BREAKING NEWS! BREAKING NEWS!
GMAC Financial Services has just announced that it will no longer lend money to prime credit customers who's credit score falls below a 700 beacon score.
In a move that will cast a large cloud over the already shaky footing of car dealers across the nation, this move will surely leave most dealers scrambling for alternative sources to assist in financing their customers. This latest move by GMAC is designed because of a lack of access to funds from the global capitol and credit markets.
GMAC has also suspended some sales bonuses to dealers for its highest volume "Platinum" dealers. While only a small percentage of dealer's business, these moves represent the latest curtailment of the fallout from the global financial crisis gripping the U.S. economy.
With these current changes in policy, those GM dealers already facing difficulty with selling cars are getting another death blow by GMAC and General Motors. This move will effect about 1 in 4 customers walking in a typical dealership seeking financing according to recent reports. What that means another 25% of customers who would have probably been provided financing by GMAC will not get financing in an already troubled retail marketplace for car dealers.
What troubles me even more for the retail auto industry particularly for the captive finance arms of GM, Ford and Chrysler is that these finance sources for dealers are their life blood.
In turbulent times the captive has been their for auto dealerships for years when banks or other lenders turned their backs and concentrated on other areas of the banking business. Captive finance companies sole customer were auto dealers, however the writing on the wall is becoming clearer, everyman (or dealership) has to be for themselves.
Dealers wake up for the sake of your businesses and employees, and let your manufacturer know that it is in their best interest to continue to support your efforts in retailing vehicles, to many livelihoods are at stake in this matter. If you don't do it no one will do it for you, in order for you to sell vehicles you have to have access to financing and this current financial crisis is hitting you harder than ever in your checkbook. You cannot survive on customers with 700 beacon scores or higher, don't wait act now by contacting your manufacturer, your captive finance company (GMAC, etc.), your congressman and other elected officials.
If you wait, it may be to late, you have to have a stimulus to get the credit market moving for the auto industry. The focus has been on residential mortgages when the focus should be wider to focus on other sectors, like the retail auto industry, commercial real estate and others. When these sectors become crippled we will be in a recession for a long, long time, as I always say, don't wait, don't hesitate or it may be to late!
Enjoy Today!
That Car Guy
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