“The auto market is entering into a true recessionary phase, which is something we have not seen in the last 10 years,” said Bob Schnorbus, the firm’s chief economist.
With consumers short of cash and deep in debt, many prospective buyers are finding it difficult to secure financing for a new car. Automotive finance companies are fearful of repeating the mistakes of subprime lenders in the housing industry and are generally declining to make risky vehicle loans.
“We are faced with the dilemma of lowering our credit standards to put them in a car, or saying no,” said Michael J. Jackson, chairman of AutoNation, the largest auto retailer in the United States. “And we’re telling them no.”