sweeten the deals
Dealers need sweeter deals to offer car shoppers.
That’s if the industry wants dramatic sales gains for t ray-ban he near future, said an analyst. auto market has run its course,” said Adam Jonas, a New York based analyst with Morgan Stanley, in a monthly call. “From this point we need deals to drive further SAAR [seasonally adjusted annual rate] surprises. Deals: Incentives, leases, subprime, longer terms, sign and drive, games.”
Jonas’ proposal could stir controversy among dealers.
I asked several dealers last month if they expected manufacturers to increase incentives through year ray-ban end to clear out inventory and meet sales targets. Some said a pickup incentive war seems likely, but these dealers were not universally keen on the idea of spiffs.
Incentives help boost short term sales, but t ray-ban oo many of them can dilute the brand’s value in the long term. And some deals, such as longer term loans, actually stall future dealership business, the dealers said.
But Jonas listed three developments in the credit market in September that support his aggressive call for spiffs.
1. The quality of auto related credit fell by 1.5 percent in September compared with a year earlier, he said. That is the eighth consecutive year on year decline, he said.
2. Jonas says auto credit availability fell year on year in September for the first time in 16 months.
3. Jonas said an early read on October’s credit quality from Capital One “suggests continued deterioration with auto loan losses ri ray-ban sing year over year for the fourteenth consecutive month.”
Spiffs are good for boosting the SAAR, Jonas said. But they are bad for profits and they are “certainly not sustainable,” he conceded.
Yet Jonas said: “The fall in credit availability that drove much of the improvement in auto sales this year seemed to hit a wall in September coinciding with a stall in retail sales volume. That’s not just a coincidence.”
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