OEM Steers Away From Subsidized Financing, For Now

canstockphoto39640727KTM North America does not see the need to offer subsidized financing yet — while interest rates are still low — despite the slew of powersports manufacturers that are offering financing promotions, said President Jon-Erik Burleson.

“For the last two years, the prevailing interest rate has been relatively low,” added Tom Etherington, KTM’s vice president of sales. “We haven’t seen the need to offer subsidized financing. For us, the real key value is our retail partners — and we have two, Synchrony Financial and FreedomRoad Financial.”

KTM’s retail finance partners are “a way to facilitate the sale, to break down the barrier of entry for our customers,” Etherington told attendees at PowerSports Finance 2016, and their ability to do a good job of service for KTM’s dealers is what powers the OEM’s sales.

“We haven’t seen a big ‘credit challenge’ yet,” Burleson told Powersports Finance. However, if interest rates climb up, KTM might have to consider different options — such as subsidizing costs or lowering interest rates, he said.

This year, several powersports manufacturers turned to finance promotions to help clean out the product pipeline. For example, Arctic Cat launched a promotion on Oct. 1 through Sheffield Financial for as low as 1.9% financing for 60 months, with no down payment on select ATV models. Polaris Industries Inc. is offering rebates up to $3,000 on select side-by-side models and financing as low as 2.99% APR for 36 months. American Honda Motor Co. is also offering 2.99% APR for up to 36 months on select new and unregistered ATV models.

From an OEM standpoint, every sales company’s goal is to sell more and subvent less, said Steven Chavez, senior manager of credit services at Kawasaki Motors Finance Corp. “That would be the optimal situation, where they [the OEMs] are retailing a lot without having to pay a lot of money and bind down rates to what they need to move product,” he said. With new products and innovative models coming out in 2017, hopefully OEMs will be able to sell those vehicles without offering a lot of promotions, Chavez said.

One thought on “OEM Steers Away From Subsidized Financing, For Now

  1. Average KTM credit profile is vastly superior to the companies referenced in the comparison which places a burden to ensure customers are able to be approved at favorable rates more heavily on the likes of an Arctic Cat / Suzuki.

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