The latest dealer survey orchestrated by KeyBanc Capital Markets showed participants ended up being evenly split when describing credit availability to their customers.

According to the survey conducted in December, KeyBanc found that 50 percent said credit availability remained intact during the fourth quarter with the other 50 percent stating auto financing loosened.

That availability appeared to help dealers generate more gross profit in their F&I offices. KeyBanc reported that 80 percent of participating dealers enjoyed a rise of about $50 per unit year-over-year during Q4 with the remaining stores saying their F&I gross per unit stayed relatively flat.

What dealers told KeyBanc reflects how important credit availability is. Cox Automotive chief economist Tom Webb reiterated the point, too, when he conducted his quarterly conference call at the beginning of January.

“Certainly No. 1, retail credit is the lifeblood that keeps the used-vehicle market moving,” Webb said. “It has been extremely favorable throughout this recovery. I think it pulls back a little bit this year, but still to the net positive. We couldn’t have gotten any better than where we were.

“I think interest rates overall will be showing a bit of an uptick. But as the only saying goes, ‘It’s the availability of credit, not the cost of credit,’” he continued. “If there is a little bit of steepness in the yield curve, that actually promotes lending. I do believe portfolios will continue to perform extremely well because of stability in the labor market. We’re actually getting some wage increases, which I think will be better in 2017 than they were in 2016. That’s a very positive thing for portfolio performance. When those loans are securitized, I think they’ll still offer investors a very nice risk-adjusted reward; therefore money will flow.

“Overall I’m looking at it to be a positive market this year,” Webb went on to say.

Dealers evidently agree with Webb as KeyBanc’s survey showed the upbeat sentiment for performance of their used-vehicle departments.

“Used-car trends remain favorable as used-car gross per unit appears to have bottomed out as an average of 60 percent of respondents reported an increase of more than $50 in the quarter,” KeyBanc said.

“And we believe we are approaching a near-term inflection point based on our used-car gross per unit index trend, in part driven by easing year-over-year comparisons,” the company added.

While not mentioned in the KeyBanc report, Webb briefly touched on another part of the dealership operation that has to do with financing. While not giving a specific figure, Webb said the impact of an uptick in interest rates likely means the cost of a dealer’s floor plan is likely to edge higher, as well.

“Most dealers do a very good job of following the velocity theory. They do maintain that inventory turn so it shouldn’t be a major burden,” Webb said. “It would only be a burden for those dealers who have not caught up to the fact that you really do have to turn your inventory.”