Perhaps Toyota Sales Chief Jim Lentz would like to type the words “credit crisis cars” into his Google bar. Because Jimbo doesn’t think that credit’s the main problem with a U.S. new car market that’s pretty much stopped dead in its tracks. “The vast majority of our customers are able to get approved for loans,” Jim Lentz told The Detroit News after cutting the ribbon on the ToMoCo’s new research-and-development center in Michigan. “In our case, credit is not the biggest challenge. Our biggest challenge is consumer confidence.” Ah, in our case. You know, for the automaker who could STILL buy BOTH Ford AND GM with their projected 2008 profits. That said, Lentz isn’t the only one who says you want a loan? We got loans! “‘There’s no issue at all with above-average credit,’ said Alan Helfman, owner of River Oaks Chrysler Jeep in Houston, adding that he is also still doing deals for customers with bad credit, albeit fewer than he was a year ago. ‘Hurricane Ike was a bigger problem for us than the credit crisis.'” You ain’t seen nothin’ yet Al. Or, if you have, you better get used to it. Just sayin’
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People who shouldn’t have been able to buy expensive new cars and trucks two years ago now are indeed not able to buy them. Long term this isn’t a bad thing, but short and mid-term the dramatic market contraction is going to hurt.
River Oaks is the Houston equivalent of Bel Air in LA. That dealership is situated between some of Houston’s top neighborhoods.OTOH, he also owns a suburban Ford shop, so maybe he isn’t atypical of our local dealers.
Also, I am not sure that Toyota’s will really be able to hold their values in this market like they used to. At some point, the used bu selling for half the price should drag the Camry down with it, shouldn’t it?
If people stop buying new cars, used car values should see a boost all around, especially for cars held in generally high regard.
Frankly it would take a 50% discount to get me to even look at buying a used GM product. Been there, done that, it didn’t end up saving me any money.
For automotive consumers there is no irrational limit on credit. The people that should get loans are. Those who should not get loans are not.
Toyota has the decency profitability to admit that while Ford and GM whine that sub prime loans need to get purchased by the government so that more subprime loans can be made.
toxicroach: My guess would be that as new car prices decrease with discounts and incentives it will drive used car prices even lower. People aren’t buying anything new or used, but if someone wants to get a car they can get a hell of a deal on a new one.
no_slushbox: My guess would be that as new car prices decrease with discounts and incentives it will drive used car prices even lower. People aren’t buying anything new or used, but if someone wants to get a car they can get a hell of a deal on a new one.
The economics of this whole thing is that prices will eventually come down….Auto prices, home prices, as well as many other goods, have been inflated beyond the fundamentals to support the increases…..let the market adjust, tighten your belt, get out those tools and keep your car and home good repair….
1996ME>
Wow…I always thought car prices relative to
income were CHEAP compared to the rest of the world.
I have read many places on the internet (“I read it on the internet, it must be true!”) that US car sales are subsidized by europe, south america, etc.
Not true??
no_slushbox: Toyota has the decency profitability to admit that while Ford and GM whine that sub prime loans need to get purchased by the government so that more subprime loans can be made.
It’s funny. On the Ford September sales call I heard something to the effect of “the people that should get loans are. Those who should not get loans are not.” Oh wait…
That doesn’t sound like Ford is whining for subprime loans to be purchased so they can issue more. I can’t speak for GM – they aren’t quite as transparent – but I bet they’re seeing the same thing from every lender but GMAC. As for Toyota, if you don’t believe Toyota has issued subprime loans, you are completely deluding yourself.
Used cars typically see stronger residuals in “normal” economic downturns where credit is still available, but people are pinching pennies. However, given that there is no credit and auto companies are making up for it with deeper discounts, I would assume that the used car market may actually get hurt in this market. It is likely that both Honda and Toyota will see drops in residuals (Toyota more than Honda). It is likely, however, that the residual drops will be less bad at Ford and GM for their newer products and SUVs vs. the industry since everyone is so price sensitive in downturns.
And when I say less bad, it’s like falling 15 feet or 20 feet – either way, you’re not doing great…
RobertSD
It’s not that Toyota hasn’t relied on subprime loans for some of its sales, its that, because it hasn’t been managed horribly for the last 30 years, Toyota can afford to lose the sales that were funded by subprime loans without going bankrupt.
Not so much for Ford and GM.