Eyeing a New Car? Why You May Want to Buy Now

Katie Simon

new-car-buy-nowThe auto industry’s recent sales rebound—a whopping 55% uptick over the last five years—may finally be slowing down.

Translation: If you’ve been planning to purchase a new car, now just might be the right time to buy.

According to a study by consulting firm AlixPartners, car and truck sales in the U.S. will likely peak sometime this year, then slowly decline from there. One explanation? The Fed is expected to raise interest rates in the near future—which will affect the public’s purchasing power when it comes to new auto loans. The projected 3% rise in interest rates will lower consumer purchasing power by $2,500, and a 7% bump could lower purchasing power by more than $5,000.

Another explanation for the expected decrease in auto sales: By 2020, China’s auto sales growth rate will slow to 3% compared to last year’s 13.5%. “The sheer size of China means the rate of sales growth will slow down,” AlixPartners’ Mark Wakefield told CNBC.

Car sharing, a increasingly popular option, may become the go-to alternative for commuters. 1.3 million people this year participated in a car share, and it’s projected to jump to 4 million by the end of the decade.

  • http://www.50by25.com/ Laura

    Wouldn’t the fact that interest rates are going up mean that if you do have money, you should wait to buy? If the general public has their purchasing power reduced, car dealerships will need to entice them with good deals – so you’d get a better deal by waiting until they’re hurting for sales. No?

    • Julie G

      It depends…if the higher interest paid over time due to the rate increase is greater than the amount saved in a sale, then it would be a bad idea to wait.

      • http://www.50by25.com/ Laura

        But if you have the money to buy, you don’t need to worry about the interest rate, except as it affects others.

        • Julie G

          Well, if you’re paying cash, then interest rates are irrelevant, and if you find a sale, go for it.