Auto industry faces final hurdle as interest rates impact auto loans

HARTFORD, Conn. (WFSB) – There is still some selection at Stephen Toyota in Bristol.

“I have inventory available, I also have quite a few used cars available,” said Cody Gill, general manager of sales for Stephen Toyota.

Although it was a bit slower to get people through the lot.

“Interest has been a little slower, it could be interest rates a little bit higher, it could be people trying to get away and enjoy a vacation they haven’t enjoyed over the past few years. last two years, but it’s definitely been a little quieter this particular month,” Gill said.

On Wednesday, the FED raised interest rates a further 0.75%, bringing the benchmark rate to a range of 2.25% and 2.5%.

Rate hikes have been hard to ignore on auto loans.

“You see a difference of a point and a half, 2 points, depending on how long you take the term and how much you’re looking to borrow. There’s no question there’s been a slight uptick,” Gill said.

Chris Ball is Associate Professor of Economics at Quinnipiac University.

He says we are probably seeing the beginning of the impact now.

“You’ll see a drop in demand for new cars first, and at the same time they’ve just overcome their supply chain issues. Getting microprocessors and chips in these cars, it’s going to be a tough year, let’s say, for all of these automotive industries for sure,” Ball said.

Potentially getting out of these supply chain issues is the silver lining for dealers right now.

“We’re heading down, I believe, in terms of inventory. Think fall, early winter, we’re going to get back to a bit of normalcy in terms of supply,” Cody Gill said.

Chris Ball adds that it helps that there are tax incentives that make buying electric and hybrid cars attractive right now, new or used.