Page 34 - On The Move - Volume 17, Issue 3

Sensibility Should Guide Auto Dealers’ Virus-Related Advertising

Shannon Robertson recalls seeing a car dealership Robertson and Henrick point out dealership advertising to avoid during the virus
billboard ad urging people to put a down payment pandemic. “Using the coronavirus as a selling point or advertising to people af-
on a new car using the $1,200 economic-aid mon- fected by it could be considered unfair and deceptive,” Henrick says. “Be careful
ey the federal government gave them as part of a about using the virus as a sales tool.” Accordingly, think twice before running an
COVID-19-related economic stimulus package. Such ad saying something like, "Click here to get your great coronavirus deal."
advertising is inappropriate, Robertson, senior vice president of the Association
of Finance and Insurance Professionals, said during a webinar put on by the As- In an earlier webinar put on by the National Automobile Dealers Assn., an attor-
sociation of Dealership Compliance Officers. ney also urged dealers to take care with coronavirus-related advertising. “Mar-
keting should be tasteful,” says Aaron Jacoby, managing partner at Arent Fox law
Fellow webinar guest Randy Henrick agrees. The $1,200 payments to 80 mil- firm. “But anything else – such as ‘Come on down for your COVID-19 bargain’ – is
lion Americans “were not intended by the federal government to sell cars,” says inviting regulator attention.”
Henrick, an attorney specializing in laws affecting dealerships. A state attorney
general or the Federal Trade Commission could bridle at that sales approach, he Source: WardsAuto
adds.

Subprime Borrowers Getting Fewer New-Car Loans

Customers with subprime credit face a double whammy, suffering more than others from pandemic-related
job losses and failing to qualify for the best new-car incentives, J.D. Power says. “The decline in share of
subprime is not because they can’t get access to credit,” says Thomas King, president of the J.D. Power Data
& Analytics Div. and chief product officer, during a webinar in May.

However, customers with subprime credit accounted for just 8% of new-vehicle loans in the week ended
May 10, down from 12% in the first three weeks of March, before COVID-19 social distancing and business
shutdowns took effect, J.D. Power says.

Conversely, market share has increased for customers with the best credit histories, to 57% of new-vehicle
loans for credit scores 740 and above for the week ending May 10, up from 52% for the week ending March
22, according to J.D. Power data. In the same time frame, the average credit score for new-vehicle loans in-
creased to 749 from 736. Zero-percent loans motivated many buyers in April and May, but only high-scoring
borrowers could qualify, King says.

Interest rates actually have improved for customers with subprime credit, but they’re still a lot higher than
zero. For the week ended May 10, the average new-vehicle rate for customers with credit scores below 620
was 13%, down from 14.2% for the week ended March 15.

“Folks with lower incomes … are experiencing some of the most severe income disruptions,” King says.
“They are not coming back to market as quickly.”
Source: WardsAuto

32 www.maada.com.maada.com
32 www