UCN
Used Car News
10/18/2021
BHPH Faces Challenges After Pandemic By. Jeffrey Bellant
Buy with Total Confidence.
IN THIS ISSUE:
Rush - Dated Material
• DEALER HONORED • USED VALUES • RETAIL MARKETS
In some ways, the challenges of the pandemic were made for the buy-here, pay-here industry. Their customers typically live on the edge anyway, but the economic shutdown provided stimulus payments and enhanced unemployment benefits that in many cases exceeded their typical paychecks. While the enhanced unemployment benefits ended in September, many families are now receiving an increase in the typical Child Tax Credit benefit. There are headwinds, however, as the labor shortage continues, lenders recede from the market, fuel prices rise and inflation creeps up. Dealers looking for solutions have a good place to start at the 2021 NIADA/NABD Automotive Finance & BHPH Summit on Nov. 1-3 in Orlando, Fla. Larry Dixon, NIADA’s vice president of industry insights and analysis, said many of the key issues in the industry will be addressed in the upcoming conference. “They realize that we’re in this extraordinary period of time that’s not going to last forever,” Dixon said. “They know that money that’s been pumped into the economy the last year-and-a-half is gone. That’s gone.” It may not be a dramatic, immediate shift, but they must prepare for the shift, he said. “Finance is going to be a big part of this show, as well as access to capital,” Dixon said. “Those are always a challenge, but it’s especially going to be a challenge moving forward.” The current market may cause lenders to tighten up a bit, as they often do during turbulent times. Dixon said it makes it especially challenging for dealers just starting out.
“Lenders are going to be less aggressive, a little bit more choosey,” he said. For dealers who have questions, the November conference will feature a panel of lenders. During the pandemic, when some states were slow to deem car dealers as essential businesses, it was the service departments that kept some dealerships afloat. “It is going to be even more important for independent dealers going forward,” said Dixon, who also leads 20 dealer groups. “The competitive environment is red hot now, going to be white hot, close to the sun and standing on the sun in the future.” In addition, there are large public auto dealerships making acquisitions, like Asbury Automotive’s $3.2 billion deal to acquire Larry H. Miller Dealerships. “So, independent dealers are really going to need to leverage service going forward,” Dixon said. They will also have challenges in the regulatory and compliance envi-
ronment under the new administration. Dixon said the BHPH dealers he talks to know there are hurdles ahead. “But their outlook isn’t dire,” Dixon said. “They’re adopting a prudent, informed outlook.” Of course, dealers are concerned about inflation and how high that gets and how it might affect costs, prices and interest rates, he said. Changes in the tax code and how some of these additional government benefits will affect tax season is also a topic on the agenda next month. Dixon, who comes from the new-car background – previously working for the National Automobile Dealers Association – said independents need support from the NIADA and 20 groups. Dixon said when it comes to 20 groups, you bring one idea to help the group and you’ll leave with 20 good ideas. The conference will also look at business development centers, inventory acquisition, insurance and healthcare.
UNDER NEW MANAGEMENT! AutoNationAutoAuction.com