Suzuki Debuts GAP Insurance
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Depending on whom you ask, zero-down revolving credit is either hurting the industry or saving it. Dealernews contacted dealers, banks, OEMs and consultants for their take on current health of the finance industry, and everyone has
a different opinion.
Almost all agree, however, that dealers need to work harder to finance more customers through increased lending sources and
a well-trained F&I manager. In a slowing market in which consumer debt-to-income ratios worsen while vehicle margins remain
thin, F&I profits become more crucial than ever.
The biggest F&I news recently is perhaps Harley-Davidson's summer promotion on nearly all its motorcycles: 2.99 percent APR
for at least 36 months, 3.99 percent for 48 months, and 4.99 percent for 60 months. Financial reports indicate that the waning
subprime market has stung the company, so credit standards for these great rates will be as high as ever.
Harley's own bank finances roughly half its vehicle sales, solely through installment loans. The Motor Co. recorded in April
its first quarterly sales decline in many a moon. Now dealers are eager to move not only 2007 models, but some '06 leftovers
— before the '08 models arrive in July. They tell us hidden promotions were escalating in the weeks prior to the advertised
promotion. "Many of the dealers are a little perturbed because they would have liked these programs back in the late fall," reports industry
consultant and Dealernews columnist Steve Zarwell.
Of course Harley's a different animal than the metric companies, which choose to entice their customers primarily with their
private-label credit cards, leading us back to the revolving credit question.
Card Game
Suzuki's private-label card is slightly more popular than its installment loans, and volume is up for revolving financing
so far this year, says Dirk Gould, Suzuki's finance manager.
"One of the nice things about the Suzuki Finance Card is customers can use it to pay for service, parts or accessories months
down the road after the initial purchase."
Should You Outsource Your F&I Department?
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This is a benefit to dealers, he says, because company statistics show that approximately 35 percent of card holders return
to a dealership within one to four weeks to make additional purchases on the card.
As for zero/zero/zero deals, the argument is often made that only customers with great credit qualify for these plans anyway.
F&I Statistics for New-Streetbike Owners
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"Basically that's six months free to pay the loan off," says Bruce Stjernstrom, director of marketing for Kawasaki, who adds
that Kawi's own no/no/no program is not particularly popular. "A lot of people pay with cash, and this is a way for them to
walk in and not have to worry about getting a check from their bank. It's really a convenience not only for us, but for the
customer."
Stjernstrom says Kawasaki's regular revolving plan is its most popular financing program.
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