ATLANTA -

Equifax shared some details of a recent conversation the credit bureau had with the National Independent Automobile Dealers Association leading up to NIADA’s annual convention in Las Vegas. They touched on a wide array of issues, including access to financing for subprime borrowers.

Jennifer Reid, senior director of product marketing at Equifax, chatted with Scott Lilja, senior vice president of member services, to discuss the many challenges facing today’s independent dealers.

Reid: What obstacles and challenges do today’s NIADA members face?

Lilja: One challenge that's come up over the last five years has been access to clean, retail-ready inventory. When new car sales dropped off the cliff in '08 and '09, trade-ins fell, so there was no leasing activity — no off-lease returns. Leasing dried up and finance companies became very conservative and less aggressive in the leasing market. Used-vehicle valuations dropped, which put dealers underwater when those leases were turned in.

We saw a dearth of available inventory in auctioneering and dealer-to-dealer wholesale activity. So, dealers were really struggling to find the cars their customers wanted. It's starting to come back slowly this year, and by the end of the year, we'll have about 2.5 million off-lease units coming back. Next year, that will ramp up to about 3.5 million, followed by 4.5 million by 2016. New car sales have come back, increasing trade-in activity.

Reid: What about franchise dealer activity in the used retail market?

Lilja: Franchise dealers have really stepped up their activity around the older retail vehicles — five-year, 70,000-mile units. Used cars went from being a “stepchild” at new-car dealerships to a real ramp-up in activity and support in the last four to five years. Many of their new-car customers took a major hit in their credit profiles during the last downturn, so they migrated to older used cars. Using inventory management tools, many new-car franchise dealers woke up to the sizable gross margins in this segment. With all the transparency on the Internet about new-vehicle pricing, it has become very difficult to stop the erosion in new-car retail margins.

Reid: Has access to quality auto-finance resources improved?

Lilja: It's improved with the independent subprime providers. But the big national providers have pulled back and are much more selective and targeted as to who they’ll do business with. Here, Equifax dealer tools can help with risk mitigation, turning auto-finance paper more quickly, and potentially attracting additional auto finance resources to a dealership.