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Finance

Future Hinges on Credit Availability

March 2009, F&I and Showroom - Cover Story

by Gregory Arroyo - Also by this author

Surrounded by mainstream media reporters, Fred Frederick, owner of the Maryland-based Fred Frederick Chrysler, held the line. He shrugged off the possibility of moving less vehicles in 2009 than he’s used to, and did the same when asked about the prospect of Chrysler changing its product mix.

“Listen, we, including you guys, need to get off the devastation,” he told the throng of reporters. “Things are not bad. I’m telling you, we got the people to get the job done and I think we’re going to get it done, but have we done a good job of delivering that message to the marketplace? No.”

Frederick’s mood seemed to change, however, when asked about credit availability. “That’s more difficult,” explained Frederick, who said SunTrust Bank, BB&T and PNC Bank have stuck with his dealerships. “We’re not seeing anything they’re doing in Washington filtering down to main street.”

Not far away was Chuck Eddy, who was also surrounded by a pack of reporters. Eddy, who said credit unions, U.S. Bank, and Chase have stepped up for his Austintown, Ohio-based dealerships, also held the line.

“Our store in northeast Ohio was only eight percent off last year,” said Eddy, who was one of the dealers who went to Washington, D.C., to lobby for the bailout loans for Chrysler and General Motors. “Personally, we’re hiring salespeople. I haven’t had to layoff anyone.”

This was one of many scenes at the 2009 National Automobile Dealers Association (NADA) Convention and Expo. Fittingly set in New Orleans — a city swept away by its own storm four years ago — the 92nd annual show reeked of questions about the future of the industry and the U.S. economy.

The NADA’s Chief Economist Paul Taylor gave his best estimate on the industry’s future, putting 2009 sales at 12.7 million units. Taylor also brushed aside comparisons of the current economic crisis to the Great Depression, as he said the current recession mirrors that of the early 1980s.

“While I like history, I find that people who are comparing what’s going on now to the Great Depression somewhat misguided,” he said. “This looks a lot like the ’80-’82 recession, and it’s useful to look at that time for guidance.”

 

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