The head of Hyundai Motor Company’s U.S. sales unit, John Krafcik told the Bloomberg news agency that the continued partial shutdown of the United States government is affecting consumer confidence and may result in as much as a 10% drop in October sales. Krafcik said that the political impasse in Washington is creating “anxiety” for many people.
“It’s that anxiety that keeps customers, potential buyers, on the sidelines when making a big purchase like an automobile,” he said. “We’ll probably see the industry off five to 10 percent this month, compared to where it was in September. I think a lot of it has to do with this shutdown discussion… Industrywide, we’re definitely seeing a slowdown in October,” Krafcik said.
The final quarter of the year is usually a strong sales period as automakers discount the outgoing model year cars and early adopters embrace the newer models. Septmember sales, though, were down 4.2% overall, the first year to year drop in over two years. Some of the decline, though, is attributed to a quirk in the calender that put Labor Day sales under August’s ledger.
Krafcick echoed earlier comments from General Motors and Ford that an extended government shutdown could hamper the already less than booming economic recovery.
At the start of the month, Hyundai initiated a program that allows federal workers affected by the shutdown to defer payments on car loans and leases. “We have already had requests from over a thousand people to have their payments deferred,” Krafcik told Bloomberg Television. “That’s a much stronger uptake than we thought. It makes us happy. It means we’re making a difference, but it does give an indication of just how deep and serious the issues are.”
Late yesterday, Toyota Financial Services said that it would allow federal employees “relief” on car payments for up to three months. “The government shutdown has placed an unanticipated financial strain on many individuals and families,” Al Smith, group vice president of Toyota Financial Services, said in a statement. Hyundai has previously offered buyers a job-loss guarantee program, dubbed Assurance, that allowed them to bring back their cars if they were laid off.