JIM HENRY

9 lenders per dealership is about right

Jim Henry is a special correspondent for Automotive News.Jim Henry is a special correspondent for Automotive News.
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The number of lenders that dealerships use appears to have sought its own level, data from Dealertrack Technologies show.

The company said this week that dealerships in its network averaged 9.1 active lender relationships in the second quarter. That was the same as in the first quarter and down a bit from 9.5 in the second quarter of 2012.

That may be the average, but anecdotally, dealerships often tend to one extreme or the other. In interviews, many dealerships say they stick to a short list of lenders, led by a captive finance company. Others pick from a much longer list, especially if they do a lot of subprime and need to find niche lenders to suit individual customers.

Dealertrack said that in the first quarter it had 20,205 dealerships in its U.S. dealer network and 1,355 auto lenders. Both reflected increases from a year ago.

The lender-to-dealer ratio bottomed out in the recession at 6.9 in the second quarter of 2009. Pre-recession, it was 10.0 in the first quarter of 2008. Today, it finally appears to be settling out.

Time for everyone to tighten their chin straps and compete.

You can reach Jim Henry at autonews@crain.com.

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