Dealernews - November 2009 - (Page 21) THE FINAL ANALYSIS JOE DELMONT CREDIT CRUNCH KEEPS LID ON DEALERS Commercial, retail credit could get tighter thing that’s far from certain — the company might shut its doors. Another established company I talked with had its credit line slashed by 60 percent recently, and the balance was rewritten as a note payable over several years. The payments on the new loan are costing the cash-strapped company several thousand dollars each month. As a result, its employees have taken sharp pay cuts for an indefinite period. There’s more turbulence under those choppy waters. How many stories like these have you heard? Credit is still tight and it’s getting tighter. A recent front-page story in The Wall Street Journal didn’t pull any punches. “Drought of Credit Hampers Recovery” reads the headline. The first paragraph tells the story: “A year after the U.S. economy was brought to its knees by the bursting of the housing bubble, credit for consumers is still being aggressively ratcheted back.” Not only is it being cut back, but banks are charging more for what little credit they provide. Wells Fargo & Co. said it plans to hike interest rates for most of its customers by three percentage points in November this year. Wells Fargo isn’t the only one pumping up rates, of course. The rate on one of my personal cards was bumped up six points a few months ago — that’s on a card that had a zero balance at the time, that has never had a balance higher than 40 percent of the credit limit, and on which I’ve never been late. Needless to say, that card went into the drawer where it won’t see the light of day for a long, long time. Back to the WSJ report: Total consumer spending fell $12 billion in August, according to the Federal Reserve. It was the seventh straight month of declines, notes the IF YOU’RE WAITING eagerly for 2010 to bring your business a boost, I’ve got some disappointing news for you. There isn’t going to be a big industry turnaround next year, and your friendly local lender probably isn’t going to give you as much money as it has in the past. Tight credit — in both commercial and retail segments — is going to keep the lid on spending and will continue to make it tough to run a business. Even if lenders decide to turn on the money machine, there are indications that consumers aren’t willing to take on any more debt. That means if your prospects can’t pay cash for a new machine, they’re probably not going to buy one. Let me be clear about this: I don’t think that the motorcycle industry is going away, and I don’t think that riders have lost their passion for the sport. I do think, however, that the salad days of fast sales and gushing credit that we’ve enjoyed for the last half-dozen years are gone for a long, long time. Don’t look for any improvement until 2011 at the earliest, unless the credit situation improves dramatically. The recent flashy words from Washington notwithstanding, you’re not going to see lots of eager customers next year. The numbers might show that the national recession is receding, but I believe the real situation facing consumers — and industries like ours that sell toys and luxury products — is worse than the numbers indicate. How many people do you know who tapped their savings or their 401(k) accounts to keep their homes and maintain a semblance of their former lifestyle? I know of several. The marketing manager of a high visibility aftermarket parts company told me recently that he’s been living on a sharply reduced paycheck for several months because revenues fell so far below forecasts. And if new equity financing can’t be arranged — someDEALERNEWS.COM Journal. “The drop is a stark demonstration of how banks and other lenders are scaling back,” it continues, “… it also reflects a reluctance by Americans to hold big loads of debt at a time when the job market remains in bad shape and the value of their homes has fallen.” Notes one consumer interviewed by the Journal: “If I don’t have credit, then I can’t use it and I won’t use it.” SBA PROGRAM FAILS If you’re looking for help from Big Brother in Washington, forget it. I checked with the Small Business Administration to see how its widely promoted flooring loan guarantee program announced this spring has been received. It hasn’t worked out very well. In July, an SBA official estimated that as many as 4,000 loans would be made under the program. The actual number isn’t even close to that. An SBA official told me in September that only nine dealer loans had been completed under the program, and none of them were for motorcycle dealers. It’s not clear whether businesses aren’t seeking the money (some say the requirements are poorly designed) or whether banks simply aren’t lending the money. But according to the SBA official, “many lenders that have not been involved with this kind of loan and have developed neither expertise nor systems to handle them are leery of participating, and that keeps the numbers down.” (Isn’t the SBA supposed to be educating these guys?) Here’s the bottom line: Credit is tight and it’s getting tighter, especially for consumers and small businesses. One industry observer expects $1.5 trillion of credit card lines to be pulled out of the system by the end of 2010. So don’t look for a boost in the new year. It’s simply not going to happen. Joe Delmont can be reached at jdelmont@dealernews.com or 952-893-6876. NOVEMBER 2009 DEALERNEWS 21 http://www.DEALERNEWS.COM Table of Contents for the Digital Edition of Dealernews - November 2009 Dealernews - November 2009 Contents From the Editors InBox Speed Read Joe Delmont COVER STORY — The Fun Starts Here Dealer Lab Distributor Report Card State-by-Statement ATV/Dirt-by-State DJB Composite Index Eric Anderson Fuel for Thought - Dave Koshollek Vintage Directory Todd Shafer Marketing Update Merchandising Update Holiday Gift Guide New Products Advertiser Index/Customer Service Mike Vaughan Dealernews - November 2009 Dealernews - November 2009 - Dealernews - November 2009 (Page Cover1) Dealernews - November 2009 - Dealernews - November 2009 (Page Cover2) Dealernews - November 2009 - Dealernews - November 2009 (Page 1) Dealernews - November 2009 - Contents (Page 2) Dealernews - November 2009 - Contents (Page 3) Dealernews - November 2009 - Contents (Page 4) Dealernews - November 2009 - Contents (Page 5) Dealernews - November 2009 - From the Editors (Page 6) Dealernews - November 2009 - From the Editors (Page 7) Dealernews - November 2009 - InBox (Page 8) Dealernews - November 2009 - InBox (Page 9) Dealernews - November 2009 - Speed Read (Page 10) Dealernews - November 2009 - Speed Read (Page 11) Dealernews - November 2009 - Speed Read (Page 12) Dealernews - November 2009 - Speed Read (Page 13) Dealernews - November 2009 - Speed Read (Page 14) Dealernews - November 2009 - Speed Read (Page 15) Dealernews - November 2009 - Speed Read (Page 16) Dealernews - November 2009 - Speed Read (Page 17) Dealernews - November 2009 - Speed Read (Page 18) Dealernews - November 2009 - Speed Read (Page 19) Dealernews - November 2009 - Speed Read (Page 20) Dealernews - November 2009 - Speed Read (Page 20a) Dealernews - November 2009 - Speed Read (Page 20b) Dealernews - November 2009 - Speed Read (Page 20c) Dealernews - November 2009 - Speed Read (Page 20d) Dealernews - November 2009 - Speed Read (Page 20e) Dealernews - November 2009 - Speed Read (Page 20f) Dealernews - November 2009 - Speed Read (Page 20g) Dealernews - November 2009 - Speed Read (Page 20h) Dealernews - November 2009 - Speed Read (Page 20i) Dealernews - November 2009 - Speed Read (Page 20j) Dealernews - November 2009 - Joe Delmont (Page 21) Dealernews - November 2009 - COVER STORY — The Fun Starts Here (Page 22) Dealernews - November 2009 - COVER STORY — The Fun Starts Here (Page 23) Dealernews - November 2009 - COVER STORY — The Fun Starts Here (Page 24) Dealernews - November 2009 - COVER STORY — The Fun Starts Here (Page 25) Dealernews - November 2009 - COVER STORY — The Fun Starts Here (Page 26) Dealernews - November 2009 - COVER STORY — The Fun Starts Here (Page 27) Dealernews - November 2009 - Dealer Lab (Page 28) Dealernews - November 2009 - Dealer Lab (Page 29) Dealernews - November 2009 - Distributor Report Card (Page 30) Dealernews - November 2009 - Distributor Report Card (Page 31) Dealernews - November 2009 - Distributor Report Card (Page 32) Dealernews - November 2009 - Distributor Report Card (Page 33) Dealernews - November 2009 - Distributor Report Card (Page 34) Dealernews - November 2009 - Distributor Report Card (Page 35) Dealernews - November 2009 - Distributor Report Card (Page 36) Dealernews - November 2009 - Distributor Report Card (Page 37) Dealernews - November 2009 - State-by-Statement (Page 38) Dealernews - November 2009 - State-by-Statement (Page 39) Dealernews - November 2009 - ATV/Dirt-by-State (Page 40) Dealernews - November 2009 - ATV/Dirt-by-State (Page 41) Dealernews - November 2009 - DJB Composite Index (Page 42) Dealernews - November 2009 - DJB Composite Index (Page 43) Dealernews - November 2009 - Eric Anderson (Page 44) Dealernews - November 2009 - Eric Anderson (Page 45) Dealernews - November 2009 - Fuel for Thought - Dave Koshollek (Page 46) Dealernews - November 2009 - Fuel for Thought - Dave Koshollek (Page 47) Dealernews - November 2009 - Vintage Directory (Page 48) Dealernews - November 2009 - Vintage Directory (Page 49) Dealernews - November 2009 - Vintage Directory (Page 50) Dealernews - November 2009 - Vintage Directory (Page 51) Dealernews - November 2009 - Vintage Directory (Page 52) Dealernews - November 2009 - Vintage Directory (Page 53) Dealernews - November 2009 - Todd Shafer (Page 54) Dealernews - November 2009 - Todd Shafer (Page 55) Dealernews - November 2009 - Marketing Update (Page 56) Dealernews - November 2009 - Marketing Update (Page 57) Dealernews - November 2009 - Merchandising Update (Page 58) Dealernews - November 2009 - Merchandising Update (Page 59) Dealernews - November 2009 - Holiday Gift Guide (Page 60) Dealernews - November 2009 - Holiday Gift Guide (Page 61) Dealernews - November 2009 - Holiday Gift Guide (Page 62) Dealernews - November 2009 - Holiday Gift Guide (Page 63) Dealernews - November 2009 - Holiday Gift Guide (Page 64) Dealernews - November 2009 - Holiday Gift Guide (Page 65) Dealernews - November 2009 - Holiday Gift Guide (Page 65a) Dealernews - November 2009 - Holiday Gift Guide (Page 65b) Dealernews - November 2009 - Holiday Gift Guide (Page 65c) Dealernews - November 2009 - Holiday Gift Guide (Page 65d) Dealernews - November 2009 - Holiday Gift Guide (Page 65e) Dealernews - November 2009 - Holiday Gift Guide (Page 65f) Dealernews - November 2009 - Holiday Gift Guide (Page 65g) Dealernews - November 2009 - Holiday Gift Guide (Page 65h) Dealernews - November 2009 - Holiday Gift Guide (Page 65i) Dealernews - November 2009 - Holiday Gift Guide (Page 65j) Dealernews - November 2009 - New Products (Page 66) Dealernews - November 2009 - New Products (Page 67) Dealernews - November 2009 - New Products (Page 68) Dealernews - November 2009 - New Products (Page 69) Dealernews - November 2009 - New Products (Page 70) Dealernews - November 2009 - New Products (Page 71) Dealernews - November 2009 - New Products (Page 72) Dealernews - November 2009 - New Products (Page 73) Dealernews - November 2009 - New Products (Page 74) Dealernews - November 2009 - New Products (Page 75) Dealernews - November 2009 - New Products (Page 76) Dealernews - November 2009 - New Products (Page 77) Dealernews - November 2009 - Advertiser Index/Customer Service (Page 78) Dealernews - November 2009 - Advertiser Index/Customer Service (Page 79) Dealernews - November 2009 - Mike Vaughan (Page 80) Dealernews - November 2009 - Mike Vaughan (Page Cover3) Dealernews - November 2009 - Mike Vaughan (Page Cover4) http://digital.dealernews.com/nxtbooks/advanstar/dn0910 http://digital.dealernews.com/nxtbooks/advanstar/dn0810 http://digital.dealernews.com/nxtbooks/advanstar/dn0710 http://digital.dealernews.com/nxtbooks/advanstar/dn0610 http://digital.dealernews.com/nxtbooks/advanstar/dn0510 http://digital.dealernews.com/nxtbooks/advanstar/dn0410 http://digital.dealernews.com/nxtbooks/advanstar/dn0310 http://digital.dealernews.com/nxtbooks/advanstar/dn0210 http://digital.dealernews.com/nxtbooks/advanstar/dn0110 http://digital.dealernews.com/nxtbooks/advanstar/dn1209 http://digital.dealernews.com/nxtbooks/advanstar/dn1109 http://digital.dealernews.com/nxtbooks/advanstar/dn1009 http://digital.dealernews.com/nxtbooks/advanstar/dn_gear2009 http://digital.dealernews.com/nxtbooks/advanstar/dn0909 http://digital.dealernews.com/nxtbooks/advanstar/dn0809 http://digital.dealernews.com/nxtbooks/advanstar/dn0709 http://digital.dealernews.com/nxtbooks/advanstar/dn0609 http://www.nxtbook.com/nxtbooks/advanstar/dn0509 http://www.nxtbook.com/nxtbooks/advanstar/dn0409 http://www.nxtbook.com/nxtbooks/advanstar/dn0309 http://www.nxtbook.com/nxtbooks/advanstar/dn0209 http://www.nxtbook.com/nxtbooks/advanstar/dn0109 http://www.nxtbook.com/nxtbooks/advanstar/dn121508 http://www.nxtbook.com/nxtbooks/advanstar/dn1208 http://www.nxtbook.com/nxtbooks/advanstar/dn1108 http://www.nxtbook.com/nxtbooks/advanstar/dn1008 http://www.nxtbook.com/nxtbooks/advanstar/intlmotorcycleshows_seriesguide0809 http://www.nxtbook.com/nxtbooks/advanstar/dn0908 http://www.nxtbook.com/nxtbooks/advanstar/dn_gear2008 http://www.nxtbook.com/nxtbooks/advanstar/dn0808 http://www.nxtbook.com/nxtbooks/advanstar/dn0708 http://www.nxtbook.com/nxtbooks/advanstar/dn0608 http://www.nxtbook.com/nxtbooks/advanstar/dn0508 http://www.nxtbook.com/nxtbooks/advanstar/dn0408 http://www.nxtbook.com/nxtbooks/advanstar/dn0308 http://www.nxtbook.com/nxtbooks/advanstar/dn0208 http://www.nxtbook.com/nxtbooks/advanstar/dn0108 http://www.nxtbook.com/nxtbooks/advanstar/dn1207 http://www.nxtbook.com/nxtbooks/advanstar/dn1107 http://www.nxtbook.com/nxtbooks/advanstar/dn1007 http://www.nxtbook.com/nxtbooks/advanstar/dn0907 http://www.nxtbook.com/nxtbooks/advanstar/dn0807 http://www.nxtbook.com/nxtbooks/advanstar/dn0707 http://www.nxtbook.com/nxtbooks/advanstar/dn0607 http://www.nxtbook.com/nxtbooks/advanstar/dn0507 http://www.nxtbook.com/nxtbooks/advanstar/dn0407 http://www.nxtbook.com/nxtbooks/advanstar/dn0107 http://www.nxtbookMEDIA.com
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