Podcast: BHPH dealer Oak Motors’ applications up 30%, approvals fall 

Truth Headlam 11:52:24Hi everyone, and welcome to the roadmap. From auto finance news since 1996 the nation’s leading newsletter on automotive lending and leasing. It’s Monday, September 8, and I’m truth headline this week, I’m joined by oak motors Executive Board Member Tiger Oakley, to dive into dealer demand and credit trends revealed in the dealerships inaugural survey of just over 1000 Americans. Tiger, why don’t you tell us a little bit more about yourself? Oak motors and Indiana finance company,Tiger Okeley 11:52:53 absolutely thanks for having this truth, we really appreciate speaking to you about the topic. You know, oak Motors has been around for 40 years. It’s a second generation family business. It’s my brother and I now my parents started it, and we really service the central Indiana area, and have been doing so for, you know, quite some time. Great.Truth Headlam 11:53:18
Thank you for that introduction. So let’s dive into things. My first question for you is kind of to get a pulse on consumer demand. So can you tell me, for Oak motors, where consumer demands and sales seem to be trending? I understand oak Motors has five dealerships across Indiana. So I’m curious if you’re seeing any kind of break off for dealership or a consistent trend throughout them, and what might be contributing to that trend?Tiger Okeley 11:53:49Yeah, I think that on those topics that you ask about, I think demand is super strong across the board. You know, the price of cars, the price of new cars, brings more people into the use space, which drives prices of every price, price point higher. So inventory that maybe dealerships were not interested in the past still are bringing good value. Customers need vehicles, but we have seen customers really make decisions that say, is it the right time? Should I upgrade? Do I have to upgrade? And then what choices do I upgrade? And part of the problem with that is we’ve seen a deterioration of supply because so many vehicles have not been produced, and so many vehicles have not been bought the last few years, especially through the covid years, that’s just put a supply constraint on good quality used vehicles. Yeah.Truth Headlam 11:54:57
And so with that, can you maybe quantify where sales are coming in, either like this month, I know September just started, or maybe even from August. And maybe if you can give me a year over year change, that’ll be great as well.Tiger Okeley 11:55:11Yeah, we’re we’re relatively flat to down, and it’s really kind of by design, with cost being up. And for our industry, it matters less about how many you sell, and really how many do you get paid for. And so with you know, the price of funds, the cost of things, we really want to see customers be successful, so we don’t dip down as far, even though we’re a buy here, pay here, there are some customers that it makes more sense to do other transportation forms than it does to own a vehicle. So the market is brisk, but we’re just being a little more selective, so it’s relatively flat, but just a little bit down year over year, really focusing on, you know, can we make the trip with the customer, and can the customer be successful with us?Truth Headlam 11:56:08
Yeah. And just to clarify, you guys also deal in new vehicles as well, or is it just usedTiger Okeley 11:56:17all independent which is used?Truth Headlam 11:56:21And so getting into my next question, I’m certainly interested to hear you know your thoughts on this. On September 3, Cox auto dealer sentiment survey came out, and it revealed that dealer confidence was steady for q3 Facebook also dropped on September 3, and that showed that dealer sales were mixed, both in the new and used space, and deals were concerned about rising prices in both new and used vehicle markets, and how those rising prices could be curbing sales. So again, I’m curious like, what are your thoughts on that? And you know, does that tie in at all to what you’re seeing across open motors dealerships?
Tiger Okeley 11:57:03Yeah, I think it certainly does. And I think it does in a little different way. I would agree with that. I think that they are mixed. I think that there is some sediment out there and concern for pricing. But. And not just in our space, but across the industry. But anytime the industry is affected, we’re affected as well, because our our consumer is really looking for, you know, a less expensive option, something that fits the budget budget better, something that that is probably second or third hand, but still is quality and going to meet the customer’s needs, and anytime that there’s a price escalation above us that that ends with us having an escalated price as well, we still see a high level of demand. But it really is a question of a balancing act that says, is it the right decision for me, what’s going in my going on in my life? And not only is it, do I want one, but can we find terms that will work for the customer situation and for the dealership to be able to make that trip together.Truth Headlam 11:58:19Yeah, and then something that I think you touched on in your previous response, and still, this showed up in Beige Book as well, was the inventory constraint within the youth market, and how that could be leading to some of the trends we were just talking about. Um, you know, I would love to dive a little bit deeper into, you know, how that’s playing out across oak motors dealerships. And honestly, what do you think the future of the used vehicle market and procurement of cars for used vehicle dealers like yourself will look like, even moving into q4 and early 2026Tiger Okeley 11:58:59
you know, I think in the near term that you just described in q4 and early 2026 I think it’s going to continue to be similar to it is now. It’s it’s going to be difficult. It’s going to be doable. It’s not as easy. There’s not as many you just have to put in the work, and then you have to make decisions on what it is that you’re buying and what you’re willing to do to bring that level of product to the market, and who are you trying to deliver it to. So there might be some dynamic in what’s the model look like, what’s the typical vehicle that we sell? Maybe it gets stretched. Maybe, you know, we’ve seen new car stores sell vehicles that they would never would have touched before, off brands, vehicles with 100,000 miles, plus maybe even up to 200,000 miles, dealerships are looking to be able to turn a retail sale anytime they possibly can. The difference with us is we can’t just sell a vehicle, because we don’t get paid at the time that we sell it. We get paid over time. So our success is truly tied to is that customer successful, and so we’re more focused on not just sales, but how many people can we help actually make the trip?Truth Headlam 12:00:24Yeah, thank you for that, and then staying on the Beige Book lane. Just for one more question, at least dealers and auto repair shops reported an increase in repairs, and it seems that consumers are holding onto their vehicles longer. And I know we just touched on a another trend where dealerships that maybe primarily played in the youth space are, as you said, trying to sell a car wherever they can, and therefore dipping into the new space, the youth space, excuse me. And so with consumers holding onto their vehicles longer, and this trend in repairs increasing, you know, are you, have you seen anything similar, even if oak motors doesn’t do repairs themselves, and like, what? What are your thoughts on that?Tiger Okeley 12:01:14Yeah, we have seen that and and we do have service facilities for our customers, because, you know, at the end of the day, cars do break. They do need maintenance. Parts wear out, and so whenever you’re dealing with a mechanical product, there needs to be a little love and a little care that goes along with the trip. And especially, you know, even though we’re short term financing, you know, you still have the exposure of maybe a tire or brakes or an alternator or battery or things, things happen. But we’re seeing that also, people are holding their vehicles longer. Our customers are holding their vehicles longer. They’re using them more. They’re repairing them more often, and I think that that adds to part of the supply crunch. So you know, if a vehicle only has a certain finite life, no matter how well it’s taken care of, a. Uh, you know, the longer you use it before you share it with somebody else, the less you somebody else gets out of it. And so we’re running into that, and customers are running into that, and we’re seeing that as well.Truth Headlam 12:02:29 So now turning the conversation towards oak motors inaugural survey that came out in August. I’m would love to, you know, just hear a little bit of a summary about the survey, if you will. And also maybe what your top takeaways were from the survey.Tiger Okeley 12:02:48
Yeah, I think what drove that survey is, you know, coming out of covid. And you know, the time after covid, and now we’re a couple of years out of covid, and the the market and the climate and the culture all seems to have, you know, dramatically changed and, and I think that I don’t speak just for Oak motors, but I speak for the industry, and we’ve seen, you know, so many changes and so many movements. And I think that rates being higher, supply being short, prices going up, not just for automobiles, but for everything across the board and and I think that that we’ve seen, you know, a restriction in lending. You know, there’s not as much access to funds for everybody across the board, and even if you have access, the cost of those funds is higher. So we were feeling a little funky about that, and we wanted to get a take of how the customer is feeling about that. What are the consumers that are in our space, above our space, below our space? How are they feeling? How do they see? What are they thinking? How are they affected, and what are their plans as it relates to what we can do for them? So it was really eye opening, and we really are thankful for our partners that performed that survey to give us that information. Sure And whenTruth Headlam 12:04:29
it comes to the survey, one point that stood out to me, and this was probably one of the more auto specific points, was that 32% of the respondents, and again, for the listeners, there were just over 1000 respondents to the survey across the country. 32% of those respondents said that applying for auto loans is something that they avoided. And I know you just touched on some general like struggles of amongst the culture. But can you maybe expand on that? And you know, just maybe how that’s showing up in in, again, oak motors as a buy here, pay hair dealership, and even, again, on the broader market.Tiger Okeley 12:05:09Yeah, I think it’s, you know, really, what’s, what’s interesting is, I think that that, for whatever reason, people have a and it’s probably a good thing from a sense of they want to try to be better. They want to try to have a better credit score for whatever reason, whether they feel like something’s in error, or whether they they wish that. You know the the report showed a little bit more of character than maybe they feel like is represented by that. But there was a large number of, like you said, 32% that allowed how they felt about their credit score to stop them from applying, which probably meant that they were looking for either putting the purchase off relying on others to catch rides. Maybe they continue to do ride share, like an Uber or a Lyft. Maybe they continue to do public transportation. Maybe they made decisions around housing that said, you know, I need to be a couple of blocks from my job so that I don’t have to have a car and I need I can walk or, you know, in the grocery store and the kids schools and the things that I need to do. So it was very insightful to know that, you know, there are folks out there that are not applying, not trying, because they feel negatively about their own credit score, and those are the types of customers that really, you know, credit score does matter, but it’s not the total tail of the mix. And you know, that’s why we have, you know, devoted 40 years to serving that what we believe is an underserved market and providing them quality and affordable, dependable transportation.Truth Headlam 12:07:01
Yeah, so I was actually going to ask you about solutions, and it seems like you’re you’re touching on a little bit of that with oak motors mission statement, if you will. So I guess to the. The, I guess, biggest problems that the survey highlighted in in terms of how credit score is really impacting consumer choices for various purchases, including auto you know, what are? What are the solutions here? Is it only that buy hair, pay hair dealerships, you know, can can thrive in this environment. Or what are some other solutions that come to mind for you?Tiger Okeley 12:07:39No, I don’t think it’s, I don’t think it’s only Buy Here Pay her dealerships have opportunities. I think it’s, I think it’s it’s less about the opportunity for buy here payers, and I think it’s more about us always having a market, because I think that there’s always going to be some customers that, for whatever reason, even though they do a pretty good job, holistically, can’t get back on top of the mountain, or can’t be, you know, grade, a credit, it’s, it’s, it’s, it’s a tough thing to do, but, but I think that, You know some of the things that they can do is, whatever the transportation that they have now, make sure that they take care of it. So the more frequent the visits to the service facility, as we talked about earlier, the better it’s going to be, the more reliable it’s going to be, the less, the less large the repair bill is going to be because you can take one bite at a time. Instead of, you know, I have to eat the whole turkey in one sitting. I think that, you know, there’s some legitimate services out there for credit repair. There’s some educational services that say, you know, here’s how I can manage my money better, and I can start to actually communicate with whoever it is that I owe money. And if, if, if those bills don’t meet the budget, what arrangements can we make, and can we follow through with those arrangements, and anything that we can do to help support the consumer in building a stronger foundation financially for themselves, to improve the quality of their life going forward. And it’s not it’s not just cars, but it’s across the board. And certainly I will tell you that, you know, the service that we provide is not just transportation. We’re going to report payment activity to the credit bureau, so if the customer is doing what they’re supposed to be doing that’s going to get reflected on the bureau and that helps them improve their credit score. But as you know, just like going to the gym, you can’t go once a week, or, you know, twice a month. Or, you know, I went for one month, really heavy, and then I just stopped forever. It’s it just takes a little bit consistently doing the things that need to be done, and staying focused and staying diligent. And that’s where we want to partner with with with our clients and our customers, because if we can help them with that transportation piece, life gets a little easier, because they can get to the job easier, more reliably. They can do the things that they need to do. They can take care of the kids. They can take care of grandma that needs to go to the hospital. And those are the things that matter in life, right? And so if we can do just a little bit to help that along the way, that’s, that’s, that’s what we’re trying to do, yeah.Truth Headlam 12:10:34So with old motors, buy here, pay here model. I’m curious how your application volume has changed year to date, or even year over year. As you know, in some ways, as we’ve mentioned earlier in this conversation, consumers have been really strained financially and have not always had you know, the most easiest access to credit.Tiger Okeley 12:11:00
Sure, I think the biggest thing for us is so we’ve seen year over year pretty steady. In fact, I would say we probably have just a minor uptick in terms of of interest and applicants, but, but we’re not, we’re not approving as many. And I think the biggest thing is, as it relates to there’s, there’s an affordability squeeze. So as prices increase, if incomes or other debts aren’t taken into consideration, there’s, there’s just not enough left over to take care of the responsibility. And like I stated earlier, you know, we want to provide transportation to as many as we possibly can. But sometimes that means that the terms have to be modified a little bit for the applicant. Maybe their payment to income needs to be adjusted a little bit, and sometimes either the selections are not there because of quality or of reliability or of cost, or it’s possible that that consumer just is not ready because they don’t have enough down payment to be able to put that that monthly budget. It where it needs to be for the type of vehicle that they want. And I think that’s really the biggest thing is, you know, what’s the customer trying to do? Does it match what what we think is a successful plan? And if it is, then we generally come together. But a lot of times, because the customers either not prepared, not ready, or we give them education and information that says, if you can do X, Y and Z, come back and see us. I think we can. We can do business, yeah.Truth Headlam 12:12:49And in regards to, you know, the uptick you said you saw, but the, um, I guess, slow down in Oak motors, approval. Can you quantify that at all? Maybe, like, what that uptick is by a percentage, and the same thing for the either approval rate or rejection rate, whichever one you can provide.Tiger Okeley 12:13:09Yeah, I would say that generally, it varies per month. But on average, I would say that we’ve seen a seen about a 30% increase in applications. And I would say that, you know when, when you vet them all out, we’ve seen about a 20% decrease in sales. And that’s by design. Again, sales is where it all starts, but at the end of the day, if, if it is going to end up in a repossession, and especially in early repossession, you know, there’s things that happen in life. And 234, years down the road, those aren’t as difficult as, you know, one, two years and so, you know, our focus is on really trying to identify folks that have the capacity and the interest to be able to make the trip on a deal structure that that works for them and works for us. And so it’s, it’s really by design we could have, you know, buy your payers can sell as many as they want to sell. It really comes down to how many people can and will pay because we have to prove our worth every week. Customers pay us by the week, and if they stop paying us, it didn’t matter if we sold them a car, we didn’t get paid.Truth Headlam 12:14:32Yeah, and those numbers you provided, like the 30% for example, are the changes year over year, or is it year to date?Tiger Okeley 12:14:38Yeah, those are year over year. Yeah, there’s, there’s more applications this year than there were last year, for sure, cool.Truth Headlam 12:14:45And then I know you just started to touch on, like, how buy hair, pay hair works. So I would love to dive into that as we close out the conversation. You know, basically first, how does it work, and Why might it be an attractive model for consumers to lean into when it comes to procuring vehicles or in general?Tiger Okeley 12:15:09Yeah, I think it’s, I think it’s attractive if, if the customer is doesn’t have a lot of options for traditional traditional financing. And even if they do have traditional financing options, if they feel a little bit at risk, they’re probably going to feel a lot better about having a partner that’s vested in their success. So if I go to the new car dealership down the street and a bank finances me, those are two different transactions. The dealer got paid. The bank’s on the hook for the line. They want me to have full coverage insurance, and they want me to make my payments on time. And outside of that, there’s not a lot of program or assistance that they can give. Maybe they can give me a deferral, or, you know, give me a grace period for a late payment, or something like that. But with buy here, pay here and oak motor specifically, because we have that vested interest. You know, we have multiple product services that go along with our purchase that you know, we have 165 people in the organization that care about that customer being successful. Now, we can’t toe the line for the customer if the customer is not willing to do the work themselves, but if the customer is willing to do them work, do the work for themselves and just find themselves in a difficult situation, don’t know what to do and don’t have the resources to to help themselves, that’s what we do. I would liken it to if you know, if you were going to get a, you know, a yearly physical, you wouldn’t go to a cancer doctor, right? You would go to a GP. And so if somebody feels they’re at risk, or has been at risk in the past, or it hasn’t worked for them, the traditional financing, or they don’t have access to traditional. Financing. The buy here, the buy here, pay your model is, is the route for them to go, and that’s what makes it attractive. And then it becomes a selection process, because there’s lots of competition in the market. The customers have plenty of places to shop and plenty of places to buy, and they really need to do their homework, and they need to really see, what does the dealer and the financing arm do for them outside of just I get a car today? That’s the easy part. The hard part is, hey, four years from now, or three years from now, or however long that they finance it for, they get a title. Their credit is improved, their financial foundation is stronger, they build a relationship, and maybe they have more options and and a better jumping off point for the next transaction, and that’s what we can hope for.Truth Headlam 12:18:07Yeah, I like that kind of best practices tidbit you just gave there. So kind of looking forward into the future as if we had a crystal ball of sorts. Where do you see vehicle sales and demand for Oak motors, buy here, pay here? Model trending again in the near term, going into q4 and early 2026
Tiger Okeley 12:18:35you know, I really see us trending up from where we are. And I think it’s, it’s really all about through all the transition and change in the market, right? You have to find ways to be able to provide services easier, faster, more efficient, less cost, and we are no different. And, you know, we have taken really outside of just operating every day. We’ve got a great management team that that looks at, how do we become more efficient? How can we provide less cost, more quality, better product, and really kind of tweak the process to meet that you know right now. Customer hopeful experience right everybody wants it right now. You can get on your phone and get Google to tell you something right now. And so, you know, really working on technology and systems. I’ll even throw in the AI thing, even though it’s in its infancy. But, but how do we deliver a package that is just just even more seamless and and better, both for the consumer and for us as an operator?Truth Headlam 12:19:54Yeah, and kind of staying into the forward looking vein here, where do you see credit access trending, since that was essentially what your survey covered. And in addition to that consumer willingness to lean on credit as we go into, you know, the third quarter, q4 and again, early 2026,Tiger Okeley 12:20:18well, those are two, two very different questions, I think, and I think I think that I think access to credit is, is going to continue to be challenging. I think that as long as rates are high, the you know, there’s a lot of risk in our in our business, and there’s a lot of risk in a lot of businesses, and so risk demands a return, and so I think that that There’s going to be continued restricted access to consumers now on the consumers willingness to depend on credit, I think that there’s two different camps, but I think for the most part, our customer, and even north of our customer, is they’re going to continue to depend on credit for sure, because at the end of the day, as prices escalated, you know, I think what the average new price, card new car price now is, is, you know, close to pushing top 30s, maybe early 40s. And you know, people don’t have that kind of money to just walk into a dealership and pay cash and not have any payments, which is the best way to do it, if you can. And then it trickles down from there. And, you know, unfortunately, these days, even if you have five or $6,000 that’s a lot of money, but it doesn’t buy you a whole lot of car, and that car probably isn’t reconditioned and probably doesn’t have a lot of protection and a lot of value to it. And, you know, a lot of those cars may end up, you know, next week, the engines blown because you didn’t know that the head gasket was bad. So I think that’s a. But those two things are challenging, because I think consumers are going to continue to depend on credit, especially for large purchases, and I think access to credit is going to continue to stay a little restricted until rates come down. Well.Truth Headlam 12:22:31
Thank you so much for chatting with me. I really do appreciate the time you spent here diving into oak motor specific trends and, of course, broader trends across the automotive and credit industries. And thanks for joining us on the road map, and be sure to follow us on x and LinkedIn. Registration is also open for for our upcoming auto finance summit 2025 and power sports finance summit 2025 in the fall, as always, we will see you online at auto finance news.net, and here, next time you.