September 18th, 2012
Dealer Financing May be Just the Right Medicine to Cure Economic Jitters
The GlassBuild show in Vegas was an excellent venue to catch up with window industry contacts. It always helps me to gauge what is going on in the window market. In talking to window fabricators from all parts of the country, a common theme among them was that sales in many parts of the country are sluggish. It seems that the first quarter started off strong but then sales took a turn for the worse beginning sometime in May, then experienced the usual dip in July but have stayed down and have not started picking up as is normally seen in the late summer/prelude to fall.
Possible theories are that the first quarter weather was unusually warm which caused premature sales in the first quarter–sales that typically would not have materialized until second quarter. This had the effect of inflating first quarter sales and subsequently deflating second quarter sales as much of the market demand was triggered early.
So the big question is what will the usually busy fall selling season bring? Will sales pick up substantially in September, October and November as they traditionally do, or will consumers behave nervously as they fret about the current state of rising gasoline prices and uncertainty due to the upcoming presidential election?
One thing that puzzles me is why many manufacturers are taking a “laissez faire” approach when it comes to setting up their dealers with an effective finance program, especially when financing can clearly have such a strong “pull through” effect on their business! If the manufacturer can work with a finance company to structure a deal whereby the manufacture can bring multiple dealers to the table, many finance companies are willing to structure programs that can offer better interest rates and lower FICO requirements based upon the prospect of securing a high volume of business with a certain dealer network.
It is also surprising to see that many dealers themselves do not currently offer financing so they are missing out on a substantial number of prospects who seek out only companies that offer it. Face it, if you are a consumer looking to buy windows now but want to pay for them next spring when you are going to get your tax refund check, who are you going to call–the dealer that takes cash or credit cards only or the dealer that is offering interest free financing for 12-months same as cash?
To help cure the election time blues, there are also finance companies offering programs such as 18 months same as cash to customers with FICOs of 660 or higher. Or how about 36 month equal payments with zero percent interest! And for the more challenging credit situations, there are 6 month same as cash deals available for customers with FICOs as low as 580. These are all unsecured loans!
So clearly, financing for remodeling type projects clearly has taken a turn for the better since the days when it totally dried up after the collapse of the housing market. Perhaps these financing tools are the medicine that window dealers can use as a cure for an otherwise sluggish market that currently exists in many parts of the country.
So, dealers and manufacturers alike take note. Offering an effective financing program can make the difference when it comes to having a year of growth as opposed to what may otherwise be another lackluster year!