Friday, September 19, 2008
Credit crunch rattles car dealers
The financial turmoil in America is creating a two-tier system among US car dealers, according to a report in Automotive News Europe.
Dealers that represent imported brands are finding it far easier to raise the collateral to acquire inventory and fund car loans.
In contrast, retailers that are associated with the Detroit carmakers, which have leveraged dealerships and weaker balance sheets, are struggling to find credit and are paying more for it.David Cosper, vice chairman of the public retailer Sonic Automotive, told the paper that dealers with an imported franchise were in a far stronger position.
"BMW, Honda, Daimler and Toyota have a huge competitive advantage over their domestic-brand rivals," said Cosper.
"The captives of General Motors, Ford and Chrysler LLC have lower corporate debt ratings and rely more heavily on the asset-backed securities markets to raise money to make loans. Their cost of funds has skyrocketed."
GM and Chrysler have both already raised the floor plan rates they charge dealers for holding the franchise and Ford is expected to follow suite, adding to the disparity between the car brands.
DATED: 19.09.08
FEED: MT
Dealers that represent imported brands are finding it far easier to raise the collateral to acquire inventory and fund car loans.
In contrast, retailers that are associated with the Detroit carmakers, which have leveraged dealerships and weaker balance sheets, are struggling to find credit and are paying more for it.David Cosper, vice chairman of the public retailer Sonic Automotive, told the paper that dealers with an imported franchise were in a far stronger position.
"BMW, Honda, Daimler and Toyota have a huge competitive advantage over their domestic-brand rivals," said Cosper.
"The captives of General Motors, Ford and Chrysler LLC have lower corporate debt ratings and rely more heavily on the asset-backed securities markets to raise money to make loans. Their cost of funds has skyrocketed."
GM and Chrysler have both already raised the floor plan rates they charge dealers for holding the franchise and Ford is expected to follow suite, adding to the disparity between the car brands.
DATED: 19.09.08
FEED: MT
