Moneymoney

Tue Feb 13, 2018, 11:20 AM

Fed Rate Hikes Are Squeezing Even the Hottest Automaker in the U.S.

•Subaru says rising rates could threaten 0% financing offers
•‘Somebody’s going to have to blink,’ says company’s U.S. chief

February 13, 2018, 9:05 AM EST

The Federal Reserve’s interest rate hikes are making it costlier for even the hottest automaker in the U.S. to sell cars.

Subaru Corp., the only carmaker to boost U.S. sales every year in the last decade, is continuing to offer cheap financing on models including the Outback crossover and Legacy sedan even as rates rise. While those deals look about the same to customers, they’re becoming more expensive for the company, pinching margins in a plateauing U.S. market.

“Our basic incentive programs haven’t really changed -- what’s changed is the fact that interest rates have increased so much,” Tom Doll, president of Subaru of America, said in an interview last week at the Chicago Auto Show.



With the Fed hiking rates three times last year and forecasting three more in 2018, carmakers are coming under pressure. So far, they’ve been wary about backing away from cheap financing offers, which could cost them market share as U.S. auto sales stop growing. At some point, the cost of dangling those deals to consumers will sacrifice too much profit, according to Doll.

“Somebody’s going to have to blink,” he said. “Somebody’s going to have to be willing to say ‘No mas -- we’re not going to do zero-percent financing anymore for 60 months or 72 months.’”

more...

https://www.bloomberg.com/news/articles/2018-02-13/fed-rate-hikes-squeezing-even-the-hottest-automaker-in-the-u-s

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Reply Fed Rate Hikes Are Squeezing Even the Hottest Automaker in the U.S. (Original post)
RCW2014 Feb 2018 OP
WTFhappened Feb 2018 #1
Badsamm Feb 2018 #2

Response to RCW2014 (Original post)

Tue Feb 13, 2018, 01:15 PM

1. So the President of Subaru is pissing and moaning

Because the Federal Reserve will no longer be subsidizing their auto sales?

I find it difficult to shed a tear.

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Response to RCW2014 (Original post)

Tue Feb 13, 2018, 04:05 PM

2. Maybe if people were getting interest on their money in a bank

They could afford a car

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