Articles by Greg Goebel - President/CEO

I have written for years about Green and Red Balloons, the metaphor for identifying the creditworthiness of dealership customers. Nothing has changed about the need to identify creditworthiness quickly and effectively when a customer first contacts your dealership, except for the fact that it has become more urgent to do so.

Twice each year, once in April and once in November, Auto Dealer Monthly reports the temperature of the retail finance climate. Having begun this process in 2005, this is the twelfth time we have asked dealers and their dealership personnel to offer their opinions of the retail finance companies they are doing business with.

As the calendar turns to March, good news seems to be abounding in the special finance world. E-mails and phone conversations with dealers and their managers indicate that business is indeed returning to that of the old days (late ‘90s) when SF was solid and deals were reasonable.

I have talked with probably more than 10,000 dealers about special finance over the past two decades. The range of their commitment to special finance has been from “off the charts” to a “you couldn’t get me to touch it with a 10-foot pole.”

It is a new year, and many dealers have finished their annual planning and are prepared for a continued upswing in business for the coming year, that includes for some dealers a refocus on their special finance efforts.

Whether you are looking at building up a special finance or buy here pay here department, both are going to require strong commitment, and certainly a large part of that commitment is capital. So what are the capital commitments for each on similar volume levels?

Your special finance department may not be as important as your personal health, but to many dealerships, it is essential to the overall health of the business. In many cases, without the gross profit generated by the special finance department, the bottom line would be very red.

The past 12 months have provided a bumpy ride for most of those involved in the special finance industry. As credit tightened after capital markets vanished and delinquencies rose, dealers felt the pinch all across the country.

The past 18 months have proven to be historic times in the automobile industry, and that certainly holds true for the special finance segment of the market. The three “Cs” – capital, collections and collateral – all experienced significant if not total deterioration during some or all of the past year.

OK, I really, really don’t like the Car Allowance Rebate System (CARS), the new stimulus law passed by the Federal Government and signed into law by President Obama on June 24, 2009. There, I have said it.