Chrysler, AT&T; Credit Losses Rise

Chrysler Corp.’s main lending unit recorded a surge in customer credit problems during the first half of this year, underscoring the auto industry’s exposure to mounting consumer debt.

Meanwhile, AT&T; Corp. Universal Card Services President David K. Hunt resigned Wednesday in what the company described as a “mutual decision” as it struggles with credit card holders who aren’t paying their bills.

Both reports raised fresh concerns that many consumers are in over their heads with credit troubles and that the problems are worsening despite a strong economy and rising employment.

Chrysler Financial Corp., in a recent filing with the Securities and Exchange Commission, said its credit losses doubled during the first six months of 1996, to $348.8 million, or 1.67% of car loan amounts outstanding on an annualized basis, compared with 0.88% during the same period in 1995.

Repossessions at Chrysler Financial rose to 3.8% of average contracts outstanding during the 1996 period from 2.57% in 1995, while delinquent auto loans rose to 3.17% of contracts from 2.25%.

“We have always viewed anything north of 3 [percent] as being a high figure” for delinquencies, said David Jones, vice president of planning for General Motors Acceptance Corp., which finances GM auto sales.

GMAC and Ford Motor’s lending arm have also experienced customer credit problems, albeit at more moderate levels, according to analysts.

Chrysler said its delinquencies have begun to stabilize and that some of the rise in problems resulted from an interruption of collection efforts as its loan-servicing unit was reorganized.

At AT&T;’s Universal Card unit, charge-offs are on track to hit 5.97% of the firm’s total credit card debt this year, based on the level through May, AT&T; said. That’s up from 3.24% in 1994 and 4.76% in 1995. The industry average is about 5%.