Car retailing

The exit of the two largest car financiers (GE Money and GMAC) in December has left hundreds of dealers without financing, and facing the very real prospect of either closing down or selling their business at a hugely discounted price. Add to that declining demand for new cars, which IBISWorld predicts will be down 5.3% by June 2009 with total revenue falling by more than 6%. Mr Robert Bryant, IBISWorld General Manager (Australia), said car manufacturers will be forced to sell cars at extremely low margins under pressure from manufacturers which are threatening dealers with canceling their franchise agreements if they don’t meet quotas. Early 2009 will see an oversupply of new cars, price drops, diving profits and struggling dealers. Consumers will be the winners, but it remains to be seen whether anyone will be buying.