In a conversation with Kevin Baumann, CEO, JKR Advertising & Marketing, regarding Reuters recent article on the 14% rise in subprime lending, he described a general history of subprime financing over the past several decades. In the late eighties it was serving a growing need, things were changing; divorce levels were rising, manufacturing was beginning to shift, a lot of late baby boomers were entering the market as first time buyers things were changing. He went on to depict how it began to peak toward the mid-nineties, and then making a long story short, and then as we all know, the market tanked alongside the mortgage mess in 2008.
Need-Based Buying Back on the Rise
Posed with how is it possible that auto advertisers know subprime auto lending is increasing? Kevin said, “It amazes me how the current economic pundits and auto writers keep missing the point by being surprised as how the trend in auto sales have outperformed predictions. It’s really somewhat simple, despite the fact that people are keeping their cars longer than ever; cars wear out. People still need cars; sooner or later pent-up demand breaks through the threshold, this will tend to accelerate subprime demand.”
What about dealers, how would this affect their advertising & marketing? It’s simple, if they don’t repeat the mistakes and abuses of the past [an aside as to how only stated income, and no down payment could get nearly anyone a mortgage not too long ago], specific overtures to subprime and near-prime prospects makes good business sense. If a dealer has the [lending] resources in place in order to fulfill credit offers, they are offering more than a car, but a service an opportunity get back on track toward a better credit score.Kevin Baumann, subprime automotive lending