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Avoiding the Fiscal Cliff Impact for BHPH

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Avoiding the Fiscal Cliff Impact for BHPH

By David Meyer, Executive VP


By all reports, things are looking good for the BHPH industry. 2012 saw a significant increase in car sales, including pre-owned vehicles, as well as the value of those sales. With credit loosening up, BHPH dealers are able to yes say to more car-buyers with credit challenges — another big boost to vehicle sales.

So how’s it looking now that we’re into 2013? While vehicle sales and subprime loans still seem to be on the rise, there is one looming issue that could put a wrinkle in our rosy outlook: the fiscal cliff.  On New Year’s Day, Congress passed a bill to avert our nation’s plunge off this much-feared precipice. Whew. But that doesn’t mean we’re entirely out of the woods.

In exchange for avoiding the fiscal cliff, Americans are looking at larger tax bills and smaller paychecks. According to CNN Money, over three in four Americans will pay higher taxes for 2013. In fact, the Tax Policy Center predicts that 77% of tax filers will pay more this year — an average of $1,257 per filer, to be exact.

Another concession Congress made to avoid the fiscal cliff was ending the payroll tax holiday. Most of the nation’s workers will see smaller paychecks, as wager earners are asked to foot the bill for the full 6.2% in payroll taxes — up from the 4.2% they’d been enjoying the past two years. This translates into roughly $50 less per monthly paycheck for workers earning $30,000 annually, and $189.50 less per month for those earning $113,700 a year.


Combined, these tax increases and paycheck decreased amount to no small change for most people, especially those consumers already struggling with credit issues. But that’s not all. Congress’s New Year’s resolution to the fiscal cliff is just a stop-gap measure. Looming ahead are the nearly $12 billion in spending cuts the Senate plan is calling for. Come February, Congress will also need to address the debt ceiling so that the U.S. can continue to pay its debt obligations. We have yet to see what impact these two issues will have on the economy and consumers’ pocketbooks.

So what does all this mean for BHPH dealerships? Simply this: Already credit-challenged consumers who are buying vehicles with subprime loans will be tightening their belts even more. This may cause more borrowers to miss their car payments. Add to that the expected delay in tax returns, and you’ve got a less active tax season which could mean fewer sales at BHPH dealers.

But amidst all this gloom and doom, there is good news. BHPH dealership do have an effective way to help cash-strapped credit-challenged customers stay on track with their payments, while also continuing to confidently offer subprime loans at competitive rates.


Spireon’s GoldStar GPS and Enfotrace GPS Vehicle Tracking Systems offer BHPH dealerships a simple, affordable and powerful tool for reducing delinquencies and defaults, cutting the time and costs associated with recovery and repossession, and changing borrower behavior. These easy-to-use solutions allow you to track the location and movement of vehicles in real-time. They even include a remote starter disable feature that lets you to disable delinquent vehicles. All of which makes it easier and faster to repossess those vehicles when necessary.

Beyond real-time tracking and vehicle recovery, GoldStar GPS and EnfoTrace GPS provide effective tools for promoting on-time payments. The systems send customers automated reminders and alerts that let them know when a payment is due or overdue. And consumers actually appreciate this feature. A recent study reveals that over 80% of consumers who had embedded telematics solutions stayed on track with their payments, and many of these saw an improvement in their overall credit rating. So in addition to helping them rebuild their credit, you’ll be turning them into higher-value car-buying customers. Win-win.

Bottom line is: Yes, the BHPH market should be ready for a dip in sales and an increase in delinquencies as a result of higher taxes, smaller paychecks and economic uncertainty in the months ahead. The best way for BHPH dealerships to protect their assets and their profits is by integrating systems like GoldStar GPS and EnfoTrace GPS into their dealerships strategies. Ask us how.

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Recent Bloggers

  • Corinna Tutor
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  • David Meyer
    Executive Vice President, Sales & Services Automotive Solutions
    Spireon, Inc.
  • Neil Fisher
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    Spireon, Inc.