Presented by:
Hey everyone,
Welcome to the Market Pulse, your cheat sheet to auto retail, built to help dealers price right, stock smart, and stay ahead.
— CDG
First time reading a CDG Newsletter?
Payment extension requests have nearly tripled since 2023: They now run between 0.8% and 1.2% of active auto loans every month.
Deferred payments are compounding into thousands in added interest: For example, a 3-month extension can add ~$1,068 in lifetime interest.
Operators are finding margin elsewhere: Longer ownership cycles are opening up more conversations with buyers about service, warranty, and protection.
(Source: Finisight Auto ABS 2019–2025 / Custom CDG analysis)
Customers are extending their auto loan payments, and it's shrinking the equity they'll bring to their next trade.
Industry data from Finisight, drawn from auto loan-backed securities issued by 13 major lenders, shows that extension requests (customers choosing to push payments to the back of their loan) have nearly tripled from their post-COVID lows.
Take a look…
(Custom analysis via CDG’s Joe Cecala)
Why this matters: On a $25,000 vehicle financed at 12% APR for 72 months, the scheduled interest totals $10,197.
Add a 3-month extension, and that climbs to $11,265, or an extra $1,068.
A 6-month extension pushes total interest to $12,316, adding $2,119.
Put simply: Money that should have gone to principal didn't, which means when those customers come back to your store in 18 to 24 months, they show up with less equity, more upside-down debt to roll into the next deal, and less buying power overall.
NOTE TO DEALERS:
Brandon Hitchman, service and parts director at Oroville Ford, Toyota, and Chevrolet, made the case that closed deals deserve the celebration they get, but that deals that didn't close carry just as much useful information.
His advice: Regularly review deals gone wrong in a group format, not just as a manager/employee debrief, so every staff member knows what clues to look for the next time a deal stalls and how to read the customer's situation.
Repair bills are climbing, and customers are using their service contracts more than ever.
We know customers are stretching their loans and holding their cars longer. At the same time, the cost of keeping those cars on the road is rising, too.
Get this: A windshield replacement on a Porsche 911 recently ran close to $5,000, according to The Niello Company’s Sales and Finance Director Dennis Gingrich. He added that a tire for his own VW ID.4 lease came in at $416.
Naturally, more claims being paid out meant service contract providers had to raise their rates, which explains why Gingrich’s store saw a 40% premium increase on used-vehicle service contracts.
To his point, though, this is also a sign that customers are getting real value out of the products they bought.
WHY IT MATTERS:
The 40% premium increase becomes a greater problem in the F&I office if the manager can't explain what's driving it, which is why Gingrich's team pulled actual repair invoices from their own service drive and walked every F&I manager through them.
Once managers had specific dollar-amount proof to bring to every conversation, customers came to the table with more buy-in before the sale was even asked for, because the cost reality had already been laid out for them.
He said gross per car actually climbed from the low $2,800s earlier in Q1 to near $3,300, making it their best F&I month in a while.
A quick word from our partner
Inventory changes. Incentives shift. Your marketing should keep up.
Stream Companies helps dealerships build adaptable campaigns that stay aligned with real-time inventory, OEM programs, and shopper demand.
We connect data, creative, and media to drive measurable results, not just activity.
So when the market moves, your performance doesn’t drop.
If you’re ready for marketing that moves with you, let’s talk.
In my conversations with Gingrich and Hitchman, both had specific thoughts on how to spot extension-stressed buyers, rebuild the F&I pitch around rising costs, and turn longer ownership cycles into service drive revenue.
Here are their Dos and Don’ts from the floor:
Do: Open the F&I conversation around what it costs to own a car right now.
Every customer walking in already knows gas is expensive, knows their new payment is higher than the one they're leaving, and has probably already paid for something that surprised them under the hood.
"People are starting to hang onto their cars a lot longer because there [isn’t] a large selection of affordable options anymore. So the affordable option then becomes properly protecting your vehicle and having it maintained so you can have it for longer than you probably ever have."
Dennis Gingrich
By the time the menu comes out, the customer has already agreed to the premise, making the F&I sale a logical next step.
Do: Track which lenders are closing the deals your captives can't.
Gingrich's store also runs a weekly contracts-in-transit call where managers can see which lenders are taking deals and at what terms.
"Most everybody just really pushes into their captive when it comes to leasing, but we find a handful of deals per month where, instead of using Land Rover Financial, there are certain models that will lease out better with an Ally or a US Bank, and that just comes down to the management team knowing the different programs, looking at the residual, looking at the rates, and just trying to hit a payment mark."
Don’t: Confuse a busy service drive with a profitable one.
As customers hold their cars longer, the service drive becomes a bigger piece of overall dealership profitability.
"How much of your VIO are you retaining profitably? You could go down the route of giving away free oil changes and doing all that stuff and padding that number, but does that really help you in the long run?"
Brandon Hitchman
A customer holding a car for four or five years instead of two is a service customer, a warranty customer, and eventually a trade customer with a well-documented history at your store.
The question is whether you're set up to capture all three chapters or just the last one.
The latest updates to the CDG Buy/Sell Tracker.
Brandon Steven Motors acquires 12 Maryland dealerships in deal worth nearly $500M
