Summary
A year ago, the collapse of the housing market blew up the global credit system and its loosey-goosey lending policies. Car dealers are still hurting today.
Analysis
As car dealers struggle to make sense of the "Post Clunkers" market one thing is very clear; lenders are not inclined to relax stringent lending policies. In a poll conducted by Automotive News dealers tell of the difficulties getting the same customers financed who would have been approved six months ago.
The problem is most acute for buyers rated below prime. But even shoppers with great credit scores often have trouble. Here is a sample from the poll:
Are the retail lenders credit standards easier, tougher or the same as they were six months ago?:
Standards are tougher: 68.5%
Standards are unchanged: 22.4%
Standards are easier: 9.1%
Are you losing sales because of lack of retail financing?:
Yes: 76.0%
No: 24.0%
Do you have competitive leasing plans available?:
Yes: 27.5%
No: 72.5%
Are you losing sales because of a lack of leasing?:
Yes: 65.0%
No: 35.0%
Can you finance subprime customers?:
Yes: 37.5%
No: 62.5%
Jack Sayer consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
