Bruce told Reuters that interest rate rises will probably be small and the effect on monthly payments would thus be “inconsequential.
“Every quarter-point movement… is £3 a month,” he told Reuters. “It’s not going to stop somebody buying a car. So even three or four interest rate rises on that basis is not going to fundamentally change the affordability of the car.”
Besides, he added, car manufacturers could easily offset the rises by passing on the money they’re making from currency exchange differences. The pound has hit a 19-month high against the euro: Bruce said that every euro cent’s difference from parity with the pound is, for Ford alone, worth £30 million.
“The movement in the exchange rate in the last year of eight points is about £1000 a car to the UK, on the basis that the average selling price is about £12,000.”
Lookers sells 120,000 cars in the UK each year, so Bruce’s views carry plenty of weight. Given the continued recovery of the British new car market since the collapse in 2008-09, many in the industry will be hoping he’s right.