Full text of G.20 Sales Finance Companies : October 16, 1950

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BOARD OF GOVERNORS
OF THE
fEDERAL RESERVE SYSTEM
October 16, 1950
SALES FINANCE

COJIPANI~

AUGUST 1950
--;.:.=-.~~~::!.;g!!~c~i:!!n;l.·-For

the first time in f'our months,sales finance companies reported a
dec · e in their purchases of' instalment paper arising f'rom retail sales of' motor
vehicles. In contrast to the increases of the preceding three months, the August volume of retail
automotive paper acquired showed a 9 per cent decline. All components of the automotive segment
were reported to have decreased, although purchases of' used commercial car paper were only slightly
less in August than in July, as is shown in the table below. Despite record sales of. new passenger
cars in August, sales finance companies reported a decrease in acquisitions of retail paper for new
passenger cars during the month.

montb-t~onth

Outstanding balances of' retail automotive paper continued to increase during August, but
at a somewhat slower rate than during July.
Purchases of' paper representing the sale of' other consumer goods were slightly higher in
August than in July. A very large increase, 82 per cent, was recorded for furniture, radios, and
musical instruments. This large increase and the substantial increases in two other categories were
counterbalanced to a groeat extent by the 13 per cent decline in the financing of refrigerators and
other household appliances. The latter categcr.y constitutes the largest part of sales finance
company operations in consumer goods other than automobiles.
As was the ease with retail automotive paper, outstanding balances of
paper showed a slight increase.

o~her

consumer goods

Retail Financing by Sales Finance Companies
Class of' retail instalment paper
Automotive:

Total retail

Number
of cars

Percentage change July L950 to August J.~5U
VoJ.ume of paper
Outstanding balances,
aeQ.Ui!"_ed during month
end of month

=-2

=-2

Used

- 9
-9

- 9
- 8

Ntnr
Used

-20
-2

-16
- 1

...
...
...
...

Total

!..1

+ 2

Furniture, radios, musical instruments
Refrigerators and other household appliances
Residential building repair and modernization
Miscellaneous retail

+82
-13
+17
+11

...
...

Passenger cars:
Commercial cars:

other consumer goods:

New

!.2.

...
...

Wh6lesale finaneing.--The amount of wholesale automotive paper acquired by reporting sales
finance c0111panles was somewhat gr-eater in August than in July. Outstanding balances of such paper
also showed a moderate increase.
Purchases of' other wholesale paper rose in about the same degree as the volume of wholesale autanotive paper. However, outstanding balances of' other wholesale paper declined slightly
during August.
Ratio of' paper acquired to balances outstanding.--The turnover rate of receivables as
measured by the ratio of paper acquired during the month to outstanding balances at the end of the
month was maintained at the July level of 30 per cent.
NOTE. August data, based on returns f'rom 119 sales finance companies, are compiled in the
same manner as those shown in earlier reports. Aggregates represent only the totals for the reporting canpanies and, since the reporting sample is not identical f'rom month to month, they are not
comparable with totals of preceding months.

Page 2
SALES FINANCE COMPANIES

Table ].,--Automotive and Diversified Financing by Sales Finance Companies
Indexes of Outstanding Balances: December 31, 1939 • 100 ~
Wholesale
other
than
automotive

Retail
other
consumers'
goods

Industrial,
commercial,
and farm
equipment

100
169
175
112
40
24
27
90
163
252
216

100
250
40
8
11
38
224
394
454
332

100
129
148
76
30
26
39
105
226
232
187

100
131
147
61
27
26
23
59
89
116
107

219
228
237
245
249

242
279
294
267
216

417
400
371
361
332

202
199
195
190
187

111
110
111
110
107

252
258
265
274
284
298
314
322

250
223
204
186
202
228
163
179

329
398
485
537
531
499
436
424

180
176
172
172
174
179
185
189

110
109
111

End of month
and year

Total
all
sales
financing

1939 ..................
1940 •••.•.••.....••.••
1941 •.••••••.....•••••
1942 ..................
1943 ••••••..•••...••••
1944 •••••••••.••••••.•
1945 .•••.•.••..•.••.••
1946 •••••••••••••••••.
1947 ••••.•••••••••..••
1948 •.•••••..•.••••••.
1949 ••••••••••.•••••••

100
1.36
152
53
20
18
22
59
119
174
228

100
132
149
31
13
15
18
42
88
151
249

1949- August •••••••••

214
225
232
233
228
234
234
237
240
250
263
266
274

September ••••••
October ••••••••
November •••••••
December •••••••

1950 -January ••••••••
February •••••••
)(arch ..........
April ..........
May ............

J\Ule. •. • • • .. • • •

July ...........
August •••••••••

~

Retail
automotive

Wholesale
automotive

lhO

112

117
120
123
124

Indexes as of .December 31 for the years of 1939, 1940, and 1941 are based on figures reported by
sales finance companies on a supplementary report form which accompanied the regular monthly report form for January 1942, Succeeding indexes are derived by calculating the percentage
changes of the outstanding balances reported by sales finance companies for each month from
those reported by the same companies for the preceding month, and by linking these percentages
to the indexes for the preceding month,

Table 2.--Relative Importance of Loaus Made by Sales Finance Companies
and Outstanding Balances at End of Month
During August 1950
Outstanding balances,
end of month

Paper acquired
during month
Class of paper
Amount

Percentage
of total

Amount

Percentage
of total

Total, all classes of paper~ ........

$934,96o,036

100

$3.084 745.789

100

Total loans •••••••••••••••• , ••••••• ,
Small (personal) loans ••••••••••••
Business loans •••••••••••••••.••••

49 1233 12j9
10,996,454
38,236,785

1
4

2

142 ,,Jl.J ,!i82
68,297,689
74,015,793

2
3

Total sales financing ~····••••••••

885,726' 191

95

2,942,432,307

95

!/

s

Included in this classification are only those firms which, in addition to their sales financing
operations, reported loan activities,

Page :S

SALES FiliAliCB COJIPAIIIES

Table 3.--.AutOIIlotiw and Diwrsified Financing by Sales Finance Companies
Paper Acquired During August 1950 and Balances OUtstanding at End of Month
Volume of paper acquired
during August 1950
Class of pttper

By all
companies
reporting

Ratio paper
acquired to
out standi,;,
balances b

OUtstanding
balances
August 31,

By companies
reporting

1950

outstandi~J

!I

balances a

$304,646,897
532 ,26;, 825
Total wholesale- other than automotive, ••
20,435,973
Total retail- other consumers' goods •••••
37,071,462
Industrial, commercial, and fare equipment
7,532, 727

$304,122,306
532,056,096
20,391,355
36,646,799
7,532,287

$2,334,680,406
260,656,866
31,936,580
287,544,162
93,406,396

13
204
64
13
8

$901,952,884

$900,748,843

$3,008,224,410

30

Total retail automotive •••••••••••••••••••
Total wholesale automotive, ••.•• • .•.•• , •.•

Total sales financing •••••••••••

!( Data are based on figures from sales finance companies able to report both their paper acquired and

E(

their outstanding balances.
Ratios obtained by dividing paper acquired (column 2) by outetanding balances (column 3),
Table

of Cars Financed and Volume of Paper Acquired
by Sales Finance Companies During August 1950

4.--~umber

Number of cars
Class of paper

Paper
Dollar
volume

acquired

Number

Percentage
of total

Percentage
of total

Total retail automotive ••••••••••••••••

268 2012

100

$292a347 1 24o!l

100

New passenger care •••••••••••••••••••
New commercial cars ••••••••••••••••••
Used passenger cars ••••••••••••••••••
Used c~srcial cars •••••••••••••••••

102,810
15,919
136,426
12,857

38
6
51
5

156,550,518
21,734,596
108,376,098
8,686,028

53

Total wholesale automotive •••••••••••••

339 2407

100

$522 1 021 1 08J..!I

100

1/ew cars (passenger and commercial),.
Used cars (passenger and commercial),

321,272
18,135

95
5

505,336,494
19,684,587

96
4

1

37
3

!( Data are based on reports from sales finance compMies providing a breakdown of their retail and
wholesale automotive financing, These amounts are less than those reported in table 3 due to the
exclusion of some data for which breakdowns were not available.

Table 5,--Volume of Diversified Sales Financing During August 1950

Clau of paper
Retail - other consumers• goods:
Furniture, radios, pianos, and other musical instruments ••
Refrigerators and other household appliances ••••••••••••••
Residential building repairs and modernization, •••••••••••
Miscellaneous retail,, ••. , ••••..•.•• , •• , •.• ,,, •.••.....•.•
Total retail - other consumers' goods •.••••..•••••••.•••••••••

Total wholesale -other than automotive •••••••••••••••••••••••
Industrial, commercial, and farm equipment ••••••••••••••••••••
Total diversified financing •••••••••••••••••••

of

Dollar volU!IlS
paper acquired

$ 4,637,793

19,223,212
3,897,227
8,150 1 941

$35,909,173 !I
20,435,973
7.532,727
$63,877,873

Percentage
of total

7

30

6

l3

56
32
12
lOO

Data are based on reports from aales finance companies providing a breakdown of their retail
financing of other consumers' goods. This amount is less than that reported in table 3 due to the
exclusion of some data for which breakdowns ....,re not awilable.