For dealers, it's business as usual

Jim Henry is a special correspondent for Automotive News.
Every major news outlet, including Automotive News, last week breathlessly reported on GM's impending purchase of AmeriCredit. Hey, a company that emerged from bankruptcy one year ago and is in hock to taxpayers up to its eyeballs plunking down $3.5 billion for anything is a big story; we even e-mail blasted the news.

But I have to wonder if most GM dealers greeted the news with a collective "Big whup."

Working with subprime auto lender AmeriCredit is old hat to most GM dealers. GM says AmeriCredit already works with about 4,000 GM dealers. Separately, GM says it has about 5,300 U.S. dealers. AmeriCredit will continue to do business with about 11,000 dealers, including the GM ones.

And Ally, the former GMAC, remains GM dealers' preferred lender for commercial loans such as vehicle inventory credit lines and for retail loans to customers with good credit. Ally apparently has no great desire to plunge into subprime.

So, what changes?

Well, the AmeriCredit deal sure seems to kill the rumor that GM might buy back Ally. Maybe dealers will get better terms or have an easier time dealing with AmeriCredit. Who knows? We'll see.

Big whup.

Bigger down payments, tougher F&I sell

Lending institutions are less likely to offer generous loans now than in the four previous years, as declining loan-to-value percentages show. F&I managers are keenly aware of the figures. Smaller loan amounts mean buyers must provide a bigger down payment. That makes it harder to finance F&I products as part of the loan.
Percent of a new-vehicle's value lenders are willing to finance
May 2010 (preliminary)87%
April 201088%
2010 Q1 avg.89%
Source: Federal Reserve