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DealerTrack Opens Up About Market Challenges

February 2009, F&I and Showroom - Feature

by Gregory Arroyo - Also by this author

F&I: DealerTrack really does have an in-the-trenches view of what’s happening in the credit markets. Can you talk a little bit about what you’re seeing among lenders?

RVP: Well, we’ve seen a number of lenders leave the indirect lending segment, the biggest one being HSBC. More than 40 lenders have exited or have been acquired in the indirect lending space. We’ve also seen a very large contraction among lenders in terms of the number of dealers they’re working with. Quite simply, lenders are more focused on efficiencies right now. So we’ve seen a marked decrease in the number of dealer-lender relationships.

F&I: How have dealers reacted to this shift in focus?

RVP: We’ve spoken to some of the big dealers out there and many are recognizing the need for balance when it comes to their lender portfolios. Having a preferred lender list just doesn’t work anymore. We even have dealer groups that are specifically looking for credit unions. It’s tough because they need a separate group of credit unions for just about every dealership they have, because credit unions are so widely dispersed around the country. It’s quite a dramatic change in view from a year ago.

F&I: You mentioned credit unions. I hear they’re pretty active these days. What are you seeing?

RVP: As I said before, dealers are now realizing the need for a balanced portfolio of lenders. So we’ve seen a growing awareness of credit unions and a definite increase in the amount of dealers approaching that lending segment. Still, the balance of banks, finance companies, and credit unions on our network remains the same, as we’ve seen a lot of credit unions leaving the industry as well. Having said that, I think dealers are realizing that credit unions can really fill some holes, so to speak, in the FICO spectrum. So credit unions are in favor right now.

F&I: How many credit unions are currently on the DealerTrack network?

RVP: Well, we have two ways for dealers to access credit unions. Dealers can get direct access to approximately700 lenders on our network,445 of those being credit unions. We also have administrators of credit unions on the network. These aggregators have a number of credit unions that they service. Basically, a dealer will select the aggregator, and the aggregator will choose the credit union for the dealer. Combining those two tiers, we have about 550 credit unions available through DealerTrack.


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