IRVINE, Calif. — New research from the Kelley Blue Book Market Intelligence Group revealed today that more vehicle buyers are apparently turning to used units, as well as tending to pay in cash rather than financing their purchases.

The study findings showed some startling vehicle buyer sentiment about potential purchasing and financing plans.

Stemming from what analysts believe to be unsteady economic conditions, the survey determined most in-market shoppers are planning to spend a relatively small amount of money on their next vehicle purchase. Additionally, KBB found these same consumers are more likely to buy a used vehicle versus a new unit.

Furthermore and most relevant to auto finance companies, more than one-third of in-market vehicle shoppers involved in the survey say they plan to pay the entire cost of their next vehicle purchase in cash, and they are not influenced by incentive offers.

KBB indicated 74 percent of the individuals surveyed plan to purchase a vehicle within the next six months. Of that cluster, more consumers emphasized they are in the market for a used vehicle (67 percent) rather than a new one (33 percent).

Again, returning to what could pique the interest of finance companies, KBB found that 42 percent of used-vehicle shoppers and 20 percent of new-vehicle shoppers said they plan to pay the entire cost of their next vehicle in cash.   …Read More

In response to the dealer who asked: We would like to include a disclosure on our Purchase Agreement about our dealership receiving finance reserve.  Our state does not have any mandatory language for the disclosure, can you help?

Try something similar to this: “Dealer Assisted Financing:  If we assist  you to obtain financing for this transaction, we may receive a fee, commission or other compensation from the lender.”

Over the years I have seen numerous service contract and product warranty programs competing for a share of the dealers’ F&I business.  I am frequently asked what I look at in evaluating a program and what items and/or issues a dealer should consider.  As always, a dealer should be realistic in looking at any individual product or program.  It is important to remember that since the dealership is the one selling a product to a consumer, no matter what the service contract or dealer agreement might say, the dealer can, under some circumstances, be exposed to liability. Read the rest of this entry →

F & I PRACTICES AND MENU MISHAPS THAT CAN SINK YOUR DEALERSHIP

Motor vehicle dealers are increasingly becoming targets for disputes about improper disclosures and deceptive trade practices and, in particular, dealership F & I practices. The negative reputation continues to get fuel from media programs that foster the consumers’ perception that misrepresentation is rampant in the motor vehicle industry. This is occurring even as many dealers are working diligently to make their sales and F & I practices more disclosure and consumer friendly.

The goal is to ensure that all of the Dealership’s products and services are offered to all of the customers all of the time. Claims frequently raised by consumers are related to allegations that the dealership’s representatives failed to make disclosures or made inconsistent disclosures. Examples of these claims include that the dealership included the cost of optional products or services that the consumer did not know he was purchasing in the price of the vehicle (commonly referred to as “payment packing”) or was told that he had to purchase them in order to complete the transaction.

A popular F & I trend geared toward avoiding consumer claims regarding deceptive F & I practices is “menu selling”. Read the rest of this entry →

When dealers think about benchmarks, financial and numerical items such as profitability, expenses, inventory turn, and F & I penetration come to mind.  Often overlooked are benchmarks for legal and regulatory compliance, which can have a significant impact on a dealership’s bottom line.  We frequently receive inquiries requesting advice on what a motor vehicle dealer should be doing in this area.  The following list of suggestions will help you set legal and regulatory compliance benchmarks for various areas within your Dealership: Read the rest of this entry →

There are a whole host of products that consumers can purchase to protect their credit if something happens to the vehicle or, worse yet, to them.  Motor vehicle dealers offer everything from extended service contracts to credit insurance.  One product that has received a great deal of attention throughout the years is the Guaranteed Asset Protection (GAP) Product. Read the rest of this entry →

The increased popularity of service contracts among consumers (as evidenced by the rising sales penetration rates in dealerships across the Country), combined with the recent problems related to the payment of claims by a service contract provider, has produced numerous inquires on the types of issues a motor vehicle dealer should consider when analyzing a service contract program.  As with any other product or service, a dealer should do some due diligence beforehand with respect to both the service contract provider and the product it is offering.   Remember, you must be realistic when looking at a particular service contract program.  As with dealership paperwork, the cheapest is not always the best.  Since the dealership is the one selling the product to the consumer it can be exposed to liability regardless of what the actual service contract or service contract provider’s dealer agreement might say. Read the rest of this entry →

While there are numerous sources of information for consumers on what to look for when purchasing a service contract and various laws to protect them, motor vehicle dealers looking for a service contract program are not as fortunate.   As I travel the country and meet with dealers at The Car Counselor’s TARP Conferences, service contracts and the types of issues a motor vehicle dealer should consider when analyzing a service contract program and its provider are a major topic of discussion.  Their concern is certainly understandable. Read the rest of this entry →

Many dealers and lenders have asked for an opportunity to discuss questions regarding Lender Dealer Agreements they have in follow up to the recent Car Counselor’s TARP Seminar. I have agreed to set aside some time this afternoon following the sale at CFAA to discuss those issues and answer questions. We will meet at my office around 2 PM, everyone is welcome to attend.

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