If you didn’t know, I also serve as the executive editor of
F&I Management and Technology magazine, the automotive side of the
company’s dealer magazine group. And I have to tell you, this has been one heck
of a news year for the automotive side.
One of the biggest problems has to do with finance. Lenders are tightening lending guidelines, which means F&I managers are sending finance deals to more than five lenders to get approvals. Last year, according to CNW Marketing Research, deals were sent to an average of 4.2 institutions.
The problem stems from skittish investors in the asset-backed securities (ABS) market, where many lenders in the automotive segment sell loan portfolios to attain funding.
And as many of you see out in the field, the powersports industry isn’t immune from what’s happening. Harley-Davidson Financial Services reported a decrease in operating income in the first quarter of this year due to a reduction in income from securitization.
According to a June report from Fitch Ratings, ABS credit card sellers and servicers are taking further action to mitigate their risk exposure in the face of rising delinquencies and losses, higher unemployment levels, and a sagging economy.
The good news is gas prices have created a nice pocket of opportunity for the powersports industry, with many dealers reporting increased foot traffic at their stores. Still, how do you finance purchases if lenders aren’t buying? That’s what’s hampering the used-vehicle market. There are plenty of finance-appropriate vehicles for today’s growing subprime segment. The problem is, lenders are pulling out of that credit tier.
In July, we published a quarterly finance report from Experian. The credit reporting agency tapped into vehicle registration data, crunched the numbers, and provided a sobering picture of what happened in the first quarter. See, despite lenders tightening up, the subprime category showed the largest increase. You’d expect that segment to shrink and the prime spectrum to increase, but it didn’t.
What’s happening is consumer credit is deteriorating. Unfortunately, this is happening while lenders are looking for bullet-proof deals. That’s why it’s imperative powersports dealers understand the importance of putting customers in finance-appropriate vehicles, as well as properly structuring deals. It’s also why dealers need an F&I professional, one who understands compliance and knows how to establish the right lender relationships.
So, how do you get started? Well, if you’re not doing anything Sept. 16-17, Bobit Business Media is literally bringing the magazine to life with its first Powersports F&I Conference.
Even if you have salespeople handling the finance part of your business, send them to the show. Everyone needs to know the financial forecast for the rest of the year, and that’s what you’re going to learn at our show. You’ll hear from individuals from two of the largest powersports dealers in the nation, including Todd Baldwin, GSM at the California-based Chaparral Motor Sports, and GSM Steve Koniarsky and F&I Director Jonathan Kyle of Bert’s Mega Mall.
We’re also hosting two pre-show certification workshops on Sept. 16, which will provide you with the perfect opportunity to certify your F&I staff. We’re also hosting a pre-show legal symposium on identity theft, which is important with the compliance deadline for the Federal Trade Commission’s new Red Flag Rule coming up on Nov. 1. And from what I hear, complying with the new rule will be a costly investment.
We’ll be releasing additional details about the show on our Website www.powersports-fi.com, so stay tuned.