Independent Dealers Worry Lack of Credit Will Hurt Sales

By Staff Writer May 08, 2018

Fewer independent dealers expect economic conditions to improve, according to a survey by the National Independent Automobile Dealers Association.

The overall picture shows NIADA members expected business to stay steady with no major uptick in customer traffic or corresponding sales heading into the mid-year of 2018.

The NIADA’s business confidence survey, taken during the first quarter, found 42 percent of the respondents expect conditions to improve in the first quarter. This is down from 63 percent in the 2017 Q1 survey.

Retail sales growth expectations fell to 50 percent from 70 percent a year ago and 67 percent in the previous quarter.

The percentage of dealers who expected an increase in their cost of doing business rose to 66 percent from 57 percent in the fourth quarter of 2017.

 

Optimism for increased cash flow and availability of auto finance resources also fell, with cash flow down 21 percent and finance availability down 34 percent from the previous year.

That was due in part to a sharp pullback in auto finance company investment in the subprime market. A handful of independent auto finance companies have left the market completely.

Dealers cited less access to the number of lenders as well as tighter restrictions to qualify buyers for loans (29 percent each) as the top reasons why it's been difficult to secure loans for customers.

Expectations of more consumer traffic dropped to 41 percent from 71 percent in the first quarter of 2017. Consumer retail sales were flat in this year’s first quarter.

The expectation of rising expenses also showed up in dealers' perception of the single most important problem facing their business. Twenty-two percent said it was the increased cost of doing business.

Concern over the lack of auto finance resources rose from single digits throughout the past year to 12 percent.

Last modified on Tuesday, 08 May 2018 20:44