The Industry's Leading Source For F&I, Sales And Technology

Top News

NADA Urges Obama Administration to Increase
Auto Credit Flow to Consumers and Dealers

April 9, 2009

MCLEAN, Va. — The Chairman of the National Automobile Dealers Association (NADA) acknowledged President Obama’s commitment to helping the domestic auto industry, but urged his administration to focus on correcting the dysfunctional credit markets.

NADA Chairman John McEleney said in a statement: “We are especially heartened by the President’s comment that he 'will not let our auto industry vanish.' This clearly shows that he recognizes the importance of the U.S. auto industry to the country’s future. We also applaud his decision to support further measures to stimulate demand, including a new fleet modernization program, also known as 'cash for clunkers.' These are important first steps toward stabilization of the auto industry as a whole.

However, we have serious concerns on two fronts. First, if something is not done in the immediate future to restore the auto dealer's access to both wholesale vehicle inventory (or 'floorplan') financing and retail consumer credit, the restructuring plan will not work. Vehicle inventory financing is the building block to automaker viability. It affects the entire auto retail network, domestic and international.”

As we said in our letter to the President, we urge the Obama Administration to focus immediately on the crisis in floorplan financing and consumer credit. It is essential not only to a healthy automotive industry, but to the overall economic recovery. Second, bankruptcy, under any circumstances, should not be an option. It would further erode consumer confidence and, therefore, our ability to sell at the retail level. Moreover, it would further exacerbate the availability of credit. In the days ahead, we look forward to working with the Obama Administration on immediate steps to free up credit, both at the wholesale and retail level.”

McEleney and his colleagues, the American International Automobile Dealers Association Chairman Russ Darrow and the National Association of Minority Automobile Dealers Chairman Desmond Roberts penned a letter in March, appealing to President Obama and his administration to focus on the problems with floorplan financing and consumer credit.

The letter also highlighted the struggles of the auto industry.

"Within the past 12 to 14 months, approximately 1000 dealerships have closed, putting more than 50,000 Americans out of work. On top of this, the crisis has prompted thousands of additional layoffs at the dealerships that are still operating,” they wrote. “Unless this situation is corrected, efforts to stabilize the U.S. auto industry will fail, further complicating the revival of the broader economy."

The industry leaders suggested the Obama administration increase credit availability quickly by revitalizing the auto loan-backed securities market and expand the Small Business Administration loan guaranty program to include floorplanning lines of credit.

"We need to restore the availability of credit for the automotive retailing network both to ensure the recovery of the overall auto industry and to preserve the economic foundation of communities all across the country. And time is very much of the essence," the chairmen concluded.

The full text of the letter can be found here.

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  

CLOSE [X]

READ NEXT

Automotive Banking Solutions Launches Subprime Credit Portal

Dealer consulting and services provider Automotive Banking Solutions has launched a new credit portal designed specifically to connect dealers with financing sources for credit-challenged customers.