Interest Rates: The Sales Killer
Introduction: The Impact of Interest Rates on the Auto Industry
With the auto industry reverting to post-COVID times, it has faced many uphill battles this past year. The top three challenges seem to be:
- Inflation in the market
- Volatile book values for vehicles
- **INTEREST RATES!**
The trifecta listed above has had a significant impact on the auto industry as a whole. With the Federal Reserve continuing to raise rates and the price of cars continuing to climb, auto sales seem to be down everywhere, and customers are holding off on upgrading their vehicles. So, when do we get a break?
Relief on the Horizon: Rate Reduction
Fortunately, relief seems to be on the horizon as the Federal Reserve has voted unanimously to reduce interest rates to a more "normalized" range. This move is expected to make vehicles more affordable and reasonable for customers, marking a significant victory for the auto industry.
This reduction should help drive more traffic back into dealerships, allowing businesses to take better care of their customers.
Projections for 2024
If the trend in rate drops continues as projected, we can expect to see an increase in sales for 2024.
Written by Stephany Whitted
Reuters and Dan Shine of Automotive News (2023, December 13) *Fed flags end of rate hikes, sees lower borrowing costs in 2024* Automotive News
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