GE’s Departure from Retail Financing of Boats and RVs
While GE Money intends to keep intact the flooring programs it currently offers dealers, the company has decided to exit consumer finance of RVs and boats. GE has extensive relationships with both Thor and
I’ve also been told that loan delinquencies on RVs are up, which has kept interest rates high despite the recent rate cuts by the Fed. When you add in that credit lending has tightened (check a recent MSN story on it here) significantly, selling an RV has gotten a little tougher as of late.
How do you think GE’s departure will impact your business and our industry on a micro and macro level? Will other companies quickly pick up the slack with no real impact, or will there be a gaping hole left by the third largest lending institution exiting the industry?
July 3rd, 2008 at 5:34 pm
As a RV dealer with GE and others, I can tell you that in the last two months we have lost 4 banks to pulling out of the market. This becomes very tough to sell when no one will finance a $30-$50 thousand dollar purchase.
May 10th, 2008 at 2:17 pm
To look at GE’s departure from the RV indirect lending picture and conclude this decision is based on the current “correction” in the RV business is shortsighted at best.
Although timing is everthing, I personally believe this is a business segment Jeff Immelt chose to ax long before ‘08.
If you follow the business news, GE has been losing money and market shares since Immelt took over the reigns from Jack Welch, former CEO. So, to conclude that this decision was spur of the moment based on the prevailing RV environment is just innacurate.
The fact that this is an election year and the economy will turnaround is bourne out by history-lest one exception from the previous administration.
The “real” economists not the alarmists are looking to a market upswing second quarter ‘08 and a much stronger ‘09, which means the lenders that remain in the market will be aptley rewarded with addtional market share.
Remember, “tough times don’t last-but tough people(organizations)do!”
Stephen.
May 7th, 2008 at 7:09 pm
Mike,
You have some good points but there are actually several hundred RV repos per month. Several large dealer-only auctions around the country specialize in RV Remarketing (Repos) for lenders.
The largest, America’s Auto Auction (GSPAA), in Greenville/Spartanburg South Carolina consigns 300 Repo RV’s per month from banks, and sells them at an 85% sell rate on the third Wed. of each month.
Manheim and Adesa auctions also both conduct RV auctions in several locations throughout the country and there are some great independents like Brasher’s that also do RV re-marketing.
We write auction-to-dealer warranty (CPO RV)coverage for lenders on their RV repo sales to help boost online sales, bid prices, and buyer’s confidence in the units, so I have some inside information on those numbers.
Steve.
May 7th, 2008 at 11:05 am
Update:
Just received a bulletin from B of A stating that they will no longer finance any products manufactured by Travel Supreme or Western Recreational. It does not say “new” it says “any”
We do not carry either one of those brands but if we did, it’s my guess that we would be talking to a new wholesale lender before the day was out.
My condolences to those who do carry them. Life just got a little harder.
May 7th, 2008 at 9:50 am
I don’t think that G.E. is pulling out so much because of past repo’s as much as they are because they EXPECT more repo’s. I can count on one hand, the number of repo’s that I have heard of in the last year. If there is a glut of bank owned repo’s - where are they? Is there a big repo yard somewhere that I haven’t heard of ?
It smacks of panic to me. This is the way bank runs used to start I think G.E.’s cut and run attitude is in direct response to the closing and shuttering of RV manufacturing facilities during the last year. They might believe that their borrowers will walk away from their loans if they are unable to get warranty repairs and / or service on their purchases. While this can certainly be a real concern on the part of lenders, I think they underestimate just how pragmatic our customers are. Very few will be willing to trash their credit rating over this. Maybe the lenders should offset their concern with the demand that any new loans be accompanied with an extended service contract. I’m not normally a proponent of ESC’s but they can be useful in some situations like this.It’s kind of like hedging your bets.
G.E. also has a significant presence in the wholesale side but it’s much more problematic to just pick up their marbles and go home from that venue. If it was as easy as the retail side,I bekieve they would disolve those partnerships also.
This new retreat comes in the wake of several lenders notice’s a few weeks ago that they would not accept retail contracts on National products which, I think, illustrates my thinking here.
We have seen enough big corporate blunders in the last few years to know that just because an outfit is big, doesn’t mean it’s smart. Let just hope that the other biggies don’t respond with a lemming attitude .
May 6th, 2008 at 1:29 pm
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