According to a forecast coming from the National Automobile Dealers Association, the US Federal Reserve is expected to skip raising interest rates this summer, giving the needed tailwind to auto sales as the economy started slower this year.
The first quarter’s weaker than expected economic increase is a good indicator that interest rates would be maintained by the Federal Reserve until September, according to Steven Szakaly, NADA’s top economist. “On the very positive side, we do see a lot of room for the Fed to maneuver,” he commented on a conference call. The continued low rates would be “very, very good, of course, for motor-vehicle sales and the rest of the economy,” especially during the high sales months of the spring and summer.
The continuously low interest rates have buoyed auto sales as borrowing costs remained small, with the frigid winter months unable to fence the pace of auto sales – up 9.2 percent after the first two months of 2015. Analysts predict the US auto market is heading towards its sixth year of continued growth thanks to increased consumer confidence, a rising labor market and improving price of gasoline. NADA, a representative for around 16,000 new-car dealers, projects the seasonally adjusted selling rate for March, adjusted for seasonal trends, would stand at 16.9 million, up from March 2014 when it stood at 16.5 million. On the other hand, analysts now estimate sales of cars and light trucks this month actually fell slightly by 0.8 percent to around 1.52 million autos, with the month having one less selling day than last year.