Monday, November 30, 2015

A December to Remember

Today is the last day of November, and it could be a record one for the auto industry. Powered by Black Friday sales, this month could be the best November ever for U.S. auto sales, according to forecasts from TrueCar and

Even more important, we're on pace to set an all-time record for more new cars sold in a year. LMC Automotive said last week that it is increasing its forecast for the year by 200,000 units to 17.5 million. That would edge out the previous all-time high of 17.402 million, which was set in 2000.

It's good that we're seeing all this activity now. The New York Fed took a look at what happens to car sales when interest rates rise, as many expect to happen in December. Just a one-percentage point increase in a consumer’s interest rate raises the cost of a four-year, $25,000 loan by $11 per month. or $528 over the life of the loan. That's enough, the Fed found, to reduce auto production by an annualized rate of 12 percent, or a decline of around 170,000 fewer cars and trucks produced.

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