The question ?

[dafuzz1956]

What will be the next disaster, we in the auto industry, will have to go through?

If you look at the past year we have gone through some s***, the market sank, Chrysler asked us to do GOD's work, Chrysler went BK and screwed 789 dealers, and General Motors goes BK and screws 2000+ dealers. Then Chrysler sells out to the union and Fiat. Then we have the biggest screw up in rebate history with C4C. That is the very short version of what a year it has been.

To the survivors of this year I take my hat off to you. To the slain comrads I morn for your loss.

The last comment, is if this country ever gets into a WWIII they better hire all of the dealer body accross this nation to go fight that war because we are the toughest S O B's in the world after surviving this.

[SHACOS]

Great question.

I've been thinking about this and can help but to not feel very confident in the current paths of Chrysler and GM. Now, it may not end up happening this year, but I feel like one of those names (probably Chrysler) will cease to exist. Why? Chrysler has lost it's brand identity. No one knows who they are anymore, besides a troubled company with lousy products.

On the positive side, I'm going to predict the BMW 5 Series wagon/SUV looking this will flop and Hyundai/Kia will have a record sales year.

[XDCX]

My fear is the growing Federal Budget Deficit will cause another wave of inflation and impact the entire economy - especially car dealers.

I've read that the only way the U.S. will be able to get out of this mess is to increase taxes or let inflation rise - both are bad for car dealers.

If I had to guess, my bet is we'll see higher inflation which will impact the buying power of our customers. Worse, the higher inflation will increase interest rates further limiting the buying power of our customers and increasing the dealer's flooring costs. :(

[F&I Pro]

For those of us old enough to remember, think Jimmy Carter (another Dem)with best rates in the double digits and inflation to match.....hold on, this roller coaster is far from over I'm afraid!:eek:

[XDCX]

with best rates in the double digits and inflation to match.....

That's exactly the scenario I fear. A lot of good dealers got wiped out during that period of record high inflation and interest rates.

The margins on new cars are so slim now that there's no way a dealer would be able to withstand a 15 - 18% flooring rate. Especially when facility loans and working capital loans would also be subject to the higher rates.

Hopefully Congress will get their spending under control, but I'm not too optimistic. :mad:

[Txflyer]

For those of us old enough to remember, think Jimmy Carter (another Dem)with best rates in the double digits and inflation to match.....hold on, this roller coaster is far from over I'm afraid!:eek: I was working for a mortgage company during the mid 80's when rates were 15%+. I've got a bad feeling those days may be around the corner once again.

[dafuzz1956]

Lets not forget that shortly prior to 9/11 a good rate for a car loan was 8-9% or higher and we all sold alot of cars and trucks back then and made some serious $$$$$$$$.

I know i don't like my return on $$ where it is now, so rates have got to climb some or I will nor retire by 60 :eek:

[lsx only]

my father use to tell me when interest dropped to 12percent how people were so excited to trade back in the day

[XDCX]

While high interest rates may seem great if you're saving for retirement, they almost always come as a result of high inflation. If you're earning 8% on your CD but inflation is running at 10% you're really losing ground.

The other downside with higher rates is the smart customers will be less likely to trade if they know they have a great rate on their current vehicle and they'd have to pay higher interest on the replacement vehicle.

[XDCX]

Great question.

I've been thinking about this and can help but to not feel very confident in the current paths of Chrysler and GM. Now, it may not end up happening this year, but I feel like one of those names (probably Chrysler) will cease to exist. Why? Chrysler has lost it's brand identity. No one knows who they are anymore, besides a troubled company with lousy products.

On the positive side, I'm going to predict the BMW 5 Series wagon/SUV looking this will flop and Hyundai/Kia will have a record sales year.

Wow, I totally missed this post when you first made it. :o

Concerning Chrysler and GM, I'm hopeful for their success but somewhat guarded. I think GM has a greater chance of getting additional government assistance because they're still seen as being "too big to fail." Chrysler could be vulnerable if they run out of money because the current political climate would make an additional bail-out unlikely.

Concerning BMW and Hyundai/KIA, I couldn't agree more. I'm starting to think that Hyundai/KIA could be the next Toyota. (To a lesser extent, Toyota may be taking steps toward becoming the next GM.)

And BMW, why in the world would they screw-up their great brand with a vehicle that would only appear to a "soccer-mom"?

[lsx only]

i wish the big 3 never started the zero percent so many of our customers just wait till it shows up then trade