As many as 800,000 new car buyers steered clear of showrooms, during the first quarter fearing they’d be turned down for a loan, reveals a new report.
There’s little doubt that a lack of credit is hurting the overall American economy, and car sales, in particular. But just the fear of credit problems could keep the automotive market depressed, even after lenders loosen up, says CNW Research, in its Retail Automotive Summary.
As much as a quarter of those who could have qualified for a car loan, even under the stricter guidelines enacted during the credit crunch, believe they couldn’t get financing and have steered clear of the market, CNW research found. That comes to anywhere between 400,000 and 800,000 lost sales.
Considering the average new vehicle now costs $27,500, that works out to as much as $20 billion in lost revenues. And based on recent market shares, that would translate into perhaps as much as $4 billion for General Motors alone, a figure that would have helped, though likely not have averted, the company’s current financial crisis.
“There are always new-car intenders who believe they can’t get an auto loan and thus drop out of the market before completing an application,” explained CNW director Art Spinella. “But the lack of proactive loan offers in the past year caused a goodly number to simply not ask.”
Complicating the auto sales crisis even further, CNW calculated that a minimum 200,000 more potential buyers were shut out of the market during the first quarter of 2009 by “tight-fisted banks and other lending institutions” that may have gone even beyond the requirements of current, tightened lending rules.