NEW YORK – Despite being hammered by the nation’s credit crunch and increasingly restrictive leasing options, Metro New York dealers are achieving better sales than their brethren in the hinterlands.
But because they depend on leasing more than most other dealers, area auto retailers here see their volume dwindling, albeit at a lower rate than the national average.
Mark Scheinberg, president of the 450-member Greater New York Automobile Dealers Assn., says his retailers are plagued by confusing leasing policies governing retail deals and floor planning.
Leasing is available depending on specific models. “But you need a PhD (in economics) to figure out what the deals are on a daily basis,” he says.
Overall domestic volume for area dealers was down 9.3% through August, compared with year-ago. However, without final data, Scheinberg says September was a horrendous month, and “October isn’t tracking any better.”
Somewhat surprisingly, European brand dealers in the region have been doing comparatively better.brand sales fell a mere 1.2%, while Mercedes-Benz deliveries grew 3.3%; climbed 5.3%; and Audi jumped 6.6%, although deliveries were down 3.7% nationally.
Scheinberg says sales of the European lines, combined, rose 0.1% through August for his members. The one exception was Mini, whose deliveries spiked 14.2% in the GNYADA area, although still lagging a 33% surge in the rest of the country.
In comparison,Corp. dealers saw sales fall 5.6% in the region, while dealers dropped 12.7%. Toyota dealers were down 7.6%, but dealers rode a 5.1% rise.
“Right now, most people are not sure (about car purchasing),” Scheinberg says. “But if you’re in the market, you’ll do very well, especially on the used-car side.” That’s because dealers are putting most trade-ins into their used-car inventory, rather than auctioning them off.
But leasing uncertainty is scaring his members. “I’m getting calls like I never got before, (even) fromdealers,” Scheinberg says. “The (stock) market is making it dreadful.”
Most auto makers are restructuring financing deals to make the monthly payment on a car purchase as attractive as leasing, he says. However, dealers prefer leasing, especially with terms of 36-42 months, rather than long-term financing deals, because it means vehicles come back sooner.
Capital One Bank recently announced it will stop floor-planning inventory for auto dealers in New York and New Jersey starting Nov. 1. That affects fewer than 20 dealers in the bi-state area, as Scheinberg says Capital One is not a major player in the area.
More significant is thatMotor Co. and LLC dealers already have seen their floor-planning rates rise from the captive finance companies.
Ford Motor Credit Co. notified all its dealer clients on Sept. 30 that it will raise floor-plan interest rates on Nov. 1.
Previously, the finance firm instituted a policy of reducing its involvement in retail leasing. But a FMCC spokeswoman tells Ward’s retail leases still are available at Ford, Mercury, Lincoln, and Volvo – and also during a transition period for Jaguar and Land Rover products.
GMAC recently unveiled a more restrictive financing program due to instability in the credit markets that limits loans to customers with credit scores of 700 or higher.
GMAC also is curtailing loans with higher interest rates and longer terms, increasing the rate it charges dealers for granting non-incentivized financing by 75 basis points, a spokeswoman says. The lending firm says its wholesale auto finance policies are not changed by these actions.
Financial Services no longer offers subvented leasing through its dealers, but a spokeswoman says it has restructured conventional financing programs to create monthly payment plans that closely approximate leasing deals.
She declines to discuss Chrysler’s policies on wholesale floor-planning programs, claiming those issues are proprietary.