The Federal Open Market Committee aka the Fed on Wednesday raised the rate it charges its best customers by 25 basis points to a range of 2 percent to 2.25 percent. Said Cox Automotive senior economist Jonathan Smoke: “That increase would turn a $500 loan payment into $510 a month, which may not seem significant. Over a 60-month loan, however, the price is up $600 over the same purchase last year.”
The Fed also signaled one more rate hike before the end of 2018 and three in 2019. Dealerships will need to use all their skills to make loan payments affordable for customers, but I have faith that they will succeed. Dealers are facing some headwinds, however. Even before news of the rate hike, Cox forecast September sales of 17.1 million units, up on August but down on September 2017.
The Harnish Auto Family’s Shannon Harnish, whom I profile in this week’s issue, has been through worse. Her first dealership was a Saturn store, which she became owner of in 2008, just in time for the Great Recession and GM’s bankruptcy. We all know what happened to the Saturn brand. But the Harnish family is nothing if not resilient. Read how Shannon and her family pulled through those tough times and are thriving today.
The specter of interest rate hikes and slowing sales may prompt some dealership owners to think of selling sooner rather than later. But there are many factors to consider before taking that big step. This week, Crowe discusses reasons to sell, and reasons not to. One reason not to: A lack of adequate challenges post sale. Read the entire column in this week’s issue.
And, of course, you will check out Transaction News.