Consumer Car Buying Advice Blog

No less an automotive luminary than Roger Penske believes that the current downtown in vehicle purchases has more to do with perceptions of the economy than in lack of credit from lenders.

Financial Statements

Here at Auto Credit Express, we see corporate financial reports every day. Many of these company financial reports can be interesting. I know that that statement might seem odd because, for the most part, you have to have a degree in accounting to understand most of them.

But accompanying most quarterly reports is a press release that at least attempts to make some sense of line after line of income, revenue and depreciation figures. And sometimes, there is a small nugget of information – possibly a quote – that makes wading through the whole mess worthwhile.

Quotations from Chairman Penske

A case in point is the latest financial statement from the Penske Automotive Group. In addition to reporting third quarter results, Chairman Roger Penske had some interesting insights into the current state of the economy as it affects both car dealers and consumers.

“Obviously, it was a difficult quarter for auto retailers in our markets,” said Mr. Penske. “We experienced a rapid decline in consumer interest for new vehicles in both the United States and the United Kingdom. We believe the challenges in our markets relate mainly to consumer confidence, not credit availability. In fact, the Company’s largest captive finance partners are responsible for funding more than 75% of the vehicles financed at our dealerships in the United States and remain committed to the needs of our customers.”

Consumer Confidence, Not Credit Availability

Mr. Penske, it should be noted, is not a banker or prognosticator. He’s a retail car guy, albeit a very exceptional one. His view of the economy is not one from afar; every day his dealerships are on the front line of the economy – buying and selling cars in both the retail and wholesale markets throughout the U.S. And while his remarks may be an opinion, they are based on his day-to-day experiences in the current economy.

Consumer Spending Down

According to the latest economic results, consumer spending declined 3.1% in the third quarter of 2008 and the fourth quarter is expected to be equally soft, if not worse. The good news is that energy costs have dropped since July while the price of oil has fallen to less than 50% of its summer high.

The Car Buyer’s Bottom Line

Consumers can certainly be forgiven for being concerned about the current economic climate. But if we are to take Mr. Penske’s word for it, the lack of credit to purchase a new automobile is more a matter of perception than reality – which means that if you’re in the market for a new car, don’t let the rumors of tight credit keep you from visiting the dealer. Who knows, if enough people change their minds about making major purchases, including automobiles, we might be able to pull ourselves out of this economic quagmire sooner, as opposed to later.

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