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Tuesday, October 16, 2007
Monday, October 15, 2007
Hogan - by Dodson
I met James Dodson (author of Ben Hogan - An American Life) at a diner hosted by the Donald Ross Society held back in April in North Carolina (Pine Needles). The Ross folks are a good bunch of guys, but who cares? I'm not a member but, I was invited apparently for my charm - as was Mr. Dodson. Anyway - I found Dodson to be an interesting guy. I gathered that he really took the Hogan book seriously. I appreciate that. The book is very well done.
For a big fat book, it moved right along. I was pleasantly surprised to see that Dodson managed to tell the story without making too many things up or coloring too much. I got the sense that he wanted to, but resisted and stuck to the task. He has a very pleasant writing style. I suspect I'll read more of his work. Well done James.
Sunday, October 14, 2007
I think I'm done
Is it a bad thing or a good thing?
I've never really played well enough for long enough to take my game to the level I had hoped to. Shooting 74 on a good day is about all I expect now. Some people think that's pretty good. I just don't. Okay - it's not bad. It's better than most people can do, but so what. 74 will win some matches , but it's not good enough to really compete with good players. I actually can't remember feeling like I had enough game to control my ball and get under par. I've come up with 80 or worse (a lot of that lately - when) in competition too many times. If I'm hitting my irons well (for the day), I can hope for 76 or 78. 17 year old kids blow it by me off the tee. I can't remember struggling with my irons as badly as I have recently. I'm really disgusted with how I'm playing. I question whether this is any fun. Maybe I just don't want to play anymore. Maybe I'm bored with it. It takes so much time, energy and money to play this game. Isn't there something else I can do? Maybe breaking up with the game makes sense now. Maybe I can play a few times a year and that will be fine? Maybe I'm done trying to compete? I can't see spending $6,000 a year on a country club membership and not enjoying it. I think I'm done. Maybe some day, I'll come back... or not.
I've never really played well enough for long enough to take my game to the level I had hoped to. Shooting 74 on a good day is about all I expect now. Some people think that's pretty good. I just don't. Okay - it's not bad. It's better than most people can do, but so what. 74 will win some matches , but it's not good enough to really compete with good players. I actually can't remember feeling like I had enough game to control my ball and get under par. I've come up with 80 or worse (a lot of that lately - when) in competition too many times. If I'm hitting my irons well (for the day), I can hope for 76 or 78. 17 year old kids blow it by me off the tee. I can't remember struggling with my irons as badly as I have recently. I'm really disgusted with how I'm playing. I question whether this is any fun. Maybe I just don't want to play anymore. Maybe I'm bored with it. It takes so much time, energy and money to play this game. Isn't there something else I can do? Maybe breaking up with the game makes sense now. Maybe I can play a few times a year and that will be fine? Maybe I'm done trying to compete? I can't see spending $6,000 a year on a country club membership and not enjoying it. I think I'm done. Maybe some day, I'll come back... or not.
Wednesday, October 10, 2007
Clever
Clever is an attribute most often bundled with other less attractive qualities. If it happens to be a person's primary tool - be careful - be afraid - run. With a willingness to take shortcuts or use deceitful tactics, and knowing how to cover the tracks, the undesirable effects of cleverness can offset or even overshadow the benefits.
Monday, October 8, 2007
The blue and red businesses are both closed now
I had observed the opening of two non-franchised used car businesses on opposite sides of town. I'll call one the blue business (their signs were blue) and the other the red business (yup - red signs). Both locations appeared adequate. Given a choice, I liked the blue business spot much better. It had slightly better visibility, more parking and it seemed to be "nicer".
The red business opened first, followed a few months later by the blue business. The red business was planted on a busy road in a building that most likely was a residence at one time. It was modified to be a used car lot and I would say they did a pretty good job. The blue business did (in my opinion) a little bit better job tidying up the property and renovating the facility. Their building was clearly not a redone residence. I thought they had an advantage. I really liked the setup of the blue business. Both businesses looked to inventory 50 or so retail ready cars and trucks.
About a month or so ago, the red business closed up shop and the property put up for sale. So much of that business is management, you can't blame the location. The fellow(s) probably just couldn't get it done.
Yesterday, I drove by the spiffy blue business... Closed - gone - left town - a realtor's for sale sign took the place of the blue sign.
I liked that blue business. I was envious (sort of). He seemed to have grabbed a good spot and done it up nicely. I wonder what happened there? Perhaps it's a bad business to be in right now.
Hmmm...
The red business opened first, followed a few months later by the blue business. The red business was planted on a busy road in a building that most likely was a residence at one time. It was modified to be a used car lot and I would say they did a pretty good job. The blue business did (in my opinion) a little bit better job tidying up the property and renovating the facility. Their building was clearly not a redone residence. I thought they had an advantage. I really liked the setup of the blue business. Both businesses looked to inventory 50 or so retail ready cars and trucks.
About a month or so ago, the red business closed up shop and the property put up for sale. So much of that business is management, you can't blame the location. The fellow(s) probably just couldn't get it done.
Yesterday, I drove by the spiffy blue business... Closed - gone - left town - a realtor's for sale sign took the place of the blue sign.
I liked that blue business. I was envious (sort of). He seemed to have grabbed a good spot and done it up nicely. I wonder what happened there? Perhaps it's a bad business to be in right now.
Hmmm...
Friday, October 5, 2007
Large diet coke please!
Are you kidding me? You are, aren't you?
The September new jobs number came out today and the economy generated 110,000 new jobs. This was a little more than expected. However, in August the actual number surprised everyone and instead of the 100,000 plus - a loss of 4,000 jobs was reported. See "and a small diet coke please" posted on September 7th.
Well not only did they report September's number today, but the poor results from August were said to have been incorrect (revised). There was actually a gain of more than 80,000 jobs in September, not a loss of 4,000. The markets liked the taste of that news and everyone ordered desert.
Make that a large diet coke with extra vitamins and minerals please. Oh, with Splenda as the sweetener and if possible, a shot of caffeine or maybe a big scoop of Haagen-dazs.
The September new jobs number came out today and the economy generated 110,000 new jobs. This was a little more than expected. However, in August the actual number surprised everyone and instead of the 100,000 plus - a loss of 4,000 jobs was reported. See "and a small diet coke please" posted on September 7th.
Well not only did they report September's number today, but the poor results from August were said to have been incorrect (revised). There was actually a gain of more than 80,000 jobs in September, not a loss of 4,000. The markets liked the taste of that news and everyone ordered desert.
Make that a large diet coke with extra vitamins and minerals please. Oh, with Splenda as the sweetener and if possible, a shot of caffeine or maybe a big scoop of Haagen-dazs.
Tuesday, October 2, 2007
Oh Bartender!
I watched...
She moves hurriedly behind the bar trying to keep up. She occasionally falls behind when the service side grabs her attention. She appears to be doing her best to please everyone - tossing out an "I'm sorry", or "I'll be right there". It seems like she needs help, but she insists that she doesn't. She fights her way through the backlog as she picks up her pace. She delivers the drinks quickly and moves on to the next. Occasionally, she will deliver drink number two or three to a bar customer instructed by just a nod. When she catches up, she'll ring in the drinks she has served on the fly that she didn't ring in before. Sometimes she might miss one here and there. After all the tabs are many and she's very busy.
In moments when she isn't preparing a drink, she keeps the counter and equipment clean and flashes a pretty smile. When the bar customer is done, she will often charge him for one or two beers when he had three or four. She's just charging what's on the tab.
She uses the frenzy of the rush and the timing of her transaction recognition (ring up that tab) to be in temporary disarray. While she would not charge a customer and pocket the money - that would be stealing (oh no never) - she manages to let the bar customer get more than he paid for. The bar customer wins. She gives the impression and he believes that the bar tender is "taking care" of him. What a nice gal. He leaves a fat tip, probably the equivalent of that extra drink that got lost in the shuffle.
She is not frantic and confused and doing her best to cope. She doesn't want or need help at the bar because that ruins her act. She plays dumb, but by shifting the cash from a purchase to a tip, she is clever and she is stealing. Oh yes she is.
She moves hurriedly behind the bar trying to keep up. She occasionally falls behind when the service side grabs her attention. She appears to be doing her best to please everyone - tossing out an "I'm sorry", or "I'll be right there". It seems like she needs help, but she insists that she doesn't. She fights her way through the backlog as she picks up her pace. She delivers the drinks quickly and moves on to the next. Occasionally, she will deliver drink number two or three to a bar customer instructed by just a nod. When she catches up, she'll ring in the drinks she has served on the fly that she didn't ring in before. Sometimes she might miss one here and there. After all the tabs are many and she's very busy.
In moments when she isn't preparing a drink, she keeps the counter and equipment clean and flashes a pretty smile. When the bar customer is done, she will often charge him for one or two beers when he had three or four. She's just charging what's on the tab.
She uses the frenzy of the rush and the timing of her transaction recognition (ring up that tab) to be in temporary disarray. While she would not charge a customer and pocket the money - that would be stealing (oh no never) - she manages to let the bar customer get more than he paid for. The bar customer wins. She gives the impression and he believes that the bar tender is "taking care" of him. What a nice gal. He leaves a fat tip, probably the equivalent of that extra drink that got lost in the shuffle.
She is not frantic and confused and doing her best to cope. She doesn't want or need help at the bar because that ruins her act. She plays dumb, but by shifting the cash from a purchase to a tip, she is clever and she is stealing. Oh yes she is.
Thursday, September 27, 2007
Ahhhh... Maps. I love maps
There is a lot of detail in here, and even though it looks too complicated to be useful, I don't think it is. Actually, it makes pretty good sense in many ways. It's an attempt to address the pieces. I really appreciate the effort here. Thanks.
An Internet Marketing Map
Wednesday, September 26, 2007
Guitar things - Bohemian Rhapsody
An adaptation of Bohemian Rhapsody for classical guitar and some post performance navigation of the fingering. Pretty good stuff.
Tuesday, September 25, 2007
Ikea - Cool concept, but bad phone strategy
I had a good time exploring Ikea. The concept is interesting. A new angle is something that appeals to me. I bought some stuff, had it shipped and put it together. What money I saved, I contributed in labor and in the end, I think the value wasn't all that much better than what I could do using more conventional channels.
The labor side was complicated by a missing hardware satchel and a couple of missing parts. I was quite surprised to find that there were actually problems in this area. I mean you would think this is a sensitive subject and a well understood "moment of truth". The idea of taking stuff home (sometimes far away) and putting it together is considerably less appealing if you're not confident all the pieces will be there. I still like the approach. The process was pretty cool. If it hadn't been for the missing stuff, I would have been jazzed.
When I discovered my missing bits, I called. It was a useless effort. The automated phone system was horrible. The menus were multi-layered, repetitive and clumsy. It took me several minutes to find a place where I was on hold for almost 15 minutes. When I finally got someone, she was not helpful. I could open up a "case number" and a manager would contact me within 48 hours, or I could come to the store (70 miles) and they would get me my parts. I asked to speak to a manager and was put on hold. 10 minutes later I gave up and planned to drive back to the store the next day. After all, I had this stuff spread out all over the place in mid-assembly. I wasn't going to wait 48 hours for a "case number" and a manager to contact me. I guess I was hoping for "We're terribly sorry. We realize this sort of thing is frustrating and disappointing. Let's go over what you are missing, find out what we need and get these parts overnight express delivered to you." Okay - maybe that was expecting too much. Still, I was bugged by the fact that I had to drive back to the store and find the missing pieces.
When I arrived at the store, I received prompt (I think I caught them at a good time) attention and I had my bits in under 30 minutes.
The Ikea store, the products and the concept are pretty sweet. I guess in the future I'd give them the benefit of the doubt on the frequency of missing components, but I discount the total notion because of the potential for assembly aggravation (read: missing bits). Also - putting the stuff together loses its charm after an hour or so. Next time I consider Ikea I'll properly account for my labor (allowing more time than you might think).
I would strongly suggest a different strategy on the phone. This was a complete failure. Come on Ikea - fix the thing. You can do it.
The labor side was complicated by a missing hardware satchel and a couple of missing parts. I was quite surprised to find that there were actually problems in this area. I mean you would think this is a sensitive subject and a well understood "moment of truth". The idea of taking stuff home (sometimes far away) and putting it together is considerably less appealing if you're not confident all the pieces will be there. I still like the approach. The process was pretty cool. If it hadn't been for the missing stuff, I would have been jazzed.
When I discovered my missing bits, I called. It was a useless effort. The automated phone system was horrible. The menus were multi-layered, repetitive and clumsy. It took me several minutes to find a place where I was on hold for almost 15 minutes. When I finally got someone, she was not helpful. I could open up a "case number" and a manager would contact me within 48 hours, or I could come to the store (70 miles) and they would get me my parts. I asked to speak to a manager and was put on hold. 10 minutes later I gave up and planned to drive back to the store the next day. After all, I had this stuff spread out all over the place in mid-assembly. I wasn't going to wait 48 hours for a "case number" and a manager to contact me. I guess I was hoping for "We're terribly sorry. We realize this sort of thing is frustrating and disappointing. Let's go over what you are missing, find out what we need and get these parts overnight express delivered to you." Okay - maybe that was expecting too much. Still, I was bugged by the fact that I had to drive back to the store and find the missing pieces.
When I arrived at the store, I received prompt (I think I caught them at a good time) attention and I had my bits in under 30 minutes.
The Ikea store, the products and the concept are pretty sweet. I guess in the future I'd give them the benefit of the doubt on the frequency of missing components, but I discount the total notion because of the potential for assembly aggravation (read: missing bits). Also - putting the stuff together loses its charm after an hour or so. Next time I consider Ikea I'll properly account for my labor (allowing more time than you might think).
I would strongly suggest a different strategy on the phone. This was a complete failure. Come on Ikea - fix the thing. You can do it.
Saturday, September 22, 2007
Barnes & Noble vs. Amazon.com
Barnes & Nobles wants me to pay them $25 each year for a "membership card" that will get me 40% off Best Sellers and 20% off most of the other stuff. They also toss point of sale discount stickers on many new arrivals and other titles that are not in the top ten. For some reason, they seem to apply the sticker so that it covers part of the title or subtitle - just to annoy me.
So, if you don't buy their membership, you pay $25.99 for a $25.99 list price book. If the one you want happens to have a 20% off sticker on it, you can pay $20.79. If you do buy their membership, you can pay $16.37 at the store on on their website. I'm not sure how they do the math. That in itself is annoying. Hey - $16.37 doesn't seem like a completely raw deal. If you buy several books at once, the BN pitch starts to make more sense. If you buy $125 worth of books, the membership will pay for itself. At some point, provided you are a prolific consumer of books, it's not the worst deal ever.
I don't want to carry your card around with me. I have enough baggage. At the very worst, you should give it away for free. I'm not even sure free is cheap enough. You should pay me to carry that thing around. It might make sense at some point, but it tastes lousy having to pay.
So I locate the same book at Amazon.com. It takes me a few seconds and I can find it by entering the title: part of the title (only one word will work) or the author, or even one of the author's other titles (let's just say it's easier than hunting around the store). The $25.99 book is $15.59 right up front at Amazon. Gee, that's a curious amount. 40% off the original $25.99 represents a discount of $10.40. This would suggest that the BN member price should be $15.59 just like Amazon. But it isn't BN is $16.37 for members - such a deal. Oh and you still pay for shipping.
Well anyway, if you use Amazon with any frequency, it's not hard to figure out how to get free standard shipping and even expedited shipping for free. Yup - I know the store eliminates shipping, but so what. When was the last time a book purchase was an emergency? The wait time for shipping is as little as two days (for free).
If I need something pronto and it is available at Barnes & Noble and I'm in the mood for a Starbucks $3 coffee (Venti redeye), I guess I'd go there. Other than that, Amazon wins. Oh yes.
Tuesday, September 11, 2007
One down
Well then... Thanks to the fellow in Suwanee Georgia for sending the Parker Spanish Fly guitar. It would have been a very nice gesture if you didn't make me pay for it, but still - since these units are relatively scarce (about a year wait to get one custom made from Parker), I'm happy to pay the dough anyway.
How ironic that this particular guitar comes from Georgia, not all that far from Augusta (Augusta National). Random - Random - Random!
Now, if we can just get to work on the arrangements there, well then we'll have something. Actually, I'll be grateful and amazed.
Thanks Suwanee
How ironic that this particular guitar comes from Georgia, not all that far from Augusta (Augusta National). Random - Random - Random!
Now, if we can just get to work on the arrangements there, well then we'll have something. Actually, I'll be grateful and amazed.
Thanks Suwanee
Monday, September 10, 2007
McDonald's by Knopfler - Boom, Like That
i’m going to san bernardino
ring-a-ding-ding
milkshake mixers
that’s my thing, now
these guys bought
a heap of my stuff
and i gotta see a good thing
sure enough, now
or my name’s not kroc
that’s kroc with a ‘k’
like ‘crocodile’
but not spelled that way, yeah
it’s dog eat dog
rat eat rat
kroc-style
boom, like that
the folks line up
all down the street
and i’m seeing this girl
devour her meat, now
and then i get it, wham
as clear as day
my pulse begins to hammer
and i hear a voice say:
these boys have
got this down
oughtta be a one of these
in every town
these boys have
got the touch
it’s clean as a whistle
and it don’t cost much
wham, bam
you don’t wait long
shake, fries
patty, you’re gone
and how about that
friendly name?
heck, every little thing
oughtta stay the same
or my name’s not kroc
that’s kroc with a ‘k’
like ‘crocodile’
but not spelled that way, now
it’s dog eat dog
rat eat rat
kroc-style
boom, like that
you gentlemen
ought to expand
you’re going to need
a helping hand, now
so, gentlemen
well, what about me?
we’ll make a little
business history, now
or my name’s not kroc
call me ray
like ‘crocodile’
but not spelled that way, now
it’s dog eat dog
rat eat rat
kroc-style
boom, like that
well we build it up
and i buy ‘em out
but, man they made me
grind it out, now
they open up a new place
flipping meat
so i do, too
right across the street
i got the name
i need the town
they sell up in the end
and it all shuts down
sometimes you gotta
be an s.o.b.
you wanna make a dream
reality
competition?
send ‘em south
if they’re gonna drown
put a hose in their mouth
do not pass ‘go’
go straight to hell
i smell that
meat hook smell
or my name’s not kroc
that’s kroc with a ‘k’
like ‘crocodile’
but not spelled that way, now
it’s dog eat dog
rat eat rat
kroc-style
boom, like that
Friday, September 7, 2007
...and a small Diet Coke please.
The news about the "New Jobs" for August (a net loss of 4,000 jobs instead of the anticipated net gain of 110,000 new jobs) seems to be causing quite a stir.
I'll have a large order of Doom and Gloom, a medium extra crispy Kick in the Balls, and a small Diet Coke.
Please.
Wednesday, September 5, 2007
Johnny Damon and Hervé Villechaize
It is only a rumor that Johnny and Hervé are twins. However, it's safe to say Hervé had a better arm.
Saturday, September 1, 2007
Parker Nylon Fly & Augusta National
So if you could please send it along as quickly as possible, I would appreciate it.
Oh... I would also like to play a couple of rounds at Augusta National.
I'm guessing the Fly is easier to arrange.
Thanks
Thursday, August 30, 2007
The Tedium of Knowledge
We've observed what amounts to a mess; an incredible collection of weeds, confusion, misunderstandings and delusions. The task then is to sort through it and discover what's really going on. If we want to "know" and have a chance to change anything (intentional change - not just an accidental consequence), we observe, measure, document, study, debate, experiment, and repeat. 
It's really quite tedious. Isn't it?
It's really quite tedious. Isn't it?
Tuesday, August 28, 2007
Relative Scarcity
When something (Let's say... a house) is for sale at a certain price and there are no buyers, the seller may choose to keep the house or lower the price. Eventually, the bid meets the ask and then there is a transaction.
Right now (in many markets) there are few bids and lots of asks. If the asks were lower, there would be bids - oh yes indeed. Houses are plentiful, but for the right price - I'll take'm all.
Because the process is drawn out over time, it takes on other qualities. If it were compressed like the stock market, the dynamics would be easier to work with. However, it isn't compressed. This gives everyone enough time to sulk.
The housing supply (and subsequently the price) moving up or down and eventually (years) falling neatly along the previously established regression, is not the end of the world. When the general consensus is one of impending doom, we can look for the balancing influence to hop in. Then we can start over. Maybe next time, some lessons will have been learned about stretch-financing, sub-prime etc. - probably not.
Hmmm... relative scarcity.
Monday, August 27, 2007
Credit, Subprime and the Auto Biz
The collapse of the subprime home mortgage market is infecting the U.S. auto industry. Car and truck buyers, especially those with lower credit scores, often are finding it harder to get financing.
Vehicle-loan delinquencies are rising among higher-risk customers. And as budget-squeezed consumers put off vehicle purchases, industry forecasters are cutting their sales predictions for 2007.
The mortgage mess and falling home values are weakening consumer confidence in a way that threatens other big-ticket purchases, industry executives say."Outside of a home, a car is one of the biggest things we purchase," Ford Motor Co. CEO Alan Mulally said last week. "When you look at all of the things that are happening right now in the United States, it's a watch item. It's something we really have to pay attention to.
"Last week, the National Automobile Dealers Association scaled back its 2007 sales forecast, in part because of the battered mortgage market. In February, NADA chief economist Paul Taylor predicted that U.S. sales of new cars and light trucks this year would roughly equal the 2006 mark of 16.5 million. Now Taylor predicts 2007 sales could dip as low as 16.1 million units.Dennis Graham, an analyst with the Plante and Moran consulting firm, says U.S. sales could fall below 16 million vehicles this year. That would make 2007 the worst year since 1998, when the industry sold 15.6 million cars and trucks in the United States.
At the same time, some lenders have raised interest rates on vehicle loans to subprime buyers. That can add up: A four-year, $20,000 loan at 7 percent costs the buyer about $880 more than the same loan at 5 percent."Customers who come in with their own financing, it used to be 4.9, 5.9 percent," says Matt Thompson, general sales manager of Watertown Ford in Watertown, Mass. "Now it's 'Can you beat 7 percent?' "
Lenders and dealers say the subprime crunch has had little effect on the cost and availability of inventory financing for dealerships."It's a different business," says David Cosper, vice chairman of Sonic Automotive Inc. and a former executive with Ford Motor Credit Co.
Disaster at retail
Dealers in markets where subprime mortgage problems are most acute report slumping sales at their stores.Many consumers, the dealers say, are delaying vehicle purchases. Other customers are buying lower priced cars and trucks with fewer options and aftermarket products to pare their monthly payments.
Patrick Strickland, sales manager of Brandon Ford in Tampa, Fla., says the number of his customers who finance vehicles with home equity lines of credit has dropped by two-thirds in recent months. More customers have missed mortgage payments, Brandon says, making them harder to finance.
Thompson of Watertown Ford also cites greater difficulty getting customers financed over the past two months."My finance manager came to me and said, 'I don't know what the hell is going on here -- everybody we've been working with is having problems'," Thompson says.
Mike Jackson, CEO of AutoNation Inc., says the mortgage industry's troubles have created "a disaster at retail." AutoNation, the nation's largest dealership group, has a concentration of stores in California and Florida."To say there is no spillover from housing into automotive is ludicrous," Jackson says. "Retail sales are down 7 to 8 percent. That's almost a million units a year."Jackson says "things could get ugly" if the Federal Reserve Board does not do more to reduce interest rates. This month, the Fed cut the discount rate by half a percentage point, to 5.75 percent. The discount rate is the rate at which the Fed makes short-term loans to banks.
More delinquents
About 30 percent of subprime auto borrowers own homes, says Jack Tracey, executive director of the National Automobile Finance Association. The trade group represents subprime lenders.Tracey says the subprime mortgage crunch and changes in federal law that make it harder for individuals to file for bankruptcy have caused delinquency rates on vehicle loans to spike.According to an association survey of subprime lenders, 11.6 percent of vehicle loans were delinquent last year, up from 6.5 percent in 2005. Tracey says delinquencies are up again this year, although he did not cite figures.
Tom Wolfe, president of Wachovia Dealer Services, says his company is seeing an increase in loan delinquencies "correlated to the areas of the housing market most impacted by the subprime market." But Wolfe insists those problems are not causing Wachovia to tighten floorplanning credit for its dealer customers."We have been in the auto finance business for over 60 years and are in it for the long haul," Wolfe says.
Toyota Financial Services also has seen an uptick in delinquencies, even though most of its borrowers have good credit, says CFO John Stillo. The captive finance company is seeing just "the beginning" of the subprime mortgage fallout, Stillo warns."The housing market is such an important part of how people feel about the economy," Stillo says. "It keeps the ball rolling from a credit perspective."
From - Automotive News, August 27, 2007
Vehicle-loan delinquencies are rising among higher-risk customers. And as budget-squeezed consumers put off vehicle purchases, industry forecasters are cutting their sales predictions for 2007.
The mortgage mess and falling home values are weakening consumer confidence in a way that threatens other big-ticket purchases, industry executives say."Outside of a home, a car is one of the biggest things we purchase," Ford Motor Co. CEO Alan Mulally said last week. "When you look at all of the things that are happening right now in the United States, it's a watch item. It's something we really have to pay attention to.
"Last week, the National Automobile Dealers Association scaled back its 2007 sales forecast, in part because of the battered mortgage market. In February, NADA chief economist Paul Taylor predicted that U.S. sales of new cars and light trucks this year would roughly equal the 2006 mark of 16.5 million. Now Taylor predicts 2007 sales could dip as low as 16.1 million units.Dennis Graham, an analyst with the Plante and Moran consulting firm, says U.S. sales could fall below 16 million vehicles this year. That would make 2007 the worst year since 1998, when the industry sold 15.6 million cars and trucks in the United States.
At the same time, some lenders have raised interest rates on vehicle loans to subprime buyers. That can add up: A four-year, $20,000 loan at 7 percent costs the buyer about $880 more than the same loan at 5 percent."Customers who come in with their own financing, it used to be 4.9, 5.9 percent," says Matt Thompson, general sales manager of Watertown Ford in Watertown, Mass. "Now it's 'Can you beat 7 percent?' "
Lenders and dealers say the subprime crunch has had little effect on the cost and availability of inventory financing for dealerships."It's a different business," says David Cosper, vice chairman of Sonic Automotive Inc. and a former executive with Ford Motor Credit Co.
Disaster at retail
Dealers in markets where subprime mortgage problems are most acute report slumping sales at their stores.Many consumers, the dealers say, are delaying vehicle purchases. Other customers are buying lower priced cars and trucks with fewer options and aftermarket products to pare their monthly payments.
Patrick Strickland, sales manager of Brandon Ford in Tampa, Fla., says the number of his customers who finance vehicles with home equity lines of credit has dropped by two-thirds in recent months. More customers have missed mortgage payments, Brandon says, making them harder to finance.
Thompson of Watertown Ford also cites greater difficulty getting customers financed over the past two months."My finance manager came to me and said, 'I don't know what the hell is going on here -- everybody we've been working with is having problems'," Thompson says.
Mike Jackson, CEO of AutoNation Inc., says the mortgage industry's troubles have created "a disaster at retail." AutoNation, the nation's largest dealership group, has a concentration of stores in California and Florida."To say there is no spillover from housing into automotive is ludicrous," Jackson says. "Retail sales are down 7 to 8 percent. That's almost a million units a year."Jackson says "things could get ugly" if the Federal Reserve Board does not do more to reduce interest rates. This month, the Fed cut the discount rate by half a percentage point, to 5.75 percent. The discount rate is the rate at which the Fed makes short-term loans to banks.
More delinquents
About 30 percent of subprime auto borrowers own homes, says Jack Tracey, executive director of the National Automobile Finance Association. The trade group represents subprime lenders.Tracey says the subprime mortgage crunch and changes in federal law that make it harder for individuals to file for bankruptcy have caused delinquency rates on vehicle loans to spike.According to an association survey of subprime lenders, 11.6 percent of vehicle loans were delinquent last year, up from 6.5 percent in 2005. Tracey says delinquencies are up again this year, although he did not cite figures.
Tom Wolfe, president of Wachovia Dealer Services, says his company is seeing an increase in loan delinquencies "correlated to the areas of the housing market most impacted by the subprime market." But Wolfe insists those problems are not causing Wachovia to tighten floorplanning credit for its dealer customers."We have been in the auto finance business for over 60 years and are in it for the long haul," Wolfe says.
Toyota Financial Services also has seen an uptick in delinquencies, even though most of its borrowers have good credit, says CFO John Stillo. The captive finance company is seeing just "the beginning" of the subprime mortgage fallout, Stillo warns."The housing market is such an important part of how people feel about the economy," Stillo says. "It keeps the ball rolling from a credit perspective."
From - Automotive News, August 27, 2007
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