You Say Good-Bye, I Say Hello
If there are any journalism professors out there reading this, then they’ll probably stop once they see me start this blog post with a cliche. But hey, if the shoe fits….
There’s an old business maxim that says the best time to start a business is when the market is at its lowest point. Conversely, the best time to get out is when the market peaks.
Cliches aside, there seems to be some confusion in the auto finance industry about what to do when the market appears to be tilting upwards, but with some fears that it could still topple over.
To wit, two financial institutions — Associated Bank and Cornerstone Community Bank — have announced their exit from the indirect auto finance business, while two other financial institutions — California Republic Bank and CarFinance.com — have announced their entrance into the auto finance industry.
What to make of arrivals and departures occurring concurrently and this not being an airport or a revolving door showroom? That’s hard to say. Each institution uses its own process for determining whether to enter or exit a marketplace.
Neither Associated Bank nor Cornerstone Community Bank was a major player in the auto finance industry. Neither institution ranked among the 100 largest auto lenders, according to the Big Wheels Data Report published by Auto Finance News, a sister publication to AutoFinanceNews.net. Neither institution relied heavily on the auto finance unit to drive revenue or profits. But the carnage appears to be in the rearview mirror. While there is still a chance of an aftershock, all economic and sales data point toward an industry that is moving forward. Why exit now? Loan sale prices are still well off historical highs, yielding little incentive for the institutions to sell their auto loan holdings. Other lending markets — such as mortgages, credit cards, and student loans do not appear to be as poised as the auto finance industry for a significant growth spurt.
To California Republic Bank and CarFinance.com, a hearty welcome and best wishes. Hopefully, they have timed the market correctly and are getting in just as the auto finance industry begins its upward growth trend.
Given the cautious optimism in the auto finance industry, is now the right time to get out? Or the right time to get in? Or both?
