Mmmmhmmm, feels like the 70s again!
Bloomberg: Capital One Financial Corp., the lender that raised $200 million in September to cover future losses, said it will end financing of auto dealers’ inventories in New Jersey and New York later this month.
Capital One will keep financing dealers in Louisiana and Texas, where it also has banking offices, spokesman Steven Thorpe said today in an interview. McLean, Virginia-based Capital One in August notified about 20 dealers that will be affected.
The decision will put pressure on new-car dealerships, which according to the National Automobile Dealers Association already face a rise in closures of as much as 40 per cent this year. Retailers are paying higher interest rates to get cars on their lots, shrinking profit margins, said Sheldon Sandler, chief executive officer of consulting firm Bel Air Partners.
“It’s a defining moment when Capital One gives up the ghost,” said Sandler. His firm in Skillman, New Jersey, advises auto retailers. “Banks are seeing the bottom fall out of the dealership business and they don’t want to be caught sitting there owning a bunch of Chevys, instead of getting cash.”
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