Car dealers are facing plenty of obstacles. The struggling economy has placed a huge strain on the automotive vertical, and no one is feeling the effects more so than car dealers themselves. The current sales slump for dealers has been simply devastating, with the National Automobile Dealer Association expecting hundreds of dealerships going out of business by the end of the year.
Those suffering the most month after month seem to be the Big Three, who have each been eliminating brands, redundant models, and/or idling manufacturing facilities left and right.
Although the public perception of car dealers isn’t a positive one, car dealers needless to say play a vital role in the automotive industry as a whole. But as the NADA estimates that about two car dealers will close their doors per day, the automakers themselves may find that they have more trouble ahead of them than before.
Among the dealers that have already shut their doors is Bill Heard Enterprises. The dealer group had 13 showrooms spread across the country from Arizona to Georgia, and accounted for 7% of total Chevrolet sales last year. When large dealer groups such as Bill Heard Enterprises can’t hold up against the current economy, imagine the struggles of smaller car dealerships that are facing the brunt of falling new vehicle sales.
Analysts fear that the auto retail system is simply flawed in its current state. These flaws have fueled positive outcomes for consumers. Consumers are more educated than ever, and understand where to look for valuable information regarding the right price to pay for a new or used car. This is also one of the factors that have ignited more competition between dealers than ever before observes Bad Credit Auto Loans Elizabethtown. This competition has even led to dramatically lower prices, and has even cut into dealer profits dramatically.
These trends have affected nearly every make. Consumer traffic in dealer showrooms has declined, even for brands with a reputation for fuel efficiency and reliability says Marlborough Bad Credit Car Loan. Unfortunately for domestic brand dealers, they’re in an even more precarious place.
On top of these adverse trends affecting car dealers, the automakers themselves have been putting pressure on dealers. Many automakers, such as Chrysler, are cutting their leasing programs, which have helped new car sales. Additionally, with the current credit crunch, dealers are feeling the pinch. Car dealers rely on credit to run their businesses according to Chicago auto loans lenders, and with credit drying up, dealers are finding themselves in increasingly difficult times.
It wasn’t that long ago when bad credit auto financing was done almost exclusively at many dealerships such as Bob Watson Chevrolet and many others. But these days, those are the types of loans that are made less often, and as a result financing companies such as GMAC are only considering borrowers with a 700+ credit score. Although credit is still available to drivers stresses Car Loan Shillington lenders, it’s simply becoming more difficult to attain.
In some areas of the country, interest rates have skyrocketed past the mid 20 percent range, which is far higher than those offered by credit card companies. But Nashville Credit Finance reminds consumers that they aren’t the only ones subject to such costs. When a car sits on a dealership lot unsold, the dealer also has to pay interest on the vehicle. For dealers that have vehicles that tend to sit longer, such as Hummer or Jeep dealerships or those with large truck and SUV inventories, those are extra costs that two years ago were not a concern for dealers.
As dealerships begin closing their doors one after another, the automakers are suffering as well. Not only are they losing potentially lucrative sales outlets according to personnel at Auto Financing Lubbock, but they also are standing idly by as dealers who invested heavily in upgrading showrooms per the automaker’s request and added extensive inventory lose their businesses.
Unfortunately for dealers and automakers, there may be worse news ahead for the auto industry before things get dramatically better. While used car sales at Used Cars Kansas City are holding up, new car dealer sales are not quite as fortunate.
Continue reading ‘The Auto Industry Pushes Through Hard Times’
