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Tom White theory of natural selection in show- rooms and on gravel lots across Amer- ica. "It certainly shook out the tree," said Radrigan of the recession. "In general, if you weren't strong going in, you didn't make it." An automotive sector revving on all cylinders in 2005 was a sputtering jalopy by 2009 as literally thousands of new and used car dealers locked their doors for good. Those left standing faced dried-up credit from third-party financiers cautious of less- than-prime borrowers. "It was supply and demand," Radrigan said. "Either they didn't have the money to lend or they tightened up credit criteria." The U.S. jobless rate during the recession peaked at 10 percent in October 2009, double the rate of just 18 months prior. "And if you weren't (unemployed), you were terrified you would be," explained the president of the Venice, Fla., auto credit company. That led to the auto industry's darkest days since 1982, the last time annual new car sales were below 10.6 million units. Also in 2009, used cars moved at their slowest pace since the Reagan administration. But three years later, subprime financ- ing has stepped to the fore in moving cars, both new and used. "A lot of dealers (had) gotten away from special finance … mainly because it's harder," Schonauer said. But "people are starting to get back in because banks are starting to lend." However, the economy is still unstable, and with the financial sector buying more and more subprime loans, some are wary of the possible consequences—a bub- ble in automotive market similar to the one in the housing market which triggered the recession when it burst. "A survey of financial company executives indicate that their concern is that the (finance) industry is quickly forgetting its lessons of four years ago … and people will hit the wall," explained Goebel in the opening session of the special financing tract of the convention. However, auto loan collections are better than ever before, he added. That is in part because finance com- panies still spooked by the economy's tenuous recovery have stuck with strict guidelines for borrowing, ensur- ing a high rate of collection and funneling deep-subprime buyers to the end of the line for purchasing a vehicle—dealer-controlled financing. Dealer-controlled Financing BHPH and LHPH lots have allowed those with blemished credit profiles to get into their first car or finally trade up after years of dependency upon an aging vehicle. Even in the unhealthiest of economic environments dealers have been moving cars to high-risk borrowers. "I'm in Ohio, and we were just dead (economically) for a long time," said Schonauer, whose Whole- sale Motor Cars store offers in-house financing. "BHPH has always been strong." Unemployment in Ohio held steady at 10.6 percent for the last half of 2009 before slowly easing. Even new-car dealerships are beginning to dabble in BHPH and LHPH, but used car retailers who spe- cialize in dealer-controlled finance rely on the riskiest of deals, those cus- tomers with the rockiest of credit.. "If you had good credit you could always get a loan," Radrigan said of auto financing even at the height of the recession. Prior to the downturn, it seemed no one was turned down for an auto loan, leading to a costly edu- cation for many used car dealers. Schonauer offered that lesson has changed BHPH/LHPH dealerships. "If you're trying to run (your store) like you did five years ago when people approved every piece of paper that came across (their) desk, you're going to go broke." Ingram Walters, a panelist alongside Radrigan in a BHPH tract of the sub- prime conference, agreed. "There's nothing complicated about buy here pay here, but it's not easy." The owner of BHPH dealerships in the Carolinas has been in the business for years, through the ups and downs. "It's a good business even in a bad econ- omy," he told dealers gathered on the final day of the Industry Summit. But, the game must be played wisely. 26