No need to panic as big banks pare dealers
|Jim Henry is a special correspondent for Automotive News.|
Recent news that Chase Auto Finance and TD Auto Finance are looking to trim their dealership networks brought swift reactions of "Here we go again" from some members of the dealership F&I community.
That more or less automatic response is based in part on the stereotype that banks move in and out of auto finance when it suits them.
But it's a gross exaggeration to associate what the banks are doing today with the bug-outs that some pulled during the downturn and at other times when the going got tough in auto loans.
Chase said it wants to drop 11 percent of its dealerships, which account for less than 5 percent of its volume. That's not much of a retreat.
TD Auto Finance hasn't put any numbers on its planned cuts, but after more than tripling in size in the past few years, it's no wonder some of the dealerships it signed up aren't a good fit.
The auto finance business just isn't that tough right now. Sure, margins are getting squeezed and delinquencies are up from nearly nothing. But those aren't the difficult conditions that drove banks to cut back in the past, such as during the recession when delinquencies, losses and unemployment spiked.
It's understandable that dealerships have long memories, but this time, history is not repeating itself.
You can reach Jim Henry at firstname.lastname@example.org.