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F&I Conference and Expo: Financial Crisis Takes Center Stage

November 2008, F&I and Showroom - Cover Story

by Editorial Staff

Charlie Robinson, finance director for Asbury Automotive, said his company is focused on getting bigger down payments from customers. Marv Eleazer, finance manager for Langdale Ford in Georgia, said he approaches every customer with the thought of making sure he’s protecting the lender.

Gary Allgeier of the Troy, Mich.-based The Suburban Collection said today’s market conditions call for a more transparent process. “Now we sit down with lenders to discuss their needs,” he said. “They appreciate it and respond to it.”

It was clear dealers understood the challenges ahead. It was also clear lenders, product providers and technology companies understood the stakes. It was also apparent at this year’s F&I Conference and Expo the severity of the credit crisis has been a surprise to all.

“I thought we’d be talking about the recovery,” said keynote speaker George Borst, president and CEO of Toyota Financial Services (TFS), to open the show. “I think we’re in a cycle and we’re near the bottom of the cycle, and the bottom is always dreary.”

Attendees at the fifth annual event, held at the Paris Las Vegas hotel on Sept. 16-17, were greeted with news of Lehman Brothers’ bankruptcy filing and the Federal Reserve’s extension of a two-year loan to rescue AIG after it reportedly lost $18 billion over three quarters.

What all agreed on was today’s credit crunch was the result of a failure to manage risk. Borst warned that the next 12 to 15 months will be rough, with inflation reaching highs not seen since 1991 and consumer confidence hitting rock bottom.

Gone are the days of easy money, as lenders are on the move and will continue to be on the move while weathering the economic storm. Lenders also said the problem is impacting consumers across the board, especially with 1.7 million mortgages expected to reset this year.

As it turned out, September was the worst month for U.S. auto sales since February 1993, down 26.6 percent from September 2007, putting predictions for vehicle sales this year at below 14 million units.

“We’ve seen this before. The cause is different this time. It’s oil’s impact on trucks and SUVs,” said Borst. “But we’ve gotten out of this before … there’s no reason to believe we won’t do it again.”

Dealers and Lenders to Work Together

Borst’s opening keynote address set the stage for the first panel of the show, which focused on prime and nonprime financing. Moderated by Marguerite Watanabe, principal of Connections Insights, the panel included representatives from GMAC, Wells Fargo Auto Finance, Toyota Financial Services, and CitiFinancial Auto.

“We are in unprecedented times,” said GMAC’s Alex Sarafian. “And I agree with Borst that we’re at the bottom of the cycle.”

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