Summary
The December Auto Sales numbers are bad out here in the PNW almost every dealer, especially every franchised dealer I have spoken with has said the same thing: "December was the worst month they have ever had". Historically, December has always been a nail biter, with the distraction of the Xmas holiday, the actual selling month becomes a very short period of time in which to make the numbers you need to float the boat. Every year we worry ...and up until now we have always pulled it out with the last week of the month putting us over the top. some years it has seemed like we did a whole months business during those precious last 5 days. 2008 started good and ended bad. Good bye 2008!!. On the positive side of the equation early January sales numbers are extremely encouraging across the US.
Analysis
A large number of automotive retailers across the country are in a serious world of hurt. Just in these last 3 months we have seen alot of higher volume independant dealers as well as Multi - badged franchise dealers closing their doors; some because they are tired of taking some of the huge monthly losses and aren't well enough capitalized to continue, (even if they wanted to), and others have been shut down by their flooring banks... or lack of flooring banks. These banks include some of the captives like FMCC, who pulled the plug on a store that less than 2 years ago was selling 3-400 units (new and used) a month. 2008 will be one for the record books. On the plus side ...
The impact of the loosening of credit ... especially at GMAC has had an immediate impact in sales. Money is suddenly flowing for car and truck loans following last week's announcement of a $5 billion government investment in GMAC. Credit-flow eased after the government bought $5 billion worth of stock in GMAC and agreed to loan GM $1 billion to help GMAC's reorganization as a bank holding company. The manufacturers offering financing rates ranging from zero percent to 4.9 percent (GM) , depending on the vehicle, has buoyed customer confidence as well.
Many dealers are hopeful that the loans to the automakers will be key to turning around the auto industry, pointing out that GMAC's lifting of credit restrictions sets an example for banks that have yet to use their bailout funding to free up consumer loans. It's important that the consumer not stay on the sidelines too long and with the recent vote of support by congress we are optimistic that we won't be revisiting the lackluster Decembers sales numbers, on any level for a long long time.
