Auto Financing Puts Crunch on Car Sales
New car sales across the nation have generally declined over the past year or so, primarily due to consumer concern and speculation about the US economy. This has resulted in an increase in used car sales for most dealers and so while new car sales quotas may have been a tougher to hit lately than normal, overall sales have been holding relatively steady for many dealerships.
But that is changing right now because of a new challenge being caused by today’s economic crisis – Auto Financing.
With the housing bubble imploding and credit freezes throughout most major banks, obtaining financing for automobiles is becoming more of a challenge now too. Banks have tougher requirements for getting a loan and are not as willing to take as much risk on car loans as they were a few months ago. Naturally, this is impacting car sales.
While data that would reflect this is still coming in, dealers are already feeling it at the dealerships. According to one report on CNNMoney.com, people are still coming in to buy cars, but they are having a more difficult time getting the car they want.
The existential aspect of this is probably good for the American soul because we as a nation have been living above our means now for decades and tougher financing requirements will curb that a bit. Today’s financial situation is certainly a cleaning up or payback hour for companies, government, and citizens. But the health factor is no medicine for car dealers who do not want to see sales declining.
Dealers today will be faced with a choice of putting their dollars into marketing and advertising programs that produce quick results to keep their sales up, or into programs that will carry them into the future. The short-term reactors will probably look good today, but after a few months when things balance out that will not be the case. Dealers that can weather the storm and pursue opportunities that carry them into tomorrow’s (restored) economic times will be the ones in the end that come out on top.
