Market Uncertainty and Consumer Confidence Will Pressure 2019 Sales, Analyst Says

Lenders will need to pay attention to rising interest rates and their effect on consumer confidence, Brian Landau, vice president of auto market strategy, told Powersports Finance.

“If consumers can’t get their motorcycle at their right monthly payment, it’s going to be tough for them because I imagine that consumers who buy a motorcycle are thinking about monthly payments just like they do in auto,” Landau said. “If the interest rate is higher than expected, that impacts the monthly payment.”

The Federal Reserve’s benchmark interest rate is 2.5% after being raised four times last year. The Fed’s two planned rate hikes this year could impact consumer confidence, Landau said.

Because motorcycles are typically viewed as discretionary spending, how consumers feel about the market plays a part in whether they purchase a motorcycle. Additionally, the vehicles are not usually viewed as a top priority, Landau added, and the consumer will choose to pay off a car before a bike.

Consumer confidence declined to 128.1 in December 2018 from 136.4 in November, according to the Conference Board Consumer Confidence Index. However, consumer confidence was up year over year, from 122.1 in December 2017. With rates currently planned to rise in the new year, there is still an “uncertainty” in the market, and it’s “to be determined” how that will affect consumer confidence, Landau added.

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