The problem. Turns out that when the Fed increases rates, rates go up. Who could have guessed?
The average new car monthly payment in the US is over $700, and people, especially those in their 20s and 30s, are falling behind more frequently.
Auto lenders are worried the trend of loan defaults and even fraud will increase in the coming months.
A solution? Automakers try incentivizing buyers back into the market with cash-back offers or discounts. Some dealerships offer deferred payments, higher trade-in values, or purchase prices under MSRP.
Despite the rate hikes, the incentivizing efforts and improving inventory levels may be enough to attract more customers.
Application. For automotive dealers in the United States, the key lies in adapting to these market changes and strategically using incentives and flexible payment options to attract and retain customers. In addition, educating customers about the current financial landscape and offering transparent, competitive loan options is also critical. This way, dealers can thrive in this fluctuating economic environment and maintain healthy sales numbers.