Low-interest rates propel industry sales
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More than one of every 10 new cars and light trucks vehicles sold in the United States in August was financed with a zero-percent loan. |
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U.S. light-vehicle sales rose 20 percent in August to their highest pace since August 2009. One primary driver behind the surge: low interest rates and favorable financing terms.
Since the downturn, Federal Reserve officials have kept interest rates low to spur economic growth.
More than one of every 10 new cars and light trucks vehicles sold in the United States in August was financed with a zero-percent loan. That's the highest percentage of interest-free auto loans of any month this year, according to Edmunds.com.
During the first eight months of 2012, 8.5 percent of industry sales were purchased with zero-percent financing.
Analysts and experts react to the impact low interest rates are having on industry new-vehicle sales:
"August new car sales show the influence of the 'three i's:' low interest rates, ample new vehicle inventory and boosted incentives. Fed Chairman Bernanke suggests low interest rates will remain in place for new car sales for 2013 as well. All of these factors support higher rates of growth of light vehicle sales growth this year and next."
-- Paul Taylor, chief economist at the National Automobile Dealers Association
"Those factors combined, plus the current very favorable purchasing environment, including fuel-efficient new products and the very low auto financing interest rates, all contributed toward an environment to purchase a vehicle."
-- Sue Yingzi Sue, GM's senior economist, noting signs of employment growth, a nascent recovery in the housing market and pent-up demand as drivers of August sales.
"This is the best of both worlds ... automakers can offer low interest-rate programs at little cost and consumers can take advantage of these offers and get a lot of car for their money."
-- Jesse Toprak, analyst at TrueCar.com.
"Low interest rates on new vehicles have helped to keep sales strong by enticing those buyers considering used vehicles to purchase new. While helping drive new-vehicle sales in the short term, we believe used-vehicle values will begin to ease early in 2013 as lease return volume increases at auction and dealers continue to source inventory from trade-ins. Declining used-car values will not send industry sales into a tailspin; however, it will make selling new vehicles more difficult as consumers are able to find more affordable options when shopping for replacement vehicles."
-- Alec Gutierrez, senior market analyst of automotive insights at Kelley Blue Book
