DETROIT -- Fiat Chrysler Automobiles’ head of U.S. and Canadian sales says loose credit terms will continue to drive new vehicle sales, even as pent-up demand dwindles in a recovered U.S. economy.
Reid Bigland, 47, who also serves as head of the automaker’s Canadian operations and the North American head of the Alfa Romeo brand, predicted that loan terms would continue to expand.
Bigland told the Automotive News World Congress that extended amortization periods -- stretching to 84 and even 96 months -- are “a very powerful tool to make big-ticket items more affordable.” But he said that while 96-month auto loans are becoming more common in Canada, the U.S. is “still trying to wrap its head around 84-month loans.”
Bigland said some previous drivers of new vehicle sales -- specifically pent-up demand and a recovering U.S. economy -- are no longer pushing new vehicle sales as they were.
“Pent-up demand has largely run its course,” Bigland argued, saying that consumers who have been hanging around dealerships since 2011 without buying a new vehicle aren’t customers, “They’re stalkers.”
He also said that both consumers and lenders have realized the “versatility” of an automobile versus a home, and adjusted their spending accordingly.
“Banks have realized that, even during the depths of the recession, consumers were willing to make their car payments even more than they would their house payments,” the Canadian executive said. “It’s very difficult for somebody to function without a car. It’s difficult to get to school, to get to work, to have a girlfriend without a car.”
Bigland said he predicted new vehicle sales in the United States would reach a seasonally adjusted annual sales rate of 17.1 million units in 2015, “give or take,” and including medium-duty sales, with low-single-digit year-over-year growth.
He said Fiat Chrysler’s U.S. sales streak -- which is now at 57 consecutive months -- is “getting tougher and tougher,” but said that it represents the type of slow, steady improvement the automaker likes.