July 24, 2006
Low-interest incentives create an increase in new-vehicle loans
Westlake Village, California – Low-interest incentive programs appear to be resonating with American consumers, according to data from the Power Information Network (PIN), a division of J.D. Power and Associates. To better reflect consumer demand for new vehicles, PIN data includes retail transactions only and does not include fleet sales.
Nearly 63 percent of all new-vehicle retail transactions in the first 16 days of July included a loan – up substantially from 57 percent in June and 55 percent in May.
Among the industry-wide loans in early July, more than 39 percent came with an annual percentage rate (APR) of less than 5 percent-up substantially from 27 percent in June and 18 percent in May.
With finance transactions capturing such a large piece of the new-vehicle market, leasing has dropped from 19 percent in June to just 16 percent of the industry in July, and cash sales have retreated from 25 percent in June to 22 percent in July.
Rebate penetration has declined as well. Only 42 percent of all new-vehicle transactions in the first nine days of July included a customer cash rebate-down from 49 percent in June. The actual rebate amount has also dropped from U.S.$2,335 in June to U.S.$2,097 in early July. Prior to July, the average rebate amount exceeded U.S.$2,200 in each of the first six months of the year.