Its been a long time

I almost forgot I had started this blog. Things have been busy and writing gets put off. I finally remembered and decided it was time. A lot of things have happened in the car business in the last 3 months. The Van Tuyl organization is playing monopoly on east Camelback road. The only new car stores they do not own between 12th st and 16th st are Courtesy Chevrolet and Coulter Cadillac. They bou7tght the old Mel Clayton property and put the Fordfranchise with the Lincoln Mercury dealership at 13th st and Camelback. I am not sure what will happen on the corner of 16th st.

At least 5 new car dealerships in teh Phoenix area have closed, several more have closed the satellite lots and shrunk back to the original dealership. 15 used car dealerships have closed up that I know of. There is an opinion that 35-40% of the dealerships that were in business in 2007 will not be here in 2009.

The flooring companies that lend money to dealerships for inventory are tightening up. If you are in default, they are not cutting anyone any slack. They come in and take the inventory, and thedealership is virtually out of business.

The automobile lenders have become overly protective of their money, in order to get a car financed, you almost have to be able to pay cash for it. If you don't have a 700 isaac score and a large down payment you are not going to be qualified to finance a car.

I just got an issue of a magazine called Auto Finance Executive. I don't remeber seeing it before but on the cover was an article titled "Zero Sum Game" or "How 0% Financing Undermined The Auto Finance Industry" The article speaks of how in the summer of 2001 auto sales were slowing down. After Sept 11,2001 sales went down 23% the first week. GM came out with its "Keep America Rolling Plan" or)% financing on cars. It worked cars sold like hotcakes. Forfd and Chrysler soon followed suit. This pushed buyers to get new cars before they normally would have. Terms were pushed out to 60 and 72 months. After a couple of years of this even Hyundai gave in to the 0% deal.

One of the reasons GMAC is in trouble is because over 35% of the car loans they made 06-08 are.9% interest or less. this means that they are losing money on every one of those loans. The magic of 0% has worn off for the manufacturers, but the consumer has been conditioned that this si the way he wants to buy a car. The consumer now hesitates when he is told he has to pay a down payment and interest when he buys that new car. Sales of new cars in 08 are expected to be about 2 million less than in 07.

But the industry will most likely not learn, when this recession bottoms out, the 0% deals will be back again.