Automotive News - December 1, 2008 - (Page 17)

Below-subprime market grows Page 24 Down payments rise Page 26 Captives cope Page 28 Finance & insurance High-risk buyers. Restricted lending. Slashed leasing. The credit crunch wallops the finance office. INSIGHT DECEMBER 1, 2008 • 17 LINDA FORD For Paul Dodenhoff, general sales manager at Power Nissan, getting subprime customers financed is hard work that starts with drawing prospects into the store with signs along the street. Hard sell In a difficult credit market, dealers do what it takes to get subprime loans done Alysha Webb awebb@crain.com F inancing for credit-challenged customers is much harder to find in today’s credit-starved market, but determined dealerships are still getting financing for some subprime customers. The key, dealers say, is personal relationships with the customer and the financial institutions. “Dealers have to work harder,” says Paul Dodenhoff, general sales manager at Power Nissan in suburban Los Angeles. “When those deals come to the desk, you have to really get involved with the customer.” Subprime customers, with credit scores under 600, account for around 40 percent of Power Nissan’s business, Dodenhoff says. That’s down from as high as 70 percent in the past, he says. The loans don’t come easily. Dodenhoff draws customers in- to the dealership by lining the street in front of his store with sales signs. Every customer gets a follow-up phone call from Dodenhoff. By the time a deal is struck, Dodenhoff and his team know a lot about the buyer. If a credit application is rejected, they “grind” the lender, finding out exactly why the loan was denied and making the case that it should be approved, he says. “If you have a real customer that has some issues in this economy, it’s always worth a phone call,” Dodenhoff says. More work Subprime loans are tougher to get than they were a few years ago. “The really, really bad stuff we were getting financed two years ago, we can’t get financed today,” says Charlie Robinson, vice president of finance for Asbury Automotive Group. Approvals for subprime loans have fallen dramatically, says Art Spinella, of CNW Market Research in Bandon, Ore. Through September, 22.7 percent of subprime loan applications were approved, compared with 67.0 percent for the same period in 2007, according to CNW. Dealerships have to approach more lenders — 7.9 institutions through September, compared with 4.4 in 2007 — to find financing, Spinella says. The approval process requires a lot more attention and hand-holding from a dealership’s finance department, says Jesse Toprak, executive director of industry analysis at Edmunds.com. “The finance department is more important than ever see SUBPRIME, Page 20 http://www.Edmunds.com http://www.Edmunds.com

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Automotive News - December 1, 2008

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