Marcie Belles's Blog – August 2008 Archive (10)

Dealership Consolidation

Dealerships nationwide are feeling the pinch of slow vehicle sales and tightening access to credit. Quite a few have been deactivated from lender rosters, making it tougher for them to find funding for their customers.

The National Automobile Dealers Association expects consolidation of 500 to 800 dealerships this year — recession-level closures, said Paul Taylor, the organization’s chief economist. Currently, there are 21,700 franchise new-car dealers in the U.S.

What… Continue

Added by Marcie Belles on August 29, 2008 at 3:01pm — 1 Comment

Gas-Powered

Since peaking in mid-July, gas prices have been slowly inching downward. Meanwhile, vehicle resale values are starting to stabilize. Have we turned the corner on the sport-utility vehicle debacle?

Gas prices have dropped nearly 10% in the past month, to $3.71 per gallon on Aug. 18 from $4.05 per gallon on July 14, according to the U.S. Department of Energy.

And price declines for used vehicles at auction have slowed considerably. Here are some examples: The wholesale price… Continue

Added by Marcie Belles on August 25, 2008 at 4:51pm — 1 Comment

Auto Finance Summit Expands Speaker Roster

The Auto Finance Summit, the industry’s premiere event slated for Oct. 6-8, has bolstered its speaker faculty with the addition of automotive guru Aaron Gold and economist Keith Schwer.

Gold, whose auto picks and pans can be found on About.com’s Guide to Cars, will present an in-depth preview of the new model year. He’ll discuss a range of… Continue

Added by Marcie Belles on August 25, 2008 at 2:32pm — No Comments

A Good Idea — Almost

With gas prices at record levels, just about every car ad today touts gas mileage. So it’s no surprise that lenders are jumping on the bandwagon, too.

Yesterday, Truliant Federal Credit Union unveiled its “Fuel Efficient Auto Loan,” an offering that rewards car buyers for buying vehicles that get at least 29 miles per gallon.

The concept is right on the money: Develop a product that tugs at people’s purse strings.

But… Continue

Added by Marcie Belles on August 19, 2008 at 10:17am — 1 Comment

The Double-Edged Sword

Long-term loan products are poised to replace lease offerings for customers seeking low monthly payments on their automobiles. But 72- and 84-month loans may create a new set of problems for the industry as lenders face a surge of negative equity among their borrowers.

In auto finance, “negative equity” occurs when a borrower owes more on his vehicle than it is worth. This scenario is also referred to as being “upside-down” on the loan.

Inherently, the longer the loan term… Continue

Added by Marcie Belles on August 14, 2008 at 3:34pm — 6 Comments

Stressing the Stress Tests

Though losses in auto loan- and lease-backed securitizations have reached — or, in some cases, exceeded — their long-term averages, so far the rating agencies and investment banks are fairly comfortable with ABS performance.

Analysts at Standard & Poor’s and Citigroup, which both held conference calls on consumer ABS in the past few days, pointed to a number of reasons for the higher losses in the 2007 and 2008 pools. The obvious ones are the sagging economy and high gas prices,… Continue

Added by Marcie Belles on August 12, 2008 at 2:07pm — No Comments

Prices Surge for Used Compact Cars

Intense demand for compact cars has sent sales volume — and pricing — higher, even on pre-owned inventory.

During June, the wholesale prices of used compact cars increased about $300 to $7,376, according to ADESA Inc. statistics. Within the pre-owned market, dealers are selling compact cars well beyond their Blue Book assessed values and making great returns.

“In the past 90 days there has been a [buying] frenzy for pre-owned compact four-cylinder cars,” said Doug Deakin,… Continue

Added by Marcie Belles on August 11, 2008 at 1:04pm — No Comments

Lenders Beware: Floorplan Troubles Loom

Auto lenders have been taking it on the chin for months now, and it seems things will get worse before they get better.

So far, financiers have largely blamed their woes on high gas prices, a tough economy, and higher-than-expected residual losses. But in the next few months, troubles related to dealer floorplans will begin to surface.

Vehicle sales are on the skids, and slower turnaround on dealership lots makes it tougher for dealers to repay their inventory loans.… Continue

Added by Marcie Belles on August 8, 2008 at 10:27am — 3 Comments

European Auto Finance Mirrors U.S. Market

The auto finance market across the Atlantic looks strikingly similar to the one in the United States. Sales of sport utility vehicles are plummeting, lenders are scrutinizing dealer performance, and auto retailers are laying off employees.

Check out this sampling of items from the most recent issue of Motor Finance magazine:

• Parker’s Car Price Guide has reported “no demand” among used car buyers for petrol 4x4s, especially with V8 engines. Owners of 4x4s are said to be… Continue

Added by Marcie Belles on August 5, 2008 at 5:00pm — 1 Comment

Snags in GMAC’s Plan

Since posting a $2.5 billion second-quarter loss earlier this week, GMAC LLC has devised a series of moves meant to get it back on track. But in my estimation, the plan alienates both of its major customer groups: dealers and consumers.

For starters, dealers will have to pay higher interest rates on their inventory financing. Barbara Stokel, GMAC’s executive vice president of North American operations, has informed dealers that floorplan financing rates will climb by at least 0.5%… Continue

Added by Marcie Belles on August 1, 2008 at 4:53pm — No Comments