Tag Archives: Automotive sales

CA Auto Bill Wants New Rules For Dealerships

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California lawmakers are are hoping to protect working families by imposing tough new rules on “Buy Here Pay Here” automobile dealerships. Assemblyman Mike Feuer introduced the bill last week saying that it would limit unfair sales and collection practices used by these dealerships. Some of the changes include:

  • Dealerships would be required to display the price of the vehicles on the car where customers can see it.
  • Customers would not be forced to make payments in person at the dealership.
  • Dealers would not be allowed to call personal references after the sale is complete.
  • Dealerships would not be allowed to install GPS trackers or devices that can remotely shut down vehicles.

Lobbyist for the Independent Automobile Dealers Assn. of California, say that enforcement, rather than new regulations, would be a better way to handle problems with Buy Here Pay Here dealers. They say that the new bill would impose additional costs on all dealerships, putting legitimate dealers out of business. In the end, people with bad credit will find it even harder to get an affordable and reliable vehicle.

Auto Sales Strong In November

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GM sales strong in ChinaThe end of 2011 looks promising for the auto industry as vehicle sales climb almost 14% in November. Analysts predict that lower gas prices and a wider availability of Japanese automobiles, could lead the industry reaching its highest December sales in two years. The Big Three automobile manufacturers showed the biggest increases with Chrysler sales up almost 50%, Ford up 13%, and General Motors up 7%.

According to Edmunds.com, “Many consumers who held off buying a new vehicle because of the uncertain economy, or because of inventory shortages that caused prices to jump, are now making a purchase. The result is a “mini-bubble” that will most likely end in early 2012.

Beware of Buy Here Pay Here Auto Sales

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For many people a car is a necessity in life. Even with the best public transportation, daily commutes and errands, are much easier with your own vehicle. As a result, consumers who don’t qualify for conventional loans, may agree to unrealistic terms when purchasing an automobile.

A fast growing corner of the auto market, also known as “Buy Here Pay Here” auto sales, is being advertised as helping the consumer purchase a car, but more often than not, it is the dealership that benefits from the agreement. Buy Here Pay Here lots sold nearly 2.4 million cars nationwide last year, according to CNW Marketing Research. It is estimated that there are more than 33,000 lots nationwide making about $80 billion in loans every year. Some dealerships have been accused of purposefully structuring loans to guarantee the borrower will default. Higher purchase prices, interest rates nearly triple the national average, and aggressive repossession practices make it easy for the dealership to repossess the car and sell it to a new customer at the same high interest rates, and while still pursuing the old borrower for their debt. Some dealerships have been accused of equipping their cars with hidden GPS devices and remote-control ignition blockers to make the repo man’s work easier.

Dealers say they are offering a valuable service for people who can’t get credit for a car. They say they risk never seeing a payment, or the car again. When a buyer does default, repossessing can be a costly hassle. Some cars are never found while others come back so beaten up they have to be junked. “This is not the car business. This is the finance business,” said Ken Shilson, an accountant who founded the National Alliance of Buy Here Pay Here Dealers in Houston. “Not everybody has the stomach for it.”

There have been some crackdowns on Buy Here Pay Here dealerships. In 2004, an Ohio chain settled a federal class action for $21.8 million to customers who say they were misled about their loans. In 2006, the Kentucky attorney general reached a $7.4 million settlement with the nationwide J.D. Byrider chain to settle violations and deceptive sales practices. But these settlements are rare. Buy Here Pay Here businesses are both auto dealers and consumer lenders, it’s not always clear who has authority over them.

You can view the whole story HERE, as reporter Ken Bensinger of the LA Times explains Buy Here Pay Here auto sales and how they can take advantage of people with bad credit while providing a valuable service for someone who needs a car but can’t get credit.

Auto Sales Up In September

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GM sales strong in ChinaAccording to reports from General Motors, Ford, and Chrysler, automobile sales rose significantly in September. Chrysler reported the biggest gain at 27%, Nissan with a 25% increase and GM at 20%. Even though Japanese auto makers were running their factories at full capacity for the first time since the March earthquake and tsunami, Toyota and Honda continue to trail the industry with a drop in US sales. The biggest rise came from the sales of full size pickups, sport utility, and crossover vehicles, a trend that seems to coincide with dropping gas prices. Despite the poor sales at the beginning of the year, some auto makers are expecting full year sales to top13 million before the end of the year, a level that has not been seen since 2008.

August Car Sales Up In August

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GM sales strong in ChinaThe slowing economy has left consumers wary about making big item purchases, but according to a recent auto data report, automobile sales in August rose almost 8% from a year ago and 1.2% from last month. All of the large automakers have showed sales gains for the year to date, except for Honda and Toyota, whose dealers have struggled to keep inventory since the earthquake and tsunami in Japan early this year. Shortages of small, fuel-efficient cars, like the Chevrolet Cruze and Ford Focus, have also lead to increased prices on both new and used hybrid, electric and compact cars.

G.M. said it remains confident that industry sales will top 13 million vehicles this year, back to 2008 levels, when 13.2 million were sold in the United States. They intend to step up production by adding overtime shifts to plants that build the Chevy Cruze, in an attempt to fill the compact car void plaguing the auto industry. Ford said it hopes to increase its overall production by 9% in the fourth quarter from what is was in 2010.

But analysts feel the automakers are “playing chicken” with the economy. Stockpiling extra inventory while consumer confidence declines could lead to too much inventory and price reductions that could end up hurting the industry in the long run.

Car Makers Reject California Emission Proposal

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California regulators are pushing a mandate that could have zero emission vehicles making up 5.5% of new car sales by 2018, increasing to 14% by 2025. The proposal is being rejected by auto makers who feel the plan is the first step into establishing new national fuel efficiency standards that could end up costing them $5,000 for every vehicle that does not meet the standard. According to the Association of Global Automakers (AGA) the requirement of electric vehicles would interfere with auto makers ability to meet the new fuel economy and emissions standards being proposed by the Obama administration. They feel that auto makers will be forced into building vehicles that are not in demand, into an infrastructure that can not meet their refueling needs. It is expected the plan would hit smaller auto companies the worst, because they have fewer resources and development advances for electric vehicles.

Small Cars Profitable For Auto Dealers

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During April, the sales of small fuel efficient cars made up almost 20% of the automotive sales market, that equates to a 19% increase from a year ago. Governments incentives to have more environmentally friendly vehicles on the road as well as rising fuel prices, has led consumers to re-think the buying of big trucks and SUV’s. Some of the big sellers include the new Ford Focus and the Chevrolet Cruze.

The overall industry is expected to report slightly higher sales, as the market continues to recover from the recession. Automobile and automobile part shortages as well as the lack of discounts will be a big factor in consumers decision to purchase new vehicles. Consumers may decide to keep driving their old vehicles until the deals return.

Part Shortages Slowing Down Auto Production

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As automobile manufacturers and part suppliers continue to experience delays in reopening factories in Japan after last weeks earthquake and tsunami, part shortages are starting to slow automobile production world wide. Toyota, Lexus, Honda, and Mazda have extended shutdowns in most of their Japanese factories, and the ones that have been reopened are not working at full capacity. According to analysts, auto makers will feel the worst of the shortages by early may and as many as five million vehicles will end up not being built because of it. It is estimated that about 13% of the world’s automotive production is out of commission.

The components most affected include semi-conductors, integrated circuits, sensors and LCD displays, but it won’t be long before shortages will also be seen in resins and synthetic rubber, power train parts, specialty materials such as silicon and certain types of glass and metals. General Motors announced that they will be suspending production of the Chevrolet Colorado and GMC Canyon pickup trucks in their Louisiana factory and plants near Buffalo, New York that makes engines for those trucks. Other automobile manufacturers, are expected to suspend building in some of their U.S. factories as parts continue to become more scarce.