Hillsdale dealers taking heat from Big Three's struggles
Chase Cheney
Issue date: 12/4/08 Section: Beyond
The credit woes of Detroit's Big Three, General Motors Corp., Chrysler LLC and Ford Motor Co., will mean hard times for car dealerships across the nation, cost-efficiency becoming the driving force.
As these manufacturers request financial aid from the government to stay afloat, many dealerships have lost part, if not all, of their funding from their manufacturers. As a result, many dealerships have gone out of business.
Though none are under serious threat of closing, car dealerships in Hillsdale are feeling the strain.
Eric Leutheuser, general manger of Leutheuser Buick Pontiac GMC, said the decreasing availability of credit affects dealerships in two departments: retail and wholesale.
"As the manufacturer loses access to credit, it puts pressure on what they can do for the dealer and to the dealer," Leutheuser said. "You have to have a line of credit to buy all that inventory."
He said the financing for their floor plan, or the loans on their inventory, comes from the manufacturer. GM, Ford and Chrysler don't have unlimited funds, which means they have to go to banks for loans. If they don't have enough funding in stock, then "the supply chain falls apart quickly," he said.
"They're having to work under the gun, so it's a bit dicier than it used to be," he said. "It's put a real tension on the wholesale side."
In the retail department, most dealers can't afford to provide the same financing to customers as they did a few years ago, Leutheuser said.
He said consumers with weak credit can't purchase a new car as easily as they once could. Rather, they must make a down payment, forcing the consumer to find a vehicle within their means.
Tom Vann, general manager of Team Hillsdale Chrysler, said clients must now meet higher standards to get financing to buy a car. To make financing more available, the dealership must hunt for lenient lenders.
He said they end up looking for subprime lenders, who extend credit to those with a shaky credit history. However, many of these lenders are undergoing the same credit problems as the manufacturers and therefore aren't willing to loan.
As these manufacturers request financial aid from the government to stay afloat, many dealerships have lost part, if not all, of their funding from their manufacturers. As a result, many dealerships have gone out of business.
Though none are under serious threat of closing, car dealerships in Hillsdale are feeling the strain.
Eric Leutheuser, general manger of Leutheuser Buick Pontiac GMC, said the decreasing availability of credit affects dealerships in two departments: retail and wholesale.
"As the manufacturer loses access to credit, it puts pressure on what they can do for the dealer and to the dealer," Leutheuser said. "You have to have a line of credit to buy all that inventory."
He said the financing for their floor plan, or the loans on their inventory, comes from the manufacturer. GM, Ford and Chrysler don't have unlimited funds, which means they have to go to banks for loans. If they don't have enough funding in stock, then "the supply chain falls apart quickly," he said.
"They're having to work under the gun, so it's a bit dicier than it used to be," he said. "It's put a real tension on the wholesale side."
In the retail department, most dealers can't afford to provide the same financing to customers as they did a few years ago, Leutheuser said.
He said consumers with weak credit can't purchase a new car as easily as they once could. Rather, they must make a down payment, forcing the consumer to find a vehicle within their means.
Tom Vann, general manager of Team Hillsdale Chrysler, said clients must now meet higher standards to get financing to buy a car. To make financing more available, the dealership must hunt for lenient lenders.
He said they end up looking for subprime lenders, who extend credit to those with a shaky credit history. However, many of these lenders are undergoing the same credit problems as the manufacturers and therefore aren't willing to loan.
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zoomerdaily
posted 2/06/09 @ 7:31 PM EST
I wonder what our newly-elect president, Pres. Barack Obama can do with the situation. Our car industry is clearly struggling. I hope he has some plans of action to save our struggling Auto Industry. (Continued…)
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