Under normal circumstances, seven-year car loans at 0 percent interest would result in a boon in the new-vehicle market. But these aren't normal circumstances.
Because of the economic havoc being wreaked on the U.S. auto retail market by the coronavirus outbreak, industry analysts say the usually reliable incentives likely will fail to ignite sales this spring.
Not only are showrooms closed, with customers eyeing thinner wallets, vehicle values are on a slippery slope. Maryann Keller, automotive industry analyst and principal at Maryann Keller & Associates, said dropping used-car values put dealerships, auto lenders and customers in a bind. That means, on the new-car side, things are "going to get uglier before it gets better," she said.
Automakers using extended loan terms to rejuvenate a rapidly decaying market face many challenges, including convincing customers to enter the vehicle market at a perilous time and asking dealerships to accept vehicle trades worth less today than mere weeks ago.