DALLAS — The global computer chip shortage is still causing a vehicle shortage. One report from Kelley Blue Book says the average new car has more than 100 of those tiny processors that are in such short supply. And that has greatly impacted the supply of vehicles.
Many new car lots are still pretty empty. But auto dealer bank accounts - those aren’t empty.
Average new vehicle price and dealer profits both soaring
A report by JD Power recently estimated that in October, the average auto transaction cost $43,999, which would be a record high.
They add that even though dealers had far fewer vehicles to sell, October 2021 was their most profitable October ever; profits up 213% from pre-pandemic October 2019.
And dealers are now on pace to reach a record $5,129 profit for each vehicle sold, more than double the per-car profit last year.
Texas credit unions sound off about forced financing at the dealership
Some of that profit is from financing. And no doubt some of that is what you could call forced financing at the dealership. We have done reports about this phenomenon in August and October.
Some dealers across Texas have been refusing outside financing, because if they can make you use their lender instead of a lender that pre-approved you, they can tack on a little extra to the interest rate and pocket some additional profit.
The Cornerstone League, which is an association that represents Texas credit unions, wrote about this very topic in September right after we began reporting on this. The association said that the Office of Consumer Credit Commissioner was concerned about the practice according to an article they saw on a "Dallas area news website."
That was our article. And yes, the state regulator that oversees dealerships had told us they were concerned about the practice that amounts to forced financing, and they asked consumers to report it.
And many consumers did. And you can as well. To contact the OCCC's Consumer Assistance staff, call (800) 538-1579, send an email to firstname.lastname@example.org, or you can file a complaint through their website.
Suzanne Yashewski, the Cornerstone League's Regulatory and Compliance Counsel, says “We have discussed it with the OCCC which regulates auto dealer loans. We have also discussed it with the Texas Credit Union Department. We have heard from many credit unions across the state raising the same issue and we have encouraged credit unions and their members to file complaints with the OCCC. It appears that the OCCC is not taking action despite the negative impact on consumers. Therefore, we will likely address it with the legislature, but have not done so yet. It is a priority issue for Cornerstone’s members."
So, what now? There is no Texas law against forced financing at the auto dealership, so the credit union association plans to take it up with the legislature.
But lawmakers don’t convene again until 2023. By then it is expected that the chip shortage, and therefore the vehicle shortage, may well be resolved.
Which means dealers having to compete for your business... and maybe more willing to accept your outside financing again.