanding has risen,” Webb continued. “There has been a significant increase in subprime lending, which of course generates a higher repo rate.”

Recent data reinforces Webb’s points.

When CNW Research crunched the September used-vehicle sales numbers, analysts pinpointed just how many more subprime buyers made a purchase last month as compared to a year ago.

CNW indicated the amount of subprime buyers spiked by 78 percent to 923,230.

Analysts noticed buyers with FICO scores below 550 jumped 86.7 percent in September versus the same month last year.

CNW also found that the market share held by buy-here, pay-here dealers jumped by 33 percent year-over-year.

Furthermore, two of the market’s largest lenders noticed an uptick in 30-day delinquencies during the third quarter.

Chase’s 30-day delinquency rate connected with auto loans continued on an upward track that’s been going on for the last three quarters. The third-quarter rate was 1.11 percent after it settled at 0.90 percent at the close of the second quarter and 0.79 percent after this year's opening quarter.

A year ago, Chase’s 30-day delinquency rate stood at 1.01 percent.

And over at Wells Fargo, the company indicated its third-quarter net charge-offs rose $33 million from the previous quarter, “reflecting seasonality and higher delinquencies.”

In fact, Wells Fargo’s 30-day delinquency rate came in at 1.40 percent in the third quarter, up from the year-ago reading of 1.22 percent.

With those trends in mind, why aren’t repossession volumes expected to rise by more than 75,000 units next year? Webb contends there are two factors offsetting stronger growth potential.

“First as we all know, households have clearly raised their priority that they attach to making their monthly car payment relative to other monthly obligations,” Webb stated. TransUnion explored this topic in more detail earlier this year, a report sister publication SubPrime Auto Finance News published here.

Moreover, Webb went on to say, “I also suspect that what is being called subprime today is nothing like the subprime of old.

“I’m sure that today’s borrowers that are subprime still have low FICO scores,” he acknowledged. “That’s how we define subprime. But I bet you that many of them have pretty low payment-to-income ratios. These are people who had their credit racked during the recession. Think foreclosures. But they have now walked away from that debt. They’re now dealing with a rent payment that is much smaller than their previous mortgage payment, and they’re actual income has not changed. It may have even gone up.”

To back up his claim, Webb pointed to the Federal Reserve Financial Obligation Ratio, a quarterly measurement he explained is “the sum of mortgages, rent payments, car payments, vehicle lease payments, homeowner’s insurance, personal property taxes, all expressed as a percent of personal disposable income.”

The Fed placed this ratio at 15.78 percent as of the second quarter. It was below 16 percent in the first quarter, too, and the reading hasn’t been that low for two consecutive quarters since the middle two quarters of 1984.

“How can that be in such a weak economy? Households have walked away from more than $1 trillion in mortgage debt,” Webb concluded.