There seems to be general agreement that the interest rise won’t do much to dent upward momentum in new car sales. Kelley Blue Book just forecast that new vehicle sales in 2016 will grow 6.1 percent compared to 2014 to around 17.5 million units. Next year should see record-breaking sales of 17.5 to 18 million units, says KBB.
There is a caveat, however. Rising interest rates could interrupt that momentum. Already, the Fed has raised rates by 25 basis points, and has signaled rates will continue to inch up for the next several years, if the economy remains strong.
Few think this first rate raising volley will impact new car sales. Plenty of cheap consumer credit will still be available, most say. But, the small increase will hit dealers in another area – floor planning. In this issue I look at dealer concerns about rising inventory costs.
This week we are revisiting an interview I did with Brad Carter at Greystone Evaluation Services about appraising dealerships. One thing we talk about is how online sales are impacting dealership valuation since real estate and location are two important elements in considering a dealership’s value.
But what if the manufacturer bypassed the dealer completely by emailing the customer and delivering a car to that customer to test drive? Well, I just read that Chevrolet has a program under which it will deliver a Chevy Volt Range-Extended Electric Vehicle directly to a consumer’s house for a test drive.
That makes location, a key element in dealership valuation, a moot point. Watch out, that could be the future.
We also have Transaction News!
Enjoy!
