As of May 27, 2008 Pacific Octane Pty Ltd acquired CarSalesCoach.com and all fixed assets, accounts and virtual property of Car Sales Coach.  Today, November 26, 2008, James Wester, the new CEO of Pacific Octane Pty Ltd will waive all consulting fees to dealers of any badge that would like to have an initial consultation to develop a business plan to sustain their business through the turmoil that is heading their way sooner rather than later.

It’s been 2 weeks since I made the post about what the auto finance industry was going to become and I figured that since I started the initial outlay of what was to come within this blog here at autoloans.net.au, then I would continue it here versus beginning a new one at carsalescoach.com.

To have an understanding of the massive impact the United States congress’ decision over the big three auto makers in America, Ford, General Motors and Chrysler, I’ll share a bit about what I have learned about Ford over the last 5 to 6 weeks.  Ford has an expense of over $750,000,000.00 per annum on contracted employees that they have to pay to not work.  Okay, let’s take this into account- Gerry Harvey employs some genius tech gurus to come into the Harvey Norman franchises only in Australia and signs them to new beaute contracts to teach new computer purchasers how to use Vista.  He contracts them through the “computer geek union of Australia” and there is no clause within the contract that states “When Vista fails miserably because it’s rubbish, all computer geeks must remain within the Harvey Norman company on some level at the same rate of geeky pay even if they’re only sweeping warehouse floors.”

This is what Ford in America has done and it’s flat out ridiculous.  Forget the stories of the fat cat CEO’s from each of them addressing the United States congress with a tear in their eye like they had just had their dog run over by a mean school bus driver.  Think about their corporate jets that they flew to Washington DC in to plead their dire case.  The really, really, really sad part about this is that aside from what’s happening in America, as badly as we hate to admit it here in Australia, is that it will roll downhill.

I had a chat with a Mercedes Benz franchise manager and told him that I saw the auto industry in deep, deep trouble back 7 or 8 weeks ago.  I told him that it would go in America first and then trickle here to Australia.  I said that I thought that even MB would be impacted, but the greatest impact would be those manufacturers with the weakest margins.  The small folks like I mentioned before in this article, with no disrespect intended, Proton, Kia, Hyundai, Suzuki and even the quirkster Saab can stand to be in real trouble initially, but it will be the big three that fall here as well: Holden, Ford and Toyota.

James Wester, the Car Sales Coach, is going to be offering consultation based on the following criteria:

Holden Dealerships- 1 NSW, 1 QLD, 1 SA, 1 VIC and 1 WA

Toyota Dealerships- 1 QLD, 1 VIC, 1 SA

Ford Dealerships- 1 NSW, 1 QLD, 1 TAS, 1 VIC, 1 SA

Now the reason I said that these manufacturers were going to have to resort to interest rate “hooks” at even 0% over 2 and 3 years would be to move metal NOW- TODAY- and NOT NEXT WEEK.

The auto industry forever and a day has been touted as “crooked” and in its own right, it is, but there are also some really ethical dealers out there that will do right by the customer even if it truly costs them in the end.  I admire these types of dealers and it is that type that hopefully I will accept initial consulting based on applications that will be established on Monday December 1, 2008 at CarSalesCoach.com.

When the dealer can’t get a credit extension or has his credit restricted whilst his interest rate is going up and he’s not selling any inventory to subsidise that costing, then there is only one thing to do- close.  I can answer the number one question on every consumer’s mind when it comes to buying a new car- “When is the BEST time to buy?”  I normally say to people that ask me “The very last day of the month whether it’s a Friday or a Tuesday” because a dealer will always have a target to meet and in order to get the cash incentive reward from the manufacturer, he’s willing to cut margin heavily on one or two units in order to be rewarded handsomely.

Now, to answer that question- I would say March.  Not the last day of November, which is this Sunday, or even the day before the New Year- but March 2009, 3 long months away from now.

There is a lot of work to do in order to repair a bleeding industry and I am willing to help as much as I possibly can and as much as the dealers of Australia with any badge are willing to let me help, but they must first be humble and secondly be willing to listen, understand, see the big picture and accept that they will never again be able to operate like we’re in 1975 again… because we’re not.

James Wester

Admin

THE showrooms of Mollison Motors are empty now. Where new Commodores and Holden utes once gleamed for customer attention, there are just a few hubcaps on a rack and brochures stacked on the red carpet. Outside the wind toys with bits of paper and a plastic cup rolls across the vacant used car lot.

The high points and lows in the history of this long-established Kyneton Holden dealer have mirrored the Australian automotive industry for the past 60 years. In its latest twist, Mollison Motors has been hit by something the industry fears could soon be the fate of many. If that happens the pain being felt in this town would then be magnified across Australia.

A little over a month ago Mollison closed when its finance company refused to extend credit to pay for what the industry calls a floor plan. The finance companies are crucial to dealers because they own the cars in showrooms, buying them from makers or importers and then leasing a selection to the showrooms that in turn pay interest while the cars remain unsold.

An estimated 60 of Victoria’s 400 new car dealers are facing similar problems following the withdrawal from Australia of two of the biggest financiers, GE Money and GMAC Finance, due to the global economic crisis.

Mollison’s closure has delivered the town of 5000 a significant hit, and not only for the loss of sponsorship for the local football team - the Tigers - or the annual agricultural show. Macedon Ranges Shire Mayor Noel Harvey estimates the annual cost of losing the car dealer to be as high as $10 million in lost jobs and spins-off to other businesses.

Read more of this tragic story by Geoff Strong

The auto industry as we know it today is about to get flipped on its backside!  The cost of oil is unstable.  The global markets are in turmoil.  The economy on a worldwide scale is slowing down.  There is a new president in the United States.  What does all of that have to do with getting cheaper AUTO LOANS you may be asking yourself.

When a company like Ford or Holden actually is basing their build out speculations on what the current market is doing and what it will be doing over a 12 month span, it’s a risky business in “getting it right”.  What we predict will happen is that Ford, Holden, Toyota and especially the smaller market share owners like Suzuki, Proton, Kia and Hyundai, will soon be offering deals at a 0% finance rate to get rid of their current 08/08 new autos.

The interest rates on homes are falling at almost a freefall rate.  Take a look at what John Symond has done at Aussie Home Loans.  They smashed the rate share ahead of time and are reaping rewards from it because they don’t carry the amount of debt as some of the larger banks or have the risk in their portfolio that the big banks all share.

Auto loan companies, including the big boys, as well as banks, will HAVE to LOWER their rates to compete with the auto manufacturers finance companies.  If you are wanting to buy that new auto, we would suggest holding off until late February or March.  The auto manufacturers will be bleeding pretty good by then and the only way to move metal is to sell it cheap and make it affordable and even more appealing through finance gimmicks.  This is the reason we see the auto loan rates falling and we stand by these statements.

James Wester

AutoLoans.net.au Admin