Lenders ‘Feel the Pressure’ Post-Recession

canstockphoto11426495Lenders are beginning to feel the pressure of increased production capacity as the powersports industry speeds towards complete recovery, post-recession, Scott Yarbrough, editor of Black Book Official Motorcycle & Powersports Value Guide, told Powersports Finance.

While the recession occurred seven years ago, the industry still hasn’t recovered to the same level it was pre-recession, Yarbrough said. “It seems like a long time, but I think it’s taken that long to get back to a more normal thought process.”

As the industry recovers, and consumer demand rises, manufacturers have increased production capacity, he said. “A lot of businesses and manufacturers are putting out more units now [which] puts more pressure on the captive side to get those units out there.”

As the economy picks up, financial providers are also lightening up their lending standards, Yarbrough said. The market has reached “a more normal equilibrium level,” and “everyone is loosening up as things behave more traditionally,” he added.

Some companies are also expanding their powersports lending, such as Yamaha Motor Corp. USA, which revved the engine of its new captive — Cypress, Calif.-based Yamaha Motor Finance Corp. — when it piloted operations with a small group of California dealers in March 2015.

“You are definitely seeing more people enter the market, more people lending, and the way you have to compete is to go a little bit lower on your lending than you typically had been,” Eric Lawrence, Black Book’s director of specialty products, told Powersports Finance. In short, “you can’t make money if you don’t make loans,” he added.

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