Experts say new-car sales will keep growing this year. Dealers expect there to be plenty of credit available. Most lenders seem to have a realistic loan-to-value ratio, which means they are willing to finance aftermarket products. But 2013 may still pose challenges in the F&I office.
That's because most customers won't have that extra $100 a month in their paychecks to cover an extended-service contract or paint protection policy like they had last year. Congress struck a deal to keep the country from going over the fiscal cliff. And while the legislation will keep broader middle class income taxes from rising, most workers will still have to pay at least 2 percent more in payroll taxes.
According to CNN that means most of the nation's 160 million workers will see monthly paychecks shrink by $50 for those earning $30,000 annually. The tax hike will shave $189.50 a month for those with incomes of $113,700. The ding in income is probably not enough to stall car sales. But it could give many consumers pause when mulling pricey add-ons in the F&I office.
And consider consumer jitters. The consumer confidence index measures the public's sentiments each month. It sank six points in December, a huge turnaround from October, when the index reached a four-year high. Between Oct. 30 and Dec. 24, prime holiday shopping time, consumers spent less than 1 percent more than they did during roughly the same period in 2011, according to a MasterCard Advisors SpendingPulse report. In 2011 the period had a 2 percent sales gain.
That being said, you just know that F&I managers will find ways to overcome these economic obstacles.
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