Latest OnLine Editon  Read Here

Uncertainty Drives Dealers in Different Directions

Uncertainty Drives Dealers in Different Directions Featured

The industry is in a state of transition and dealers are uncertain about the best way to move forward.

Take the issue of whether or not to finance their own sales.

Michael Darrow, owner, The Auto Traders in Durham, N.C., said about 40 percent of his sales are subprime deals.

Darrow also “dabbles” in buy-here, pay-here. Lately, he’s been increasing the amount of paper he keeps for himself, doing two or three buy-here, pay-here deals a month out of 38 sales.

“The lenders have tightened up a little bit, which is where we’ve seen more opportunity for buy-here, pay-here,” Darrow said. “Now a lender says, ‘That’s a $900 fee,’ that’s when we’ll keep it in-house.”

Rex Echer, owner, The Car Shoppe, Salina, Kan., is acting like one of those finance companies.

His store used to be evenly split between straight retail and buy-here, pay-here. Now retail sales make up 70 percent of the business.

“ It’s a little safer,” Echer said.

A major issue for Echer is a lack of quality inventory.

“It’s harder to find anything with good mileage,” he said. “For the buy-here, pay-here stuff, I don’t know what good mileage is anymore. Maybe 150,000 or less.”

This drives up the recon costs.

Last modified on Thursday, 13 July 2017 13:06
Rate this item
(0 votes)

Related items

  • Auto Loan Defaults Rise

    Auto loan defaults increased to 0.95 percent in August, from 0.86 percent in July.
    This is the second consecutive monthly increase.
    Overall, the S&P Dow Jones Indices and Experian increased to 0.86 percent in August.
    The only index to decline was bankcard defaults, which dropped to its lowest level since December 2016.
    Three of the five major cities saw their default rates increase.

  • Luxury Cars See Stronger Prices

    Average wholesale prices in August were once again up largely on the strength of truck prices, although another factor could be early impacts from Hurricane Harvey, which appeared to drive prices up at the end of the month, particularly in Texas.  
    According to ADESA Analytical Services’ monthly analysis of Wholesale Used Vehicle Prices by Vehicle Model Class, wholesale used vehicle prices in August averaged $10,947 – up 0.6 percent compared to July and up 1.9 percent relative to August 2016.  Luxury cars had a standout month, with significant average price increases on both a monthly and annual basis.
    Price softening was less evident than in previous months when holding constant for sale type, model-year age, mileage, and model class segment. 

  • CarMax Adds Philadelphia Store

    CarMax Inc. celebrated the grand opening of its new store in Langhorne, Pa.
    This is the company’s fifth location in the Philadelphia area. The store is located at 1776 E Lincoln Hwy and has the capacity to stock approximately 240 used vehicles. In celebration of the Langhorne store opening, CarMax and The CarMax Foundation awarded $8,000 in donations and grants to the Lower Bucks Family YMCA. Support for this organization came at the recommendation of the Langhorne CarMax associates.