| | | WEEKLY REPORT | January 16, 2013 |
| | | | | | | Captives gain stature among auto execs
Captive finance companies got high marks in the latest KPMG survey of top-ranking auto executives. “Captive finance is becoming an increasingly important part of the value proposition for consumers and OEMs alike,” said Gary Silberg, Chicago-based national automotive industry leader for KPMG, headquartered in New York. ...  story
| Q&A
Helping solve the compliance puzzle
 Teaching F&I managers and other dealership employees to comply with a growing list of state and federal laws is the No. 1 priority this year for GSFSGroup's training business. ... story
| Saab parts unit offers service plans
 Saab Automobile Parts North America is trying to make up for the fact that 2010-11 model Saab vehicles were not covered by a manufacturer warranty because of the automaker's bankruptcy filing in December 2011. ... story
| How a service manager spurred the F&I office
 Nestor Alvarez, service manager at Land Rover North Dade in Miami, says selling extended-service contracts in the service lane has had a side benefit of motivating the store's F&I department to sell more service contracts, too. ... story
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Store faces $100,000 in punitive damages
 Lithia Toyota in Medford, Ore., must pay $100,000 in punitive damages for "egregious" behavior that included intimidation, trickery and deceit in a debt collection case stemming from the sale of a used 1993 Toyota 4Runner, a divided state Court of Appeals has ruled.
A jury awarded ... >> Story
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F&I BY THE NUMBERS
Leases dominate Nissan captive's revenue stream
Leases account for two-thirds of the revenue at captive finance company Nissan Motor Acceptance Corp., which serves the Nissan and Infiniti brands. Data from a recent SEC filing show share of NMAC revenue. | | | | | | 6 mos. ended 9/30: | Retail
leases | Retail
loans | Wholesale
financing
& other | | 2012 | 68% | 24% | 8% | | 2011 | 66% | 26% | 8% | | | | | | | Source: Nissan Motor Acceptance Corp. |
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JIM HENRY
Are these the best of times?
| |  | Jim Henry is a special correspondent for Automotive News | |
The business dynamics of auto lending are so good -- low interest rates, low cost of funds, low delinquencies and rising consumer demand -- that auto lenders are asking: Is this as good as it gets?
There’s no black-or-white answer. If good means easy, the answer could be: Yes, current conditions in many ways are probably as good as they’re going to get.
Competition is heating up among auto lenders. Lenders likely will have to shave margins to fight for market share. Delinquencies are bound to increase, as subprime auto lending increases. Used-car values are past their peak.
But if good means higher revenues and higher profits in absolute terms, the answer has to be: No way. Auto lending is probably years away from the next peak.
Fundamentally, U.S. light-vehicle sales are still well below the long-term growth trend. The average car on the road is more than 10 years old, according to R.L. Polk & Co. Even allowing for longer-lasting vehicles, that represents a lot of pent-up demand.
So, the question: Is this as good as it gets? is on the agenda for next month’s American Financial Services Association Vehicle Finance Conference, immediately prior to the National Automobile Dealers Association convention in Orlando.
With thousands of naturally optimistic retailers converging on Orlando, I think the answer is going to be: No way.
JAMIE LaREAU
Readers take me to task
| |  | Jamie LaReau covers auto dealers for Automotive News | |
“Not easily dispelled or discouraged.”
That’s the definition of “tenacious.”
And there ought to be a photo of a finance and insurance manager beside that definition.
Take my blog last week. I discussed how the 2 percent hike in the payroll tax will mean smaller paychecks for many Americans this year. In turn, that might make it tougher to sell F&I products because some consumers won’t have an additional $50 or more a month to spend on extras. But, I concluded, it would be interesting to see how F&I managers would find a way around this roadblock.
Indeed it was interesting, to say the least.
The blog garnered more than a dozen dissenting comments from F&I managers on Facebook’s Ethical F&I Managers page.
Most managers politely, but doggedly, argued that tough economic times are nothing new to them, yet they always rise above the challenges to achieve F&I sales success.
As one unbowed F&I manager wrote: “The reduced take home and therefore discretionary pay is actually a boon to a professional F&I manager. It means in reality that the consumer is even LESS able to self-insure or to be able to out-of-pocket afford those potential expenses.”
These poorer consumers will see more clearly the value in products such as extended-service contracts and wheel-and-tire protection, he insisted.
Another manager tested a sales pitch on me after I commented in the posts that $895 for wheel-and-tire protection is a lot of money.
“If that $895 saves a consumer from having to come out of pocket a thousand dollars to replace a tire and wheel then it was worth it, right?” wrote the manager.
In fact, the frenzied discussion compelled the first F&I manager to make a bold prediction: F&I sales will have a “banner” year in 2013 — precisely because people have less income.
F&I PRESS RELEASES
» Auto Financial Group Maintains Strong Momentum for its DrivingSense Program
» National Credit Default Rates Moved Up in Q4 2012 According to the S&P/Experian Consumer Credit Default Indices
» Frontenac Company Completes Portfolio Group Recap
» Following Strong 2012, Family First Dealer Services Announces Enhanced Product Portfolio
DEALER JOB LISTINGS
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F&I BY THE NUMBERS
Santander loan porfolio rebounds
Subprime specialist Santander Consumer USA's outstanding loan portfolio rebounded in 2012, according to a recent SEC filing. Santander grew rapidly through acquisitions through 2010, but the amount of outstanding loans retreated in 2011. | | | | | As of Sept. 30 | Amount oustanding,
in billions | Yr.-ago change | | 2012 | $15.68 | 11.0% | | | | | | As of Dec. 31 | | | | 2011 | $14.14 | -4.5% | | 2010 | $14.80 | 116.0% | | 2009 | $6.85 | 12.1% | | 2008 | $6.11 | 24.6% | | | | | | Source: Santander |
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