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Smart Shopper Buying a Car During the Credit Crunch
343 messages, Last post on Nov 14, 2008 at 5:59 AM
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Replying to: duke23 (Oct 01, 2008 6:50 pm) Some of it is the consumer's fault. Some of it is the financial institutions fault. Some of it is the dealer's fault. I don't expect any dealer's sales person to be someone's "credit counselor". They're there to sell cars. Not to spoon feed a customer on the ill-advised transactions they're about to make. But, at some point, someone has to say...."hey, this is a risk we don't want to take". The credit institutions are finally saying that right now. It's a shame that someone has to be forced to see economic reality, but we're now at that point. The last stat I saw about the approval of new car loans has the dealerships saying they're getting approval for about 60% of applicants. That's down a whopping 30% from where they were a few months ago (90%). I expect that number to go even lower.
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I guess I'm lucky our store is located where it is. Other parts of the country are FAR worse off! |
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down 4% today. Car business grew from 2001-2006 due to home equity used to purchase cars. that is not going to happen for several years to come. Those buyers are gone and not coming back until equity is regrown by another wave of appreciation. That could be 10 years off. Most think homes are still weay too expensive. Upside down buyers. Ones without home equity who bought vehicles with the wrong gas mileage. These values dropped big when gas went up. They can't buy now because they owe too much. Ones who have a little equity are not going to lock in $15k of depreciation on a vehicle with 30k miles on it so they can get a better mileage car. The potential future job losers. People will lose jobs due to to crunch and collapse. These folk are not in the new car market. the american auto industry workers. These folk no longer exist. Living on unemployment doesn't sell cars. There will be good car prices for the next few years due to lack of customers. How GM and Ford can survive I can't say. Most people no longer worry if a Jap car is 1% better quality than the American model. They are worried about whether we are going into a depression and if buying the Jap car could contribute to the fall. If the big 2 go under, will Japan have the market cornered and be able to double their profits when the recession ends? |
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Let's all get in a circle and wring our hands now. These things happened to SOME people. Most people were smarter than that. Also, it's Japanese cars, not the term you used that many people find offensive.
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Things will be fine, this is a huge setback, but nothing that's gonna cause very much long term damage. The big three won't go out of business-it'll take way more than this to take down them. GM has lost how many billions of dollars, but with some early retirements and a few layoffs (which i'm not saying are good things), can recoup the money to ride out the storm. Companies that have been around as long as those three probably have some ways to avoid financial catastrophe. The average person won't be affected by any of the stuff going on. Interest rates will go up for a bit (they've already started) but not to the point where it'll cost anyone a lot of money, a half point on a car loan isn't enought to put a payment out of reach, and if it is you shouldn't be buying a car in the first place. Everyone just needs to take a deep breath and calm down. My livelyhood depends on people buying and financing cars, but i'm not worried, so Joe hourly worker shouldn't be either.
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Replying to: graphicguy (Oct 02, 2008 4:50 am) From an article recently in the NYT Credit crunch / auto industry Quote The squeeze is particularly severe for customers with less-than-stellar credit scores who need subprime loans at higher interest rates. While 67 percent of those consumers were approved for loans in 2007, only 22 percent are getting them this year, according to CNW. “The subprime market has, for all intents and purposes, dried up,” said Mr. Spinella. Automakers have already experienced a drastic drop in sales of larger vehicles like pickups and sport utility vehicles because of gas prices that hit $4 a gallon this spring. But Mark LaNeve, head of North American sales for General Motors, estimates that G.M. is losing 10,000 to 12,000 sales a month because of tighter lending practices. “It’s a bigger problem than $4-a-gallon gas,” said James Press, a Chrysler vice chairman. “We have buyers coming in, but they can’t get a loan.” Unquote |
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Replying to: isellhondas (Oct 01, 2008 12:51 pm) OH REALLY? ... Mr. I-SELL-HONDAS.  I guess you'll be wanting to change your username then? How about jipmyhero? 
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Replying to: jipster (Oct 02, 2008 4:20 pm) |
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Replying to: jipster (Oct 02, 2008 4:20 pm) 
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Smart Shopper Buying a Car During the Credit Crunch
