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Can auto financing help make 2016 another record year for vehicle sales?

Posted on Wednesday, January 20, 2016 at 1:22:03 PM

U.S. car sales reached new heights in 2015, surpassing a peak not seen for 15 years as cheap gas prices, robust employment gains and low interest rates encouraged Americans to utilize auto financing in the purchase of new vehicles.

In total, auto makers sold 17.5 million cars and light trucks nationwide last year - transactions made to the tune of about $570 billion, according to The Wall Street Journal. Analysts have already begun to wonder aloud whether or not 18 million is the next sales figure to be broken. 

A new factor was thrown into the mix in December, however, when the Federal Reserve decided to raise interest rates. Investors have looked at the sliding stock prices of auto makers like General Motors and Ford Motor and instability in the Chinese market, coupled these with concerns over the rate hike and begun to question this year's bright sales forecasts. 

Some believe that, despite the all-time popularity of leasing and financing in 2015 and their undiminished appeal to drivers, U.S. auto sales can't do much more growing. 

"How much higher than 18 million units can we go?" said Brian Hennessey, a portfolio manager, to The Journal in another article. "It's pretty much a peak number." 

If somewhere in the range of 18 million is the auto market's peak, it still means that vehicle sales could equal or surpass 2015's numbers. With auto production still running high, manufacturers are likely to rely on deals and discounts as they lose some of their pricing power in a slightly slower market. 

Ford Motor, for one, is confident that 2016 will be better than 2015. Plenty of investors agree, The Journal reported. A recovering labor market, falling gas prices and a wide selection of auto finance options from providers like Home Loan Investment Bank mean that drivers will have every opportunity to buy a new vehicle this year.