Credit where credit is due

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Although showroom footfall is a little light for the time of year, some car dealers are still reporting brisk trade. Others are saying that they are fighting for every deal and many customers will just not commit and more of the ones that do either want a lot more for their old car or too much off the new one.

There are also some wider parallels with the credit markets as some business managers are saying the finance declines are costing dealers in lost volume and finance profit opportunities. The frustrating aspect is that because of the tightened lending criteria car buyers, who would have qualified easily a couple of years ago, are subsequently being declined in the current market.

It is the classic of extremes where once virtually anyone could get credit and often way more than they could actually afford now only the chosen few can get credit, and guess what? They don’t need it! (Fewer but more expensive cars financed in July)

Maybe it’s a simplistic view but if a person stacks up in terms of their commitments and previous history live in their own house and have full time employment they should be able to get some form of terms. Whilst we certainly don’t want a return to the reckless lending policies that got us in this mess in the first place we should certainly be entitled to expect the creators of the chaos to be a little more helpful than they are at present.

Car dealers have had to learn over the years that long term growth and customer retention are the keys to successful car retailing. Whereas, in years gone by, sales people would happily sign naive customers up to expensive long term agreements which meant them never being out of negative equity, today the finance solutions are far more sensible.

With the extensive range of add-on products now on offer dealers can also look at them as extra revenue streams and as a result expect to see a confident buyer who is happy with the service come back to change their car much sooner.

Despite the economic uncertainty many dealer groups will still post very strong profits this year because they have cut costs early and worked very hard to keep customers coming through the doors. The point really is that if the car business can continue learning from past mistakes they can truly create a customer focused business which can be trusted.

If the financial institutions took a harder look at their own operations and took steps to re-establish the lost trust by really trying to help people with their credit requirements during the downturn then they could avoid being ranked worse than double glazing or timeshare touts and that is a reputation surely no one wants!