The retail auto industry is in the worst financial crisis in its history and the future doesn't look very promising for most auto dealers. In the early 1900's, auto dealers came to the rescue of the auto manufacturers with loans and the ability to purchase more inventory to meet the needs of the fledgling auto industry. That was when local banks and other financial sources could step and assist because of the character and contributions that the local businessman contributed, loans were based on character and importance to the community. The days have changed and have they, auto dealers are in the fight of there life to find adequate sources to fund the purchase of vehicles needed for there businesses.
Dealers have been besieged with letters changing terms of there floor plan agreements and as NADA (National Auto Dealer Association) is putting it, there is a massive pullback from captive lenders, regional banks and others who specialize in lending to auto dealers. The pullback is not subjective as dealers with excellent repayment histories and have great collateral are seeing these lenders making demands that may not be met by the auto dealers.
NADA has taken the case to the Federal Government to intervene on the dealers behalf as it sees a potential for massive closing on the near horizon. They are requesting the government provide a commitment of $1 trillion dollars to increase the issuance and sale of securitized loans for buyers and dealer inventory to stem the tide of dealership closings because of the credit crisis.
The issue stands out because if not the potential for thousands of jobs lost of dealership employees, suppliers and other associated businesses could result in a deepening recession.
With banks continuing to receive aid and it not being circulated through loans and other instruments is confounding, what is the purpose of the banks receiving aid if they will not lend to businesses and individuals. At some point the public has to cry out and tell the government to stop as it really is a waste of taxpayers dollars since they are the ones footing the bill and these funds are not benefiting them or the economy. We are only preserving jobs for the bank executives and other bank employees with these funds and if it is meant to stimulate the economy then lets get the money circulating instead of providing the banks more funds so they can purchase other banks, that truly is a waste of taxpayer money.
The outlook for many dealers remains weak as the lenders are making it very difficult to operate with tight credit restrictions coupled with the already difficult retail marketplace.
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