Dealership Corridor
Welcome to the New Year rush! At your dealership, you’re trying to move out those older units while negotiating for new models. You’re also connecting with key business partners to review and finalize plans and projections for 2025. And last – but not least – you have a calendar chock full of social commitments with friends and family! But what if I told you that you could connect with more customers and make more in 2025? Let me explain.
Innovation is one of those buzzwords that has, frankly, been overused lately. While once reserved for scions of industry like Henry Ford and Eli Whitney, today the concept of innovation is applied to any new product modification or brand positioning. But without true innovation – and the people who are driven every day to invent the next new thing – we would miss out on a lot of great ideas.
The United Auto Workers strike at a few U.S. manufacturing plants has consumed the daily news cycle over the past few weeks. While new vehicle inventory has largely recovered from the pandemic-induced supply chain issues, dealer principals are closely watching how events unfold before adjusting year-end plans.
As dealers face an uncertain 4th quarter, consumers are also casting a sideways glance at their economic future. According to the Experian State of the Automotive Finance Market Q2 2023 report, auto loan delinquencies rose past pre-COVID levels and new vehicle values continued to climb while LTV decreased. While the Federal Reserve held interest rates steady this month – for the second time this year – rates remained at a range of 5.25 percent to 5.5 percent, the highest level since 2001. But auto lenders continue to take their pound of flesh as the average auto loan interest rates across all credit profiles ranged from 5.18 percent to 14.08 percent for new cars and 6.79 percent to 21.32 percent for used cars.
Americans owe $1.56 trillion in auto loan debt, according to the Federal Reserve Bank of New York, accounting for 9.2 percent of American consumer debt. The average payment for new vehicles was a record-high $742 in the second quarter of 2023, with loan terms up to 74 months, according to Experian. Think about paying $742 every month for the next five years on possibly two vehicles. A lot can happen during that time, including layoffs, unexpected repairs, theft, accidents, etc.
