I don’t know, because I am in the UK and I don’t know exactly what definition of vendor finance you’re working with.

For example, here in the UK, that is extremely regulated, and you’re usually not buying with the dealer’s money, or the dealer chain’s money. Sometimes you are buying with the manufacturer’s money (through a regulated subsidiary finance company or joint venture) but most of the time you’re simply buying from a regulated finance company, from which the dealer is getting an introducer’s fee (and for which they must agree to be regulated).

(I am not a driver and have no car loans but I am reasonably familiar with the business model from previous client business)

It is my understanding that Nvidia is pretty directly using their own money for this: there is a criticism that they are essentially “selling their balance sheet as a service”, and that their total exposure is about $200 billion.

Nvidia’s loans are not, in that sense, particularly comparable to even the loosest definition of auto loans.

This is all putting aside how much money Jensen Huang has persuaded others to loan. Perhaps that side of things won’t go away; I think we might see him carrying on that function in some future capacity. But it will almost inevitably be at a much smaller scale, because the market is significantly less enthusiastic about lending more money.

Almost none. Dealerships will arrange financing for you, but the actual financing comes from a third party financial institution. The dealership walks away from the deal with the full cash value of the sale; and maybe a kickback from the bank. The concerning thing with vendor financing is that the vendor is supposed to be in the widget business, not the financing business. If they are getting into the financing bussiness, that is generally a sign that the professional financers don't want to get involved; which is not a good sign.

captive lender originations account for between 20% and 30% of the us auto loan volume depending on whether you count the loans or the volume

You're being deliberately obtuse. Every auto manufacturer has a captive finance arm. That captive finance arm may be operated by a financial institution, but the financing is subvented by the auto manufacturer. Chase isn't offering 0% financing on a Subaru because they like the car, they're offering it because Subaru pays them to.

This is, nevertheless, a quite different story. Nvidia does not have a captive finance company.

> Nvidia does not have a captive finance company

You don’t need to when you have a few dozen customers. You meet with them and plot world dominance over cocktails.

Auto companies have the structure they do to support 1000s of dealerships and millions of customers.

Surely the credit risk level is completely different between individual customers personally on the hook vs speculative corporations?

Sure, but no matter the risk level the vendor always has the most ability to absorb defaults. It’s probably why they are the only reasonable lender in many markets

Bullshit. Most of our economy is financing. Airlines are literally credit card companies with some aircraft leases attached.

Right but aren’t you kind of underscoring the point? It’s not really the kind of vendor finance we are talking about then; it’s really just the finance industry moving into loaning other things, moving the storefront into another business. It’s pretty highly regulated.

Vendor finance of the kind Nvidia is doing is different: they are the single vendor for one thing, they are loaning to startups who otherwise might not get funding from banks, it’s coming from the same balance sheet as the product, and these loans are materially causing GPU scarcity.

In general, vendor finance of the kind Nvidia is doing is indicative of an uncertain market, and when it’s the only vendor and it causes the price of the thing to rise, that’s obviously bad.

The industry is very aware that it relies on this for its continuing growth and stability.

it's also an issue for cat companies. they get a double whammy during economic downturn because demand drops and supply rises (due to repossessed data flooding the market)