The auto industry is riding what has, thus far, been a rollercoaster ride of a year. February was a weak month for vehicle sales, but March followed it up with more optimistic figures. However, newly released sales figures for April, compounding serious pressure from other market factors, may be a sign of the floor falling out from underneath the automakers.
For many prospective buyers, purchasing a vehicle is simply becoming too expensive. Auto loan interest rates are now at levels not seen since before the financial crisis in 2009 – an average of 5.6% in April, compared with 4.2% in February 2013. With the Federal Reserve planning at least 2 more rate hikes later this year, it is unlikely that these rates will decrease soon.
Further complicating the landscape are the ongoing negotiations over NAFTA. The US’ NAFTA negotiating team has presented several redrawings of trade provisions on finished automobiles that would inevitably make production more expensive . . .