Wall Street volatility likely will prolong the auto industry's credit crisis through 2009, industry executives say.
And the pain is becoming intense.
U.S. dealers surveyed by Automotive News report greater difficulty and expense financing their inventories. They say it's getting harder and more expensive to find financing for buyers — even those with good credit.
Meanwhile, the cost of borrowing continues to rise for many auto lenders.
Worsening credit conditions have led one market forecasting firm to predict sluggish U.S. light-vehicle sales of 13.7 million units next year.
And in this shaky market, the credit crunch is dividing automakers' captive finance companies and dealer networks into haves and have-nots. The haves generally are large dealerships and captive lenders that work with import brands. The have-nots are smaller dealers and captives associated with the Detroit 3.
David Cosper, vice chairman of the public dealership group Sonic Automotive Inc., said the recent federal bailouts of such financial giants as AIG, Fannie Mae and Freddie Mac are creating "scary" credit conditions. Borrowing costs are rising even for creditworthy borrowers, he said.
"I have never seen anything like this," said Cosper, a former executive of Ford Motor Credit Co. "It is terrifying."