On the gas

Rise in interest rates hasn’t slowed upturn

Car and truck sales in the United States shrug off rising interest rates, attain their best performance since 2007.

Bloomberg News

SOUTHFIELD, Mich. — Federal Reserve Chairman Ben Bernanke said he is letting up on the monetary gas pedal. That hasn’t done much yet to affect U.S. auto sales that may have accelerated in June to the fastest pace in 66 months.

Rates charged for new- car loans didn’t budge from nearrecord lows after the Fed began signaling a tapering of its bond-buying. The central bank is adjusting to an economy that’s following the auto industry’s rebound. Bernanke’s comments triggered a jump in mortgage rates and a stock-market slide.

“The market is very strong and we seem to be doing well despite what’s going on,” George Magliano, senior economist at IHS Automotive in New York, said by telephone. “Is the market going to be immune to the sell-off of the stock market and the rising mortgage rates? I find it hard to stay as strong in the face of these things. We’ll probably back off a little bit and then pick back up.”

Sales of new cars and trucks probably accelerated last month to the fastest pace since December 2007, according to a survey of analysts by Bloomberg News. The projected growth in June, which analysts say was led by Nissan and Ford, keeps the United States on track for its best annual sales in six years.

The central bank’s moves and volatility in stock markets and mortgage rates will test the confidence of consumers to keep buying new cars and trucks. Yet some of the fundamental reasons for the sales surge remain.

Rates for new-car loans remain low. There’s pent-up de- mand from Americans replacing the oldest vehicles ever on U.S. roads. U.S. automakers are producing their best cars in a generation, so better vehicles are in showrooms everywhere. What’s more, a weakening yen is enabling Japanese carmakers to cut prices or add features.

Bernanke said last month that the Fed will probably taper its $85 billion monthly bondbuying program later in 2013 and halt purchases around mid2014, citing a slowly improving economy. Still, most members of the central bank committee don’t expect to begin raising the benchmark lending rate out of its lowest-ever range of zero to 0.25 percent until 2015.

“If the incoming data supports the view that the economy is able to sustain a reasonable cruising speed, we will ease the pressure on the accelerator by gradually reducing the pace of purchases,” Bernanke said during a June 19 news conference. “However, any need to consider applying the brakes by raising short-term rates is still far in the future.”

That’s positive for new-car loan interest rates, which averaged below 2.5 percent for 36 months and 2.7 percent for 60 months through last month.