Used-Car Dealers May be Out in the Cold This Winter

1. Consumers feeling high energy costs, layoffs, weaker housing market, rising interest rates
2. Putting chill on consumer spending
3. Big drop in demand for auto loans in Oct as consumers keep cars longer
4. New federal guidelines will require higher minimum credit payments, stretch more budgets
5. Buy-here, pay-here dealers will have to put more money out on street
6. Strong wholesale prices will cut into gross

Points
1. Housing market weakness reducing refinancing as source of consumer spending cash
2. Consumers paying more when borrowing money for car
3. More consumers seeking to refinance credit card debt
4. Creditors will benefit from higher rates, can afford more risk
5. Positive side for dealers--many consumers will see buying used as smart economic decision


Background
1. Consumer borrowing down by record amount in dollar terms in Oct
2. Decline of 4.9% in category that includes auto loans
Sourced From: Used Car News, December 5, 2005; Detroit News, December 8, 2005

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