CINCINNATI—A new report reveals that new car shopping will slow markedly if interest rates rise by two percentage points.
The report by Swapalease.com comes shortly after the Federal Reserve raised interest rates by 25 basis points. U.S. consumers are buying new cars at a record pace, with analyst predicting sales will exceed 17 million units by year’s end.
The study indicates that 6.8% of consumers won’t shop for a car after a 1% interest rate increase and 21% won’t shop following a 2% increase.
Swapalease.com presented an online holiday car shopping survey to approximately 2,500 drivers across the U.S. during early December to identify new trends. The study also revealed other interesting findings:
- Four out of ten people said that at some point in their lives they have given a new or used vehicle as a gift during the holidays.
- Approximately 12.4% of car shoppers believe carmakers’ special holiday-themed television ads influence consideration for specific brands (industry experts generally believe television advertising offers a 2% return)
- 4.5% of survey participants said they have purchased or leased a Mercedes-Benz as a result of the carmaker’s “Naughty or Nice-themed” holiday television campaign
- 48.3% of people said they were planning on spending the same on gifts as they did last year (in spite of significantly lower gas prices and an improving economy)
- 32.6% of consumers actually believe car shopping for deals on the last day of the year is overrated
“We’re particularly focused on how people view the interest rates given the fact that we just saw the first rate increase in nearly a decade,” said Scot Hall, EVP of Swapalease.com. “Additionally, it’s good to see carmakers seeing success with their holiday television campaigns, which are clearly influencing shoppers toward a specific brand.”