On Nov. 2, the Federal Reserve raised interest rates for the fourth time in seven months. The move raises the rate banks charge each other for overnight loans, requiring them to raise interest rates on the loans and credit cards most consumers use to fund big purchases.On Nov. 2, the Federal Reserve raised interest rates for the fourth time in seven months.
““With rates expected to go even higher and stay there for at least the duration of 2023, the auto market will become more dependent on cash-rich, higher-income, and higher credit-tier consumers.”” As Cox Automotive Chief Economist Jonathan Smoke explains, “Living with restrictive rates for more than a few months will have long-term implications for the industry and the country.”Some buyers squeezed out “As a result of higher rates, consumers who are most payment sensitive have been falling out of the market,” Smoke says. Subprime and deep subprime loans, he says, are “disappearing.”
“No new vehicle being sold today can be financed with rates at that level to produce an affordable payment,” Smoke says. That pushes the least affluent buyers into the used car market. But things aren’t much better there. “In today’s market, subprime buyers are mainly limited to vehicles that are 6-9 years old and with at least 75,000 to more than 120,000 miles,” Smoke says.Automakers focusing on wealthier buyers If you were paying close attention, you noticed that we said the Chevy Spark “was” America’s least-expensive new car. Chevrolet recently discontinued the Spark.
Walk, you peasants.