Author: efgmarketing

Categories
Economy F&I

Get Ready for a Fire Sale

Brien Joyce, blog author

I drove down ‘dealership row’ last weekend and was struck by the number of massive SALE banners and vehicle promotions. It’s that time of year when dealers are trying to move 2024 inventory to make room for the 2025 models. Fortunately, this year, they have some inventory to move – but face some stiff challenges thanks to high vehicle prices, stubborn interest rates, and hesitant consumers.

Industry forecasters expect third-quarter U.S. vehicle sales to be roughly flat compared to a year earlier. According to Edmunds’s estimate, automakers sold about 3.9 million new vehicles in the U.S. in the July-September period, 2.3% less than a year ago. Cox also forecasts a 2.1% decline, while J.D. Power predicts flat sales. The sluggish results would put automakers on pace to finish the year with U.S. vehicle sales of around 15.7 million—a slight increase from last year, when supply-chain snags were still hampering vehicle output but still off historic highs.

Continue reading “Get Ready for a Fire Sale”
Categories
Compliance

Consumers Keen on Compliance

Earlier this summer, the Consumer Financial Protection Bureau (CFPB) shared its initial findings from the Auto Finance Data Pilot, an initiative designed to monitor the auto loan market for consumer risks. The pilot involves collecting data from nine large auto lenders, representing a cross-section of the market. The CFPB found that consumers who financed negative equity from a prior vehicle into a new auto loan were more likely to have their account assigned to repossession, larger auto loans, lower credit scores, lower income, and longer loan terms.

Some consumer advocate groups have urged the bureau to go farther, capturing auto lending data on buy-here/pay-here dealerships and predatory lending targeting military servicemembers. According to a letter sent to the bureau, the Consumer Federation of America, the National Consumer Law Center and Americans for Financial Reform Education Fund urged the bureau to do the following:

  • collect data on auto financing from credit unions, so that the Bureau can compare outcomes of consumers who financed directly with a credit union with similarly situated consumers who obtained an “indirect loan” from a credit union through a dealership
  • expand the data collection requirements to apply to “Buy Here Pay Here” dealerships, and to evaluate their use of pre-dispute arbitration agreements, as the Consumer Groups believe that these dealerships may cause consumer harm that goes unchecked
  • collect data concerning auto leases to ensure that dealers pass tax credits on to consumers who lease clean vehicles
  • collect data related to “language access, including language preferences, ease of accessibility, translation efforts, and other customer service practices.”
Continue reading “Consumers Keen on Compliance”
Categories
Business Growth

Embrace Change

It might be time to take a deep breath. There has been a tremendous amount of swirl lately in the economic and political headlines, but I’d like to put a little perspective on today’s business environment and encourage our credit union clients to optimistically plan for the second half of 2024.

Regardless of who we elect as our president, history shows that U.S. presidential elections have had little bearing on the trajectory of the economy and business, regardless of which party wins. Through all 46 presidencies to date, the U.S. economy has continued to grow. While there are some underlying economic macro trends, we agree with most experts supporting a continued decrease in inflation and interest rates, and projections reflecting a strong economy. In fact, The Conference Board recently issued its forecast predicting that GDP growth should pick up later in 2024 as inflation subsides and the Fed first signals and then actually cuts interest rates.

While The Conference Board did reveal that consumer spending decelerated in the first half of the year, prompting GDP to dip, the impact was softened by a continued strong labor market and strength in the stock market. As long as consumers believe their jobs are safe and they can make regular monthly payments easily, they will continue to spend and borrow throughout the remainder of the year.

Continue reading “Embrace Change”