I almost missed James Surowiecki’s recent New Yorker piece on how auto dealers and brokers affect Main Street loans and consumer credit ratings.
Overheard at a Saturday coffee shop: a 25-year auto veteran explained how wholesale intermediaries ‘source’ cars from gullible customers and sell them to auto dealers and car yards for mark-up. The veteran noted the existence of a little-known — to the general public — shadow market that kept the dealers’ variable costs down, secured a steady supply and created enough stock to ensure profitable margins on loans and consumer credit despite the default risks. “I get up to 60 calls a day,” the veteran observed. “I’ve been in the business so long, I don’t know what to do.”
The conversation then turned to the veteran’s Nokia phone and the antenna flaw in Apple’s iPhone 4. “I’ll be waiting a few months until the problem is fixed,” the veteran said. “Apple probably fixed it 12 weeks ago and is waiting for new stock: the phones may be slightly different in 5 to 6 months when the initial stock is sold,” a friend replied. “I don’t want a phone with a free case,” the veteran countered. “My wife made me get this phone so she could keep tabs on me.” Everyone was on ‘the grift’.