Forget, for a moment, the shiny new metal all over the Paris show. And the champagne and canapes, which flow as absurdly freely as ever. Wanna know how badly the motor industry is doing in these turbulent times? One insider gives this quick lesson in credit-crunch-o-nomics.
You’re a car company and in normal times the process is simple. You ship 50 new Mondeos or Astras or whatever to a big dealer every month. The dealer sells them, mostly on credit. Then a month later the dealer pays the manufacturer.
Now it’s different. The customers come to buy their cars, but the dealer can’t offer them a loan. So they walk away.
Then at the end of the month, the dealer realises he has to pay for the unsold stock. So he goes to the bank and asks for a half-million pound loan to tide him over. The bank manager replies with whatever is the business-jargon translation of ‘You’re having a laugh mate.’
It won’t take many months of that before the dealer is bust and the manufacturers production lines have ground to a halt.
It doesn’t matter if people want new cars and if they can afford the repayments. If they can’t get the credit, the whole game is up.
That’s a bit of an extreme example but I agree in principal. Unfortunately for the manufacturers, somewhat like the banking fraternity, thay have been taking the piss for far too long (many of the dealers have too) and they are going to get their comuppance big time. Had to happen. BMW is a nice case in point. I have to admit I am a bit of a fan but they are selling what can only be described a ‘good’ cars (as opposed to the excellent cars of old) and at ridiculously inflated prices. Have you seen the profit they’ve been making the last few years? They all need to take a deep breath, count to ten and wake up and smell the coffee. The consumer has spoken. I think the second hand car market will benefit ultimately.
Commodre – nicely said.
TOP GEAR Austrila is absoloutely rubbish!
I (and a million others) would prefer to watch Clarkson, Hammond & May than the no name generic hosts they have managed to grab of the back of some unemployment line.
Please give me back my top gear not this washed out copy.
Paul, Adelaide, Australia.
To Ozzie Paul:
I’ve got no idea how that relates to this article but I COMPLETELY AGREE WITH YOU!! Could they honestly have found worse presenters anywhere?! As soon as my friends and I first saw it advertised we said ‘That’s gonna BOMB!’ . . . and though we wanted to be proved wrong we had no such luck. They just had to pick complete idiots without an ounce of personality between them to host a half-baked, unimaginative copy of the UK version. BRING BACK THE BRITISH BOYS!!
I agree again with jeeza. nicely put commodore
this might have been an extreme situation for those of you in other countries, but in America, it’s reality.
http://ap.google.com/arti cle/ALeqM5gOe4rjBr0d3KA19 UAj2epR5tLyWQD93KV5R00
The short of it is, companies like Bill Heard Chevrolet, which had dealerships as far east as Georgia and as far west as Las Vegas, NV, went tits up in the last week. While their business practices were pretty reprehensible, the fact is, this isn’t hyperbole for some of us. Granted, we started this mess but…
I like this new site its much better than the old one,and you can interact more.
As to the above comments I agree I would like to open a second hand dealership, I can see money to be made.I myself managed to pick up a vehicle last week that I would never have been able to afford, and I bought it cash. They were only too happy to get rid of it.
The other thing I would like to gripe about is the price of fuel. Its unaceptable, people who have to commute to work (80 miles ) round trip, and use half of their hard earned money on the fuel to get there is disgusting.Especialy if you start work at 5am there is no public transport,do what the french do, dont stand for it,protest about it,dont just bloody accept it..
Total agreement with the comments concerning the Australian version of Top Gear. The whole presentation is totally cringe worthy, especially the generic “Stig”. The presenters are loud and unimaginative in their presentation, they lack any charisma and to be truthful the Australia doesn’t have access to the quantity of car makes to hold interest. We have some of the worst roads in the world and couldn’t possibly drive anything like these three pseudo entertainers would have us believe.
I disagree with Paul Horrell’s comment that dealers are unable to offer loans to customers. Whilst we are all aware of the difficulties in the US auto market – as a result of the financial fall-out – UK dealers continue to provide consumers with a wide range of products. The Finance and Leasing Association (FLA) – the body which represents UK motor finance providers – has seen a steady increase in the market share of dealer finance in 2008. New car finance penetration was at 46.7% at the end of 2007. In August it was 50.7%. Reduced credit availability from other sources has turned consumers back to their local dealership and as dealer finance is usually secured against the car, consumers are offered better terms. I think dealers should grab the opportunities that current conditions present.
Someone once commented that GM is no longer a car company. It is a finance company that also happens to make cars.
Ozzie Paul – Look on the bright side, proper Top Gear is back on in the UK on September the 2nd, so try to get that on YouTube. And I agree, TG Oz is a bit crap, to much copying and trying to be like proper TG crew
Rosscoe P Coltrane, Top Gear is back on the 26th october also. hope u enjoy it!!
I also agree with Commodore.
Thanks for your blog! is very interesting…
thank!