Seventeen years after General Motors' Keep America Rolling strategy made 0 percent financing deals a go-to marketing tactic across the industry, the deals are on the wane — perhaps for good.
No-interest loan offers are drying up across the industry as rising interest rates cause automakers to cut back on the promotions. In July, 0 percent financing dipped to its lowest level for any July since 2005, at 6.9 percent of sales, according to Edmunds. The share was even lower in June, at 5.6 percent, nearly half the level reported a year earlier.
That those lows are occurring during the peak sell-down months for outgoing models — a point on the calendar once blitzed with 0 percent deals — reflects an epochal shift. Automakers used to the sales surge that can accompany the deals are loath to let go.
"We're going to hold onto 0 percent financing until we frickin' can't, and we're kind of getting close in the industry," Hyundai Motor America Chief Marketing Officer Dean Evans told Automotive News. "Every day that the Fed raises [rates] a quarter, we all look around and go, 'Was that it for the 0? Are we going to now have to go to 0.9?' "
The Federal Reserve has raised its benchmark interest rate five times in the past 18 months, including twice this year. It has forecast two more rate increases in 2018 and three in 2019.
Given that extra expense, no-interest deals are no longer the imperative they once were, said Jeremy Acevedo, Edmunds manager of industry analysis. Automakers historically have used the tactic to help sell down outgoing models during the model-year changeover.
"We're kind of sunsetting a bit of an automotive tradition here," Acevedo said.