Bank PO = Discount from Dealer

[uls]

The point being is that the bank has all the leverage in the transaction since without bank financing, the usual buyer would not be able to buy the car. Trying to get a little extra more profit for the bank in the form of a
fleet pricing scheme would be the norm.

You the dealer, would have to play nice with banks since without them, the car selling business would grind into a halt as it did in the US in mid-2008 to 2009 during the credit crunch.

My observation of the local market here is that Auto companies are also more reliant on loans to propel sales and that the new cash buyer is few and far between.

During my negotiations with the dealer, many have intimated that if my company bought a fleet (more than 1) car at the same time, then I would get a discount. Why would not banks have the same kind of deal?

BTW, the deal is between BPI and a non-Ayala provincial dealer.

Like I said, I will post the docs once I get it back.

from the start palang, i already understand your point

your view is different from mine

your view is the car dealers need the banks more than the banks need the car dealers

your view is car dealers have to kiss the banks' ass coz without the banks, car dealers can't sell cars

i fully understand your view ok?

my view is different

my view is the banks need the car dealers

the banks are the ones who have to kiss the dealers' ass

banks need to make loans -- that's their main business. to make loans, they need borrowers. lots of borrowers.

car dealers provide banks with a steady stream of borrowers

ask any banker... they'll tell you car loans make up a large part of their loan portfolio

that's why banks reward dealers with dealer's incentive

to encourage dealers to give them more customers

the last thing the banks wanna do is discourage dealers from doing business with them

the banks wanna make the experience of doing business with them as worthwhile as possible

that's my point

i understand you but you seem unwilling to open your mind to my view

i know what happened in the States

i know all about the credit crisis

ako pa

--

iba dito sa Pinas

a lot of people here buy cars in cash

in the US, there are almost no cash buyers

dito madami-dami

yes, car dealers need the banks

but i think the car dealers here can survive even without bank financing

[uls]

During my negotiations with the dealer, many have intimated that if my company bought a fleet (more than 1) car at the same time, then I would get adiscount. Why would not banks have the same kind of deal?

in a car financing transaction, the banks are not the car buyers

the customers are the car buyers

the banks are NOT the customers in the transaction

a bank is a fleet buyer when a bank buys a fleet of cars for its own use

that's when a bank is considered a customer

[Galactus]

Double post

[Galactus]

ask any banker... they'll tell you car loans are a large portion of their loan portfolio

that's why banks reward dealers with dealer's incentive

Jeez, there's a lot of patting-themselves-over-the-back here.

I work for a bank/financing company. And I can tell you from real experience that auto loans do not form a large portion of a bank's loan portfolio. They generate revenue more from traditional lending (commercial loans), although consumption loans (which include auto loans), do form a sizeable portion.

Actually, some KB's and savings banks don't even engage in auto loans. Too risky (as in our case), so we've limited borrowers to those within the group employees. And the auxillary services related to managing the portfolio (filing cases, repossession and warehousing expenses, etc.) can be staggering. We did explore the option of setting up and talked to several dealers. And from our experience, certain concessions on both sides were demanded and given. Everybody won. Too bad the negotiations fell through.

i understand you but you seem unwilling to open your mind to my view

i know what happened in the States

i know all about the credit crisis

ako pa

Great. Just what the world needs. A Mister-know-it-all.

Everybody's an expert after the fact. A Ben Bernanke-Joseph Stiglitz-Edward Prescott-Paul Krugman-Robert Barro-"Peter Schiff" all rolled into one.

What a crummy life we lead. Ho-hum. Pity the ignorant masses.

Even those people would be the first to claim they don't know everything about the crisis.

And yet here in our backyard, lies the Economics Messiah.

All hail!

[shadrach]

from the start palang, i already understand your point

iba dito sa Pinas

a lot of people here buy cars in cash

in the US, there are almost no cash buyers

dito madami-dami

yes, car dealers need the banks

but i think the car dealers here can survive even without bank financing

Without an actual breakdown on the percentage of car sales that is financed vs cash transaction, I can't agree with your view.

What I see daily and the promos offered by car companies to get the majority of Filipinos to buy cars is based on the finance model.

Given the small segment of the truly rich in this society, I doubt that car dealers would survive without financing just catering to the less than 5% of the population who can afford to always pay cash.

[boybi]

Jeez, there's a lot of patting-themselves-over-the-back here.

I work for a bank/financing company. And I can tell you from real experience that auto loans do not form a large portion of a bank's loan portfolio. They generate revenue more from traditional lending (commercial loans), although consumption loans (which include auto loans), do form a sizeable portion.

Actually, some KB's and savings banks don't even engage in auto loans. Too risky (as in our case), so we've limited borrowers to those within the group employees. And the auxillary services related to managing the portfolio (filing cases, repossession and warehousing expenses, etc.) can be staggering. We did explore the option of setting up and talked to several dealers. And from our experience, certain concessions on both sides were demanded and given. Everybody won. Too bad the negotiations fell through.




Great. Just what the world needs. A Mister-know-it-all.

Everybody's an expert after the fact. A Ben Bernanke-Joseph Stiglitz-Edward Prescott-Paul Krugman-Robert Barro-"Peter Schiff" all rolled into one.

What a crummy life we lead. Ho-hum. Pity the ignorant masses.

Even those people would be the first to claim they don't know everything about the crisis.

And yet here in our backyard, lies the Economics Messiah.

All hail!

Let's hear from the horse's mouth since Galactus is working for a bank/financing company:

Do banks get discounts from car dealers for financing it for a car buyer?

[jmpet626]

from the start palang, i already understand your point

your view is different from mine

your view is the car dealers need the banks more than the banks need the car dealers

your view is car dealers have to kiss the banks' ass coz without the banks, car dealers can't sell cars

i fully understand your view ok?

my view is different

my view is the banks need the car dealers

the banks are the ones who have to kiss the dealers' ass

banks need to make loans -- that's their main business. to make loans, they need borrowers. lots of borrowers.

car dealers provide banks with a steady stream of borrowers

ask any banker... they'll tell you car loans make up a large part of their loan portfolio

that's why banks reward dealers with dealer's incentive

to encourage dealers to give them more customers

the last thing the banks wanna do is discourage dealers from doing business with them

the banks wanna make the experience of doing business with them as worthwhile as possible

that's my point

i understand you but you seem unwilling to open your mind to my view

i know what happened in the States

i know all about the credit crisis

ako pa

--

iba dito sa Pinas

a lot of people here buy cars in cash

in the US, there are almost no cash buyers

dito madami-dami

yes, car dealers need the banks

but i think the car dealers here can survive even without bank financing

Ganitong ganito yung article na nabasa ko sa top gear (issue feat kia forte). Malaking percentage din ang mga financed cars.

[uls]

Great. Just what the world needs. A Mister-know-it-all.

Everybody's an expert after the fact. A Ben Bernanke-Joseph Stiglitz-Edward Prescott-Paul Krugman-Robert Barro-"Peter Schiff" all rolled into one.

What a crummy life we lead. Ho-hum. Pity the ignorant masses.

Even those people would be the first to claim they don't know everything about the crisis.

And yet here in our backyard, lies the Economics Messiah.

All hail!

hehehe

after typing that, i know i sounded...

i wanted to re-word it but then decided not to

just wanted to see if there's gonna be violent reaction

hehehe

peace

[Galactus]

Let's hear from the horse's mouth since Galactus is working for a bank/financing company:

Do banks get discounts from car dealers for financing it for a car buyer?

Well, as I've said, negotiations fell through. We just offered car loans to employees of the group (totalling over 1,000 employees), but we were only able to market it to less than 10% of them, mostly used cars pa, or pre-owned company vehicles, hehehe.

On our side (bank/finance), we demanded exclusivity or near-exclusivity agreements, kami lang ang magfi-finance, pero almost always, di pumapayag ang dealer, ala in-house financing. They wanted the customer to have wider and better financing options, so parang free-for-all.

To answer the question directly, I believe there is no clear-cut answer. Various dealers, especially independent ones (those not owned by local zaibatsus or chaebols ), get varying concessions. Ibang usapan na yan pag Ayala-owned dealer tapos Ayala-owned bank ang magfi-finance, uso talaga ang intercompany transactions.

But it may be equated to credit card accreditations. Merchants, in exchange for the use of POS cc machines and an alternative form of payment, give the banks "commission," ranging from 3 to 8%. Kaya merong surcharges noon (actually kahit ngayon, despite the law banning it).

[dgreyt]

Do you have to pay the DP first before the bank issue the PO the dealer?
What are the requirements?