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AUTOLENDING.NET

May be helpful for you.

Dealers Report Higher Used Car Sales

Sourced From: AutoRemarketing, April 1, 2008


Situation
1. Recent Wachovia survey indicates 28% of dealers say used-vehicle sales "above expectations"
2. Represents significant increase from 22% in previous survey, up 6%
3. Dealers have "just enough" used-vehicle inventory: 82%, compared w/ 80% previously
4. This measurement climbed from 64% last year
5. Wachovia Capital Markets surveyed 40 dealers, GMs, sales managers from dealer network
6. Releases equity research papers 6 times / year; small sample size, representing only 16 states


Significant Points
1. Used-vehicle demand appears to be climbing; demand for new vehicles falling
2. Movement largely reflects seasonal trends
3. Automakers pushed new-vehicle sales in Nov and Dec

Lenders Add Restrictions for Auto Loans

Sourced From: Wall Street Journal, April 2, 2008


Situation
1. Even as Fed cuts interest rates, getting tough for buyers to find attractive terms on auto loans
2. GMAC tightened lending standards 3 times in 2007
3. AmeriCredit and Sovereign Bancorp have recently raised minimum credit score
4. In 2008, 90% of auto-loan applications from prime borrowers approved, down from 92.5%
5. Among subprime applications, 57% have been approved in 2008, down from 68% early 2007
6. Delinquencies hit 10-year high in Jan, though they declined slightly in Feb


Significant Points
1. Many lenders making fewer loans; instituting stricter standards on loans they do approve
2. Often requiring higher credit scores, making smaller loans, bigger down payments
3. Some lenders applying tough standards for borrowers in states hard hit by housing crisis
4. Subprime borrowers will bear brunt of shifting lending standards
5. Even prime borrowers w/ good credit may be affected by some changes
6. Some consumers may not be able to get a car loan at all


Says
"We're trying to lend to people who will be able to pay us back." -- Thomas Kelly, spokesman, J.P. Morgan Chase & Co.'s Chase Auto Finance

Bad Leads?

You thought your lead was bad!

Not Endorsing, But I Am Definitely Laughing

Bank survey: Franchised car dealers following customers to the used car department

A recent Wachovia Bank survey of 40 large automotive retailers shows an increase in used car sales, with 28 percent of dealerships indicating that their used car sales were above expectations, reports the Associated Press.

The results represented a steep increase from 6 percent in the bank's January survey and flat results compared with year-ago levels.

"Although there was some seasonality, we believe many dealers have lowered their expectations and new car intenders may be switching to used cars," Wachovia's Richard M. Kwas wrote in a note to investors. "In general, dealers conveyed that prospects are more interested in used vehicles over new."

In addition, 82 percent of dealers said that they have "just enough" used vehicle inventory for their needs, up from 64 percent at the same time last year.

At the same time, 15 percent of dealers said they had "too little" inventory, up from 6 percent in the last survey, but down from 31 percent last year, indicating optimism among some dealers about the spring selling season.

Officials for MyRide.com, said they've seen a steep increase over the past several months in searches for information on used cars.

According to MyRide.com, nine of the top 100 search terms entered on the Web site in September were used car-related, representing 6.2 percent of the top 100 terms' traffic volume. But by February, the most recent month available, that number had risen to 27, or about 21 percent of top 100 terms' traffic volume.

A spokesman for MyRide.com said that the specific used models drivers are searching for are the more expensive models including light trucks, such as the Ford F-150 pickup and Chevrolet Tahoe, and luxury cars like the BMW X5.

From DealersEdge Daily Headlines
March 28, 2008

Ford to sell Jaguar and Land Rover to Tata for $2.3B

Ford Motor Company has agreed to sell its Jaguar and Land Rover brands to Tata Motor Group for $2.3 billion. Ford will infuse $600 million into the brands' pension fund once the deal is complete sometime in June, at which time Ford will receive $1.7 billion.

From Dealer Digest Daily
March 26, 2008

Negative Equity Trades Hit Three-Year Low

Negative Equity Trades Hit Three-Year Low
Mar 24, 2008
Found at $pecial Finance.

Westlake Village, Calif. - The percentage of negative equity for the first quarter of 2008 is the lowest it has been in this period for the past three years, according to the Power Information Network (PIN). The drop in upside down trades to 29 percent comes after a downward trend for several calendar quarters. The report, released March 7, said that despite the drop in upside down trades, those consumers that do trade with negative equity owe more than in the past. “So far in the first quarter of this year, the average negative equity amount has been $3,930, up from $3,587 three years ago,” the report said.
The report suggested these trends could be due to consumers with modest negative equity on their vehicles refraining from trading those vehicles in, and those that are the most upside down continuing the trade-in trend.

A Little Fun Stuff

Dear Anonymous Reader

A recent note from an Anonymous reader:

What exactly is the point of this post? Seems like this blog must be selling a service, but I don't even see a service being offered...
Is the point that some random person doesn't know the difference between leads? What are you going to do about it?
Maybe this is an autoblog designed to drive traffic, but you don't even have any ads....

Dear Anonymous Reader,

Thank you for taking the time to read Special Finance Leads. I appreciate the questions and felt that they warrant a response.

To the first question: What exactly is the point of this post? The post was originally designed to discuss things and people that I run into at different points of my daily life. I anticipated adding post more frequently but, as they normally do, things got a little busy. Sorry for not offering more post to read, I will try to cure that here shortly.

To the next question: Is the point that some random person doesn't know the difference between leads? A saying I once heard inspired the post, “A poor craftsman blames his tools.” The point of the saying as well as the post is that sometimes it is not the tool but it is the craftsman (or in this case craftswoman). When I talk to someone at a dealership that wants more leads, sure I can offer him or her more leads, I am not so inclined to provide them. I believe there is a more fundamental problem than the leads (the tool for selling cars). It is the equivalent of asking the doctor for the cheapest medicine he can provide without allowing him to diagnose your problem. As I would know it, prescription without diagnose is malpractice.

And the final question: What are you going to do about it? What I do about it is a great question too. I offer dealers the opportunity to evaluate their current situation and determine how they can maximize their efforts. My primary focus in on the secondary market. Specifically, I provide a dealer the chance to implement a solution that works regardless of who is in the seat. However, I will not do that without proper diagnoses of the current situation in the dealership. The first symptom I check for is someone that says, “We just need leads we are good at everything else.”

I trust that these answers are helpful and insightful. I also genuinely appreciate the feedback. Without feedback we would never get better, we would just be status quo. Many Thanks.

We’re Good

Ok, Webster says Good is “satisfactory in quality, quantity, or degree.” General Managers or even Special Finance Managers seem to always be looking for something that will make them more money. In this case, I am talking about Subprime leads. They respond to advertisements for the next best thing. They sign on the dotted line and then at the end of the month call and cancel whatever they just bought. Those leads sucked! We can’t do anything with these people!

So I get a call from a GM the other day, “Hey, I want to know what you guys do.” After asking a few questions, I get the response “Oh, we’re good there!” So she tells me to not worry about that and just tell her what how I can help her. So I ask a few more questions that are met with the same response. Then the most amazing statement came out of her mouth… “all the leads are the same.”

Now we are getting somewhere. If all the leads are the same then what could possibly be different? Why would she be calling me? To get more of the same leads? What I didn’t tell her was that if all the leads are the same then that means that you don’t know how to work them. Someone is selling cars to these leads. If she doesn’t sell them a car, the need for a car is still there so the customer is going to get it somewhere else.

The real question is how did she define Good? Good at burning through leads, good at prequalifying leads, good at telling people what to do? What is Good? If you’re so good, why is there a need to continue looking for something else, another way? I wanted to tell her that if she would be willing to try something that is currently working in dealerships without applying her own “Good” ideas, I can help her sell more cars. But all I could get out was “Wow, that’s good!”