Is dealer financing slipping? Maybe not

Donna Harris covers automotive retailing for Automotive News
In a recent study Kelley Blue Book found that one in three respondents intend to obtain financing at the dealership when they purchase their vehicles. That could indicate dealers' penetration levels are slipping.

Over the years, the numbers I'd traditionally seen were closer to two out of three or three out of four car buyers financed through the dealership. It's convenient and the dealer has access to a variety of lenders -- even more so today with electronic credit application through DealerTrack and RouteOne.

So what gives? Well, the study also says customers go straight to their bank or credit union for car loans because they feel they have more control negotiating the transaction. The ones who say they'd finance through the dealership like the convenience and low payments.

But the real reason for the low percentage could be the word “plan.” The study says just one out of three people plan to obtain financing from the dealer. But then they see how fast and convenient it is for the F&I manager to send their application to hundreds of lenders and then the dealer offers better finance terms.

Suddenly, we're arriving at the bigger numbers I've been used to seeing for dealer-arranged financing. Maybe dealers aren't slipping after all.