On December 24, Standard Poors Rating Services downgraded the five top publicly traded dealer groups based on industry wide pressures rather than on individual company performance.
Additionally, the agency predicted sales of light vehicles in the U.S. to fall to 11.1 million during 2009, which would be the lowest level recorded since 1982.
In a statement, Standard Poor's said, "We expect 2009 new vehicle sales to decline 15 percent, to 11.1 million units at best, from already depressed 2008 levels. Considerable uncertainty exists about the duration and depth of the downturn."
The largest dealer group, AutoNation headquartered in Fort Lauderdale, Florida was rated BB+, a non-investment grade commonly called "junk bond" status.
"Longer term, large retailers such as AutoNation are likely to benefit from the rationalization of weaker dealers, but in the near term, financial performance will be pressured," said Standard Poor's.
The action came before GMAC was approved as a bank holding company by the Federal Reserve, giving it access to government lending programs. It is not known if that approval would have altered S P's rating.
The approval came as good news for GM dealers in North America where GMAC, as recently as Sept. 30, was providing dealership inventory financing for 80 percent of GM vehicles around the world as well as serving as a major source of retail financing, accounting for 42 percent of G's loan and lease volume for North American dealers.
0 comments
Post a Comment