Carter Worth Sees Warning Signs In The Auto Industry

On CNBC's Fast Money, Carter Worth shared his analysis of the auto space. He thinks that there are some warning signs in the space that shouldn't be ignored.

Worth said that the sales of automobiles have been improving since 2010 and it is now back above 18 million units. He added that it is good that the number of sold cars is going up, but it is concerning that the amount for lower quality loans, or subprime loans, used to finance the sales is growing. Since 2010, the percentage of sold cars financed by subprime loans has grown from 17.9 percent to 23.1 percent.

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The average duration of loans is also increasing and it is 67 months for new cars and 62 months for used cars and 16 percent of the used cars is financed with loans that are going to be paid back in 74 to 84 months. When it comes to new cars, 30 percent is financed by 74 to 84 months long loans.

Worth presented a chart which shows that the automobile space had a negative return in 2015, which is concerning in his opinion, because it has happened in the period of a record auto sales. He has also shown the chart of Ford Motor Company F, which has been on a decline since 2013. Worth believes that the downturn in the stock is going to continue.