Some fear auto industry returning to bad habits

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http://www.fayobserver.com/news/business/some-fear-auto-industry-returning-to-bad-habits/article_f0860c54-5959-5938-9f91-33bd808284c7.html



Some fear auto industry returning to bad habits
Associated Press
Posted: Wednesday, September 3, 2014 7:16 am

DETROIT- Big discounts. Six- or seven-year loans, in some cases to buyers who would have been turned down in the past.

As the auto industry strives to sustain its post-recession comeback, car companies are resorting to tactics that some experts warn will lead to trouble down the road.

Vehicle discounts have risen 5.5 percent from a year ago. More than a quarter of new buyers are choosing to lease, a historically high percentage. Auto company lending arms are making more loans to people with low credit scores. The industry is adding factory capacity. And the average price of a car keeps rising, forcing some customers to borrow for longer terms to keep payments down.

Annual auto sales in the U.S. should top 16 million for the first time in seven years. But the pent-up consumer demand that has driven sales is ebbing. Sales are predicted to grow 5.5 percent this year, the slowest pace since the financial crisis.