Consumer confidence plunged to an all-time low this month, according to Conference Board data released today. The January reading came in at 37.7, down from 38.6 in December.
To put things in perspective, the Consumer Confidence Index was 110.3 in January 2007 and 87.9 in January 2008.
For months, consumer confidence — or the lack thereof — has been blamed for low vehicle sales figures. Consumers are just too wary about their jobs, home values, and retirement funds to even step foot on the showroom floor.
But it seems to me that announcements like today’s consumer confidence data just exacerbate the problem. When consumers hear that confidence is at a record low, they are even less inclined to purchase a vehicle.
Which leads me to another point: At the NADA Convention this week, I had the pleasure of talking to senior executives at some of the nation’s largest auto finance companies. We talked about the outlook for 2009, origination volume, loss rates, and risk management, among other things.
Frank Armstrong, president of World Omni Financial Corp., offered a unique perspective on the consumer confidence problem. He proposed an interesting social experiment: For the next 60 days, media outlets should report only good news about the economy and prospects for recovery. No doubt, consumers would take heed, he reasoned.
Though I’m fairly certain we won’t be able to get this experiment off the ground nationwide, it seems like a perfect opportunity for the auto lending community to reach out to existing customers and potential car buyers. Let them know you’re around and open for business. Maybe offer existing customers a “referral fee” for bringing in new business. Create a buzz around your company and the financing opportunities you provide. A concerted effort industry-wide should get consumer confidence moving in the right direction.