Subprime...coming into its prime?

One of the things we're noticing out here at NADA is the rise in dealers interested in finding a unit that can help them with their subprime business...that is, cars sold to people with poor credit. There seems to be an increase in the subprime end of the business for car dealers right now, and one of the biggest catalysts seems to be the collapse of the subprime loans in the housing business. "A lot of middle and lower-middle class people have had their credit damaged by the subprime mortage mess," one dealer told me, "and those people still have to have a car to get to work."

The result is that some people who would have traditionally qualified for traditional loans are now falling into the subprime -- or "nonprime" as it's sometimes called -- category. They're buying used cars and paying higher interest rates, and the dealers are all looking for devices that can help them track and monitor the vehicle if there is a default. Of course, you can't just slap a GPS device in the car and start tracking your customers' whereabouts. Along with the privacy issues, there are also disclosure requirements (ie, you have to tell them it's in the car) and fair lending concerns (e.g., do you put a device on every car you sell or just the ones with reaaally bad credit). For the companies that can navigate those tricky obstacles, though, this will be an emerging opportunity.