Archive for December, 2008
This afternoon, the government has just announced a rescue package for dealers who have ‘floor plan finance’ (ie they run off credit securitised by their vehicle stock) with GE and GMAC.
As everybody in the industry knows, when GE Money & GMAC announced a few weeks ago that they would be calling in all their debts, there has been a frantic struggle by dealers attempting to refinance before the debts were called in – expected to be Jan 2009.
Of course the credit crunch has dried up many sources that would otherwise have been available leaving hundreds of dealers faced with the very real possibility that they would be unable to repay these massive loans. That would eventually lead to car repossessions and scores of potential bankruptcies.
However thankfully, at the eleventh hour the government has stepped in and together with the ‘big 4’ Australian banks have approved a finance package of around $2 billion which will be made available to affected dealers. There will be eligibility criteria of course (such as the viability of the business) but this is fantastic news for the thousands of families who’s livelihoods are dependent on the retail motor industry.
More information to follow soon…
Official figures out today show that just 71,647 cars, trucks & light buses were delivered last month. That’s down 20,434 vehicles on the same month last year.
As mentioned in a previous post these deliveries probably reflect consumer sentiment in October, allowing an average of around a month between sale commitment and delivery.
The big question is how consumer confidence in November itself will affect December sales.
But again, reiterating the silver lining – these sales scare the hell out of the car companies who have long term production quotas they can’t just turn off overnight. Cars will continue to arrive at the docks which will do nothing to alleviate the oversupply issue. This means aggressive discounting- something we are seeing every day. Combine this with the usual end-of-year deals and target chasing & there are some fantastic deals to be had.
Quoting from Andrew McKellar, FCAI chief executive, “On the up-side, there are going to be some very competitive opportunities for anyone considering buying a car in the near future”.
So good news for car buyers, bad news for car makers and sellers. However the good news for everyone is that we’ve just put together a Christmas E-Card! It’s a bit of fun with a uniquely Australian flavour so please take a look at www.privatefleet.com.au/christmas-2008
Despite all the doom and gloom in the automotive industry, we’ve just recorded a very strong month in terms of enquiry. In fact for the first time since 2003, last week we actually deliberately put the brakes on some of our online activities to ensure that service levels didn’t drop due to us being too busy with fresh enquiries.
Unfortunately sales have not quite kept pace with this flood of enquiries. Whilst they are up around 20% on this time last year, enquiries are really going gangbusters & have recorded an increase closer to 50%.
Ironically it seems as if its the economic environment which has affected this fall in conversion. Quite simply, dealers and manufacturers are desperate and many are offering discounts the like of which have never been seen before. Just this morning I got an email from a Ford dealer offering a discount of 40% on a new car! Sure that was a fleet only deal (ie just for Private Fleet clients) but is still way in excess of what we would have previously expected in our wildest dreams. The price they were offering retail clients was not all that much higher.
When deals are that good, there’s not that much more we can do in terms of pricing. Delivery dates maybe, convenience almost certainly but if it’s down the the bone price-wise, our hands may be somewhat tied.
Moral of the story: There has never been a better time to buy a new car. For the vast majority of makes and models it’s a buyer’s market and there’s fantastic value to be had. You will probably be able to get a great deal negotiating independently… give us a call by all means just don’t expect the impossible and remember, if we can’t save you money there’s no obligation whatsoever to go ahead. Last but not least – Happy Shopping!