McCALL, ID – Seven-year auto loans stretch out too long, says Russell Wager, Mazda’s vice president-marketing in the U.S.
“There’s a concern about the growing time length in financing,” he says. “It’s pushing out to 84 months.”
Wager cites two potential downsides of such protracted payback periods.
First, many consumers become upside down on prospective trade-in vehicles that are worth less than what’s owed on them.
Second, “people are taken out of the market for too long,” Wager says at the Idaho Auto Dealers Assn. convention here.
Dealers generally prefer leasing because customers get in and out of new vehicles every few years, rather than hang on to them for what seems like a marketplace eternity. The average age of vehicles on U.S. roads is about 11 years.
Nearly 30% of new-vehicle loans in the U.S. consist of payback terms from 73 to 84 months, says Experian Automotive in a June report.
The increase in longer-term loans is less ominous and more a matter of consumers keeping monthly payments manageable,” says Melinda Zabritski, Experian’s senior director-automotive finance.
At the Idaho dealer gathering, Wager also talks about the need for well-timed new-product debuts as well as his company’s decided lack of interest in developing self-driving cars.
“The U.S. is where the best margins are,” he says. “You have to play here.”
Properly done new-product rollouts launch the right vehicles at the right time, he says. “You don’t want to be in a position where you have nothing (new) to show.”
Mazda has a 6-vehicle lineup. Joining it this year is an all-new ’16 CX-3 compact CUV. The second-tier Japanese automaker sold 176,569 vehicles in the U.S. last year, a 6.4% increase over 2013, according to WardsAuto.
While several automakers are developing self-driving vehicles, Mazda isn’t one of them.
“We build cars for people who want to drive,” Wager says, adding that as a market proposition, “autonomous cars would be a disaster,” with little distinction from one to the other.
He tells WardsAuto: “It’s not a question of (self-driving cars) not happening. It’s a question of whether customers want one.”
He wonders if “this is another one of those things (such as electrical vehicles) where it’s technologically possible, but the customer says, ‘I’m not paying for it.’”