In a swift response to the economic uncertainty fueled by the coronavirus pandemic and widespread COVID-19 illness, automakers are scrambling to offer a car payment plan to help those whose paychecks are threatened by the outbreak. Many carmakers are also creating special coronavirus car deals to persuade consumers that now is a good time to buy a vehicle.
While the automakers’ COVID-19 programs of incentives and sales support have been instituted quickly, they are not unprecedented.
Coronavirus Car Payment Plan & Programs
“These types of programs have been tools OEM’s have used many times over in economic downturns and for inventory control,” said James Houston, J.D. Power Managing Director, Consumer Lending and Automotive Finance. “History shows us that automotive sales recover over time. And there will be less need to rely on these types of programs.”
But in times of economic uncertainty, auto manufacturers can’t wait for the tide to turn. Ford Credit, GM Financial, Honda Financial Services, Hyundai Capital, Nissan Motor Acceptance Corporation, Toyota Financial Services, and Volkswagen Credit. These cars offer delayed payment options to customers in the U.S. impacted by COVID-19. Fiat Chrysler primarily relies on Chrysler Capital and Ally Financial to provide funding for leases. And new-car purchases and both are offering a variety of payment relief options. Americans are becoming even more delinquent when it comes to making their car payment plan. It is even worse now than during the peak of a recession far back in 2010. This is the kind of headline that grabs attention. Does the increase in delinquencies show that the economy has some sort of weakness?
What the Auto Manufacturers Are Offering Consumers
In one of the most expansive programs, Hyundai Motor America’s Assurance Job Loss Protection will make up to six months of payments for new owners who lose their jobs and have purchased or leased their vehicles between March 14 and April 30, 2020, through Hyundai Capital. The same offer applies to Hyundai’s luxury brand, Genesis, through the Genesis Cares program.
Furthermore, anyone who anticipates trouble making their payments should reach out to the financial institution that made the car loan or financed the lease even if that lender is not linked to the manufacturer. This will enable people who owe money on a loan to discuss their options. That can include flexible payment arrangements and payment extensions. Lessees might be able to arrange deferred lease payments as well.
In addition to financial support for existing customers, automakers are introducing new programs to prompt potential buyers who might be on the fence to purchase their vehicle immediately.
General Motors is offering “very well-qualified customers” interest-free financing for 84 months with deferred payments for up to 120 days. Ford Credit is offering to make your first three loan payments while also giving customers the option to delay their first payment for an additional 90 days. Buy an eligible Ford model by April 30, 2020, and you need not pay anything for six months.
Unveiling coronavirus car deals
“Every OEM has a different need based on current inventories and future inventories,” J.D. Power’s Houston said. “Any program that assures consumers the affordability of the vehicle they are purchasing during uncertain times. And gives after-sale support for those who financed their vehicle helps to generate consumer confidence.”
With consumer confidence in short supply right now carmakers are also scurrying to assure potential car buyers that in most areas of the country their affiliated dealerships are open for both vehicle sales and service.
Many are emphasizing their online shopping, vehicle purchase, and vehicle delivery options. For example, GM’s “Shop. Click. Drive.” program at participating dealerships enables customers to browse a dealership’s inventory on desktop and mobile devices 24 hours a day. Through that and similar programs, automakers offer consumers the ability to choose a vehicle, estimate a trade-in value, agree on payment, add accessories, and schedule delivery without ever setting foot into a showroom.
Other companies, such as FCA, are also ramping up online buying programs and tools. Because many Americans are self-isolating, automakers hope these options will prompt consumers to reconsider buying a vehicle in what has been and could continue to be a troubling economic time.
Projections for U.S. auto sales for the remainder of 2020 range from dreary to disastrous. One “worst-case” projection, a scenario in which prolonged COVID-19 infections combine with a long-term economic slowdown. Forecasts that new light-vehicle sales could tumble to 12.1 million this year from 16.9 million in 2019.
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