The British automotive industry is among the positive highlights of the European region, but the CEO of Hyundai UK warns that the country’s car industry is still frail.
Tony Whitehorn, Hyundai UK’s chief executive considers that even very small growths of British interest rates would seriously impact the nation’s car industry, as it has become very dependant on borrowing costs – a high number of customers use finance packages to purchase cars, allowing them to repay the debt over years.
“Let’s say (a) 0.25 (percent rise) may not have significant impact but if that was followed in two months’ time by another 0.25 and in two months’ time by a further 0.25, that then becomes quite significant. I think it just has significant ramifications to confidence and directly into accessibility of funds to buy cars,” said Whitehorn.
According to economists and analysts, UK’s record low 0.5% base interest rate could be grown for the first time in six years at the start of 2015. For the local car industry, the very low interest rates were among the key factors that contributed to a quick turnaround in car sales after the 2009 economic crisis. The Bank of England (BoE) announced it would only raise the rates on a gradual basis, without them ever reaching the level before 2008-2009.