It's a great time to be a car dealer. That's the word from a dealer who was extolling his franchise during last week's National Automobile Dealers Association convention in Las Vegas.
It seemed that every retailer was feeling good and hoping that it would all last forever.
Well, I hate to burst anyone's bubble, but it won't.
Automotive suppliers are still feeling the pain, and their relationship with automakers hasn't gotten any better. Suppliers aren't sharing in the good times that dealers are having.
Car companies are having mixed results. Some are doing quite well, and others are struggling to keep their heads above water. The Asians and the Europeans are doing much better in North America than the Big 3. And among the Big 3, only General Motors appears to be heading in the right direction. Ford and the Chrysler group seem to be at loose ends and are having a difficult time making money in the United States.
There are always ups and downs in the car business, and it's not going to be any different this time.
Manufacturers are trying to figure out how to keep sales volume up and rebates down. Without rebates, sales seem to head into a tailspin immediately. American consumers want incentives and rebates, and unless an automaker is willing to give up volume and market share, it isn't going to quit offering incentives. That's good news for dealers.
We're going to see another big year in retail sales. It looks like the industry norm in the United States is no longer 14 million cars and trucks a year. Somehow when we weren't looking, the norm has been bumped up to 16 million a year or more.
We'll hit that this year and then some. It's going to be a good year, but like last year, it will probably be very selective.
The cloud on the horizon for retailers across the United States is the problem brewing with F&I. As margins get lower and lower for new cars, dealers are looking to their finance and insurance departments more and more as important profit centers.
But consumer groups across the country are ready to rise up and start screaming about the problems with F&I.
The problems are not going away.
Every economy has challenges. For auto dealers this year, it's going to be F&I. Just be ready for the slings and arrows.