Innovative thought leadership for Automotive Video Marketing & Sales.

Keep Your Dealership Competitive Even When Interest Rates Rise

Posted by Collin Davis on 10/19/2015

US car sales have kept booming in recent months, and in fact the auto industry has received a lot of credit from economists and other analysts for propping up otherwise-sagging receipts in the retail sector. A large part of the continued acquisition of new vehicles, according to the number crunchers who determine this sort of things, is the fact that interest rates have stayed low ever since the dawn of the Great Recession. Rising incomes combined with near-zero rates means lots of car buying in recent years.

You probably know the basics of how interest rates are set in the US, but just in case: the Federal Reserve Bank (or simply “the Fed”) loans money to commercial banks at an interest rate determined by the Federal Reserve Board, and banks then add a bit of a bump to that rate when they loan money to consumers. The Fed’s lending rate has been just above 0% for years, which makes it possible for commercial lenders to make a profit even while charging record-low rates on consumer loans.

That makes consumers more comfortable with borrowing, and able to make the lower monthly payments more easily, and that means more car sales.

The Fed’s rates have to go up at some point, though, and there are signs that this could be happening real soon. When it does, auto dealerships could find themselves in a sudden slump as easy sales from interest-sensitive consumers drop off.

When rates go up, many price-conscious consumers will opt for used vehicles or continue driving their old cars rather than spending the extra money on interest that higher rates represent. In addition, consumers who are currently on the cusp of of being able to secure financing will find themselves on the wrong side of the line once rates go up, cutting into the number of eligible buyers and slowing down overall auto sales even more.

With the rate hike a question of when, not if—it is going to happen, almost certainly before the end of 2016 and likely much earlier than that—dealerships need to get more proactive NOW in order to keep sales steady and even watch them climb.

Video Outreach Gives Your Dealership a Fed Board Buffer

Don’t let the Federal Reserve Board dictate your dealership’s future sales numbers. Take control of your own attractiveness to car buyers, and build a website that catches attention and brings people to you even when there are fewer auto-interested folks to go around. The population of car buyers is going to drop, but if you can capture a bigger share of those still in the market your dealership won’t suffer.

Dealer Video Showroom gives you access to great media that consumers love, enabling you to reach out via email, social media, and other online advertising in a way that is proven to resonate with car shoppers and help increase sales rates. It’s not the economy, it’s the activity, and with the right information presented in the right way you can generate plenty.

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