Tractor lots are full

[Snobdds]

Where did you hear that about Capital One? I imagine that floorplan loans matter more for some dealers than others. Most of the long term & older dealerships back when I was involved in them were self-financed.

Capital One exits floorplan lending business

Capital One decided to exit floorplan lending on March 29, but will stay in the auto finance business.

www.autonews.com

 

[Snobdds]

Or in reference to car dealers (used and new) they will have to lower the cost of their vehicles, which is already happening.

That's not how it works.

 

[Snobdds]

CapOne has never been a big player in the floor plan business. I worked for them for 13 years. 8 of it in Auto. They inherited some when they bought Hibernia Bank. They did a little bit beyond that, but as a very conservative bank, they have no problem exiting a business in which they are not competitive.

One more time...

A company that has a huge interest rate margin model is exiting a business where they can't manage interest rate risk.

Either they have a lot of long duration bonds that are now worthless, drying up their access to capital...or
They anticipate a changing of how the automotive world works with dealers getting squeezed out of being the middle man. OEM's want to sell direct to customers, via the Tesla model.

 

[tradosaurus]

That's not how it works.

It's happening now.

I watch a few car channels, used car dealers and car industry experts. They see it at auctions; prices coming down. Dealers can't afford to hold on to cars on their lots and are having to lower the prices.

 

[tradosaurus]

Refund is what they call it friend. No point in try to make this a fair tax debate.

"They" call it "refund" to make people think the Fed Gov't is giving them money.

I remember when I had 9 kids (all mine) I was paying no federal income tax and getting money on my tax return. Wouldn't call that a refund.

Now I just wrote a check to the IRS for $8500. I believe all tax payers shouldn't be able to have their federal income taxes deducted from the paycheck but have to write a check to the IRS to see how much is being stolen from them.

 

[Snobdds]

It's happening now.

I watch a few car channels, used car dealers and car industry experts. They see it at auctions; prices coming down. Dealers can't afford to hold on to cars on their lots and are having to lower the prices.

That's not due to floorplan financing costs increasing.

OEM's are having to lower prices because car financing has increased. If they kept their prices high with the high financing costs, they wouldn't sell anything. Their demand is falling, so in order to keep high demand, their prices have to come down.

The question is, do dealers pass those savings on to customers? One of the reasons OEM's are going to the tesla model is due to rogue dealers. The dealers that were putting 80K mark ups on Broncos because a few were willing to pay it. Well that also prevents a lot of people from buying too. Ford knows this and have little recourse to fight the dealer on this. That is why Ford announced they are trying to get rid of dealers in their model, and going to service shops only and online buying.

 

[rScotty]

That's not due to floorplan financing costs increasing.

OEM's are having to lower prices because car financing has increased. If they kept their prices high with the high financing costs, they wouldn't sell anything. Their demand is falling, so in order to keep high demand, their prices have to come down.

The question is, do dealers pass those savings on to customers? One of the reasons OEM's are going to the tesla model is due to rogue dealers. The dealers that were putting 80K mark ups on Broncos because a few were willing to pay it. Well that also prevents a lot of people from buying too. Ford knows this and have little recourse to fight the dealer on this. That is why Ford announced they are trying to get rid of dealers in their model, and going to service shops only and online buying.

The obvious solution for that one is for Ford to finance the floor planning for their dealers. In fact, that may be what is happening and part of why Capital wants to exit. Ford's financial arm is a huge investment bank all by itself.
rScotty

 

[tradosaurus]

That's not due to floorplan financing costs increasing.

OEM's are having to lower prices because car financing has increased. If they kept their prices high with the high financing costs, they wouldn't sell anything. Their demand is falling, so in order to keep high demand, their prices have to come down.

The question is, do dealers pass those savings on to customers? One of the reasons OEM's are going to the tesla model is due to rogue dealers. The dealers that were putting 80K mark ups on Broncos because a few were willing to pay it. Well that also prevents a lot of people from buying too. Ford knows this and have little recourse to fight the dealer on this. That is why Ford announced they are trying to get rid of dealers in their model, and going to service shops only and online buying.

I must clarify; the dealers I am referring to are used car dealers using lines of credit to buy cars at auction. Many of these used car dealers will be going out of business because their monthly floor plan notes are unaffordable because they bought high at auction and can't sell high on their lots. Plus all of the other fees such as advertising.

New car dealers will have to lower their prices or mfg's provide large rebates as in the past to counter the higher interest rates.

States laws will be difficult to overcome to allow car mfg's to sell direct to the public.

 

[Snobdds]

The obvious solution for that one is for Ford to finance the floor planning for their dealers. In fact, that may be what is happening and part of why Capital wants to exit. Ford's financial arm is a huge investment bank all by itself.
rScotty

I believe Ford uses profits from their financing arm to provide the cash flow to finance the parts orders to build the cars and trucks. It would have to come up with another revenue source to finance the floorplan.

If they just get rid of dealers, they wouldn't have to finance a floor plan.

 

[Snobdds]

I must clarify; the dealers I am referring to are used car dealers using lines of credit to buy cars at auction. Many of these used car dealers will be going out of business because their monthly floor plan notes are unaffordable because they bought high at auction and can't sell high on their lots. Plus all of the other fees such as advertising.

New car dealers will have to lower their prices or mfg's provide large rebates as in the past to counter the higher interest rates.

States laws will be difficult to overcome to allow car mfg's to sell direct to the public.

Read up on the tesla model...