Automakers roll out incentives to woo uncertain consumers
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This year was forecast to be a pretty good one for carmakers. Then came COVID-19.
Eric Lyman, analyst at TrueCar, had estimated new vehicles sales would total 17 million in 2020. But he’s adjusted that down — hard.
“We’re expecting to land somewhere around 13.2 million, in the most likely outcome,” Lyman said.
Automakers need to keep sales up to keep cash flowing, so they’re offering big incentives. Not just cheap deals and low or zero interest financing, but flexibility. Like Ford, which is offering deferred car payments for up to six months for “peace of mind.”
Most mid-market automakers are making offers like Fords.
“They’re very similar to what we saw back in 2009 and 2010, as the market crashed,” said Jim Houston, who monitors Consumer Lending and Auto Finance at JD Power. He said there’s a big difference this time. Back then, some finance companies were folding. For now, at least, lenders have plenty of available credit.
Auto analyst Rebecca Lindland said carmakers are also making these finance offers, in part to support their local dealerships.
“If a dealer goes out of business, it really negatively affects the community in which that dealer usually worked,” Lindland said.
While these incentives could lead to great deals on new cars for some shoppers, Lindland also warns that buyers should tread carefully. Six months may not turn out to be much of a buffer for people who lose their jobs.
COVID-19 Economy FAQs
What’s the latest on the extra COVID-19 unemployment benefits?
As of now, those $600-a-week payments will stop at the end of July. For many, unemployment payments have been a lifeline, but one that is about to end, if nothing changes. The debate over whether or not to extend these benefits continues among lawmakers.
With a spike in the number of COVID-19 cases, are restaurants and bars shutting back down?
The latest jobs report shows that 4.8 million Americans went back to work in June. More than 30% of those job gains were from bars and restaurants. But those industries are in trouble again. For example, because of the steep rise in COVID-19 cases in Texas, Gov. Greg Abbott, a Republican, increased restrictions on restaurant capacities and closed bars. It’s created a logistical nightmare.
Which businesses got Paycheck Protection Program loans?
The numbers are in — well, at least in part. The federal government has released the names of companies that received loans of $150,000 or more through the Paycheck Protection Program.
Some of the companies people are surprised got loans include Kanye West’s fashion line, Yeezy, TGI Fridays and P.F. Chang’s. The companies you might not recognize, particularly some smaller businesses, were able to hire back staff or partially reopen thanks to the loans.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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