I’m sure you’re tired of all the media coverage surrounding the subprime mortgage arena, and all the doom-and-gloom talk floating around. But it’s not going to stop. What’s important is that you read between the lines.

I think everyone is in agreement that automotive lending has learned from its past transgressions. I think we’re also in agreement that comparing the recent lending styles of the home mortgage industry to automotive finance is like comparing apples to oranges. Yes, I’ve heard it. But that’s not dulling the spotlight on the credit industry.

During an AmeriCredit investor Webcast on Nov. 15, I heard how the company tightened its credit criteria in 2007, and how it’s seeing some increases in delinquencies for its 2006 vintages.

The company also said it scaled back on its subprime originations for its
Long Beach platform, and that its Bay View Acceptance Corp. is performing solidly. Aside from the July and August time frame when the company raised rates, AmeriCredit officials also reported that loan pricing has remained relatively stable. The one comment, however, that stayed with me was a response by Dan Berce, president and chief executive officer, to a question from the audience.

“We absolutely could have sold the company in 2007,” he said. “But we didn’t. We felt strongly about the future of the company.”

And do they ever, as later that month several company executives used the doom-and-gloom talk that sent AmeriCredit’s stocks to a 52-week low to buy more than a million dollars worth of company stock. Market watchers called it a risky bet, but one said the insider buy may point to a good risk/reward balance.

So, what is AmeriCredit seeing? Opportunity, aren’t you?

Earlier this year I wrote about Experian’s Melinda Zabritski’s prediction that 2008 would be the year of the used car. I know you’re thinking, “Didn’t that start happening in 2006?” It did, but by all accounts it’s going to be more profound this year.

According to June 2007 registrations analyzed by Experian, more than 50 percent of vehicles financed and purchased were used. Out of those vehicles, more than 43 percent were purchased by prime customers. Zabritski said consumers are seeing an opportunity to purchase higher-end used vehicles. Looking at the top 10 used vehicles sold, which included the F150 and Silverado 1500, she added that some of the concerns (i.e., gas prices) that have hampered new truck and SUV sales are not as problematic in the used-vehicle market.

There have been other signs that 2008 will be the year of the used car. Just look at some of the moves the captives made in the last several years: BMW created Alphera to cater to non-BMW dealers and GMAC added National Auto Finance Company to do the same.

In November, the magazine published an interview with Mercedes-Benz Financial’s Christopher Kaefer, a marketing executive. Because of space, I had to cut out his response to my question about moves by captives to address non-brand dealers. Here’s what he said: “I’ve seen the trend, and I would say BMW is by far the leader in this way of thinking. We have not started an initiative yet.”

Read between the lines.

OK, we’ve been beating the drum lately about having an efficient F&I selling system, and we’re doing it again this month via Zurich’s Direct Underwriters’ Richard Costello. His article (page 50) talks about starting the F&I process in the showroom. I bring this up because I believe it’s high time we start arming the entire front-end with the tools they need to make a sale.

In fact, the magazine will be conducting its first Web Seminar (see the ad on page 25) on Jan. 17 with AIS Rebates’ Troy Ontko and Greg Kelly (I’ll be talking as well). The two are going to make a case as to why salespeople need to be armed with incentive information, too.

With 2008 predicted to be the year of the used car, wouldn’t it be nice if your salesperson could switch a customer from a used car to a new-car lease? That might be one way of meeting those franchise agreement quotas this year.

I understand your frustration with all the doom-and-gloom talk. As an industry advocate, I’m concerned about the spotlight being shined on all things finance. Just look at this quote I pulled out of a press release from Wolters Kluwer Financial Services:

“It’s very possible that 2008 will mark the beginning of a dramatic shift in regulatory compliance in the financial services industry. New guidance, enforcement and legislation could very well direct financial institutions to take on a much more active role in helping their customers choose the products and services that best fit their needs.”

Too bad there’s no legislation targeting consumers who want way too much for way too little. Speaking of which, make sure to read Kelli Wood’s story (page 36) on proposed legislation aimed at bailing out consumers caught in the subprime mortgage slide.