S. auto industry hasn’t appeared so healthy for years. Sales hit an eight-year high in June, there appears to be plenty of pent-up demand, and discounting is far from getting out of hand. New plants and production lines are being built, and many auto executives, dealers and securities analysts are optimistic.
And yet, a minority on Wall Street and in the autos business are seeing reasons to be wary. They argue that a combination of cheap loans with extended terms, deep incentives from some dealers, and unsustainably high values for used cars, is making it far too easy for many Americans to buy new vehicles.
Demand, they argue, is being artificially pumped up. And, if the U.S. Federal Reserve raises interest rates next year as expected, it will raise the costs of buying a car and could trigger a slowdown in demand.