The ongoing financial insanity has hit home in the car industry
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perspective from inside the Used Car Dealer sector is eye popping with concern.
As an industry insider, the author (me) has seen the decline in Used Car
spending first hand. I used to go to the two main auto auctions here in the
Seattle area every week and purchase about 60 used cars per month, between what
I sold here in Seattle and what I exported to Surrey BC, a Southern suburb of
Vancouver proper.
The interesting facts in and around my
personal experience go back to before August, 2008. These experiences are
relegated geographically to the Pacific Northwest, so they can not stand as a
harbinger of things to come. The same and worse has already been the case around
the country at large
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flag to dealers in the Northwest. Seattle though, has an economy that seems to
whether the cyclical financial storms whose visitations come and go upon our
systems, and the same has been true of this one so far. Most other States have
experienced much worse effects than we have here in Washington
State.
During the early part of 2008, my Business Partner had
necessity to spend a few months in Arizona on business unrelated to the Auto
Industry. He continued to go to a Dealer Auction once per week regardless,
simply because it gets in your blood. His reports were sobering. Prices at
auction plummeted, dealer attendance fell
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fell dramatically on a week to week basis. In a belated ripple, as I spoke with
my partner on the phone, I begin to see the same trends, on a comparatively
diminished scale, begin to manifest themselves here in Seattle.
At South Seattle Auto Auction in Kent, Washington
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being run in ten lanes back in April - May of 2008. Of these cars, about 48% to
52% were being sold every week. As of August September, the inventory at the
auction had dropped to 1,600 to 1
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statistical reality alone constitutes a screeching halt in the sector, and that
screech has been echoing and reverberating out on the dealers lots with their
retail interface. People are just not buying cars.
It makes sense
when we consider that big ticket items are absolutely not moving right now, and
this phenomenon is global. The construction industry is on its lips. We all know
about the housing sector. Should we have expected the auto industry to escape
the ravages unnoticed. Of course not, but as us usually the case, a lot of
dealers simply stuck their heads in the sand with the hope that the pounding
would somehow miss their store. I guess its human nature to hope for the best,
as well as to resist change. Many dealers now wish that they had adjusted their
business plans in advance to soften the impact when the storm finally hit. They
are boarding up their windows now though
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Up in Canada,
the dollar was weak against the Loonie (The goofy name the Canadians gave their
money). For a while back in early to mid 2007, Canadian dealers were flocking
into the States to buy cars that would sell retail for five or ten thousand
dollars more in Canada than they would in the US. Canadian retail buyers who
lived close to the border would mob UD border area dealers on the weekends and
pay cash for US cars. It was a feeding frenzy, and very profitable for industry
professionals, both in Canada and in the US.
As the population
in Canada is only one tenth the size as the US population, it didnt take long
for the market to flood out up North. A lot of Canadian dealers began to sit
behind lots full of American car inventory that was no longer flying off the
shelves. By early in 2008
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uncertainty had begun to gather on the futures horizon. The Canadian dealers
that I supplied continued to buy volume because of a certain niche that worked
for them, but this was an anomaly and it too has evaporated into the smoke. We
sent four cars North in September compared to August when sixty went across.
My most active Canadian dealer told me a month ago that he never
listens to the news. It just doesnt interest him and he can do without the
negativity that seems to be the expense that comes with gaining a wider
perspective. His position on news watching has changed recently. Historically,
this dealer, who has been in business at the same location for more than 15
years, has always moved more than 50 cars per month. Usually it has been closer
to 70. In the last two months he has seen his sales go down to two or three cars
every weekend. He says that now he listens to the news four times per day.
What the future will bring is not visible in the old crystal
ball. We are in uncharted waters here, and the economic system has been
fundamentally changed. For car dealers right now its hard to find optimism. One
thing seems likely however. Those dealers that are able to hang on will be
riding higher than ever once the storm blows itself out. They will have fewer
competitors to dilute their markets.
Author's Resource Box
Jeff Rogers is the President and Founder of www.dragnetmarketing. He is is an
internet marketing strategist who focuses on the online viral phenomenon. He has
created free Viral Video pages that amass ad real estate downline as more people
and companies use them for presentational and networking purposes.
. See
Jeffs Blog at viralvideopage.blogspot
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