GM Canada’s CEO is expressing apprehension over the way cheap auto loans are fueling vehicle sales in Canada.
In an interview with The Globe and Mail, CEO Kevin Williams said
“Macroeconomically, there’s some reason for optimism [but] nobody in the industry had the industry pegged at this number,” Mr. Williams said. “Nobody had the industry running this high.”
2013 is expected to see a record 1.73 million new vehicles, but much of the growth seems to be stemming from long-term loans designed to keep payments low. According to a JD Power study cited by the Globe, 64 percent of Canadian car loans have terms lasting for 6 years or longer.
Consumer debt has been a controversial topic in Canada, with Canadians taking on accumulating record debt amid low interest rates and easily available credit. But the concern over easy credit in the auto sector is unlikely to become a systemic risk, even as interest rate hikes loom on the horizon.