Question

consider your last big purchase of a car, consider your decision making process that led you to choose the particular make and model and was it the right time to make this purchase of the car given the economic conditions at the time of the purchase. while analyzing your decision keep in mind everything from interest rates to the prices of complementary and substitute foods are driven by human economic behavior.

develop a minimum of 1050 word analysis of your decision making process include the following:
retrieve stats on GDP and on PCE by the year for the last years. you can retrieve those sources from internet sourcing for internetsourcing. Post in a single worksheet on excel and discuss the trends in 10 years.
retrieve stats on the effective federal funds rate on the consumer price index. All items less food and energy by year for the last 30 years, post these stats in a single worksheet. in your report if you took out a loan discuss how the trends in the effective federal funds rate compare trends with inflation. what's your loaninerest rate on car, were interest rates falling spartan the time, where interest rates relatively higher or lower.
discuss the influence of any federal government or state government programs such as tax credits for deductions for saving energy purxhaseson you decision making.

develop conclusions about the economy's influence on personal making relative to purchase

Answer 1

1. Following shall be the factors to be considered before purchase:

1. Residual/Resale Value of car is the value of car as it depreciates with time. This value sometimes also depends on the competitors in the market.
2. Cost of Ownership: When buying a car it is vital to consider additional ownership cost which incl. price of insurance, fuel, and maintenance which can add up over the years. Car expenses shouldn’t total more than 15% to 20% of your total monthly budget.
3. Features and Technology: This includes the safety devices, etc. Buyers should choose vehicles with features that meet their needs but make sure not to pay for technology and features that you will not use.
4. Incentives and Trade-ins: The best time to buy a new car is when dealers clear out inventory at the end of the year, usually, the beginning of October is the perfect time to purchase a car before the new model comes out. Also one should keep an eye on low-interest loans and other rebates near the end of the model year.
5. Pricing and Financing: Potential buyers will have to do their research. This incl. price comparisons, strict budget guidelines, etc. If buyers will need a loan or financing, check your credit history and score beforehand.
6. Performance of the car: Consider a good engine CC, power & torque while going for a vehicle. It decides how good your car can move head while pickup & rough terrains. Petrol vehicles have a better pickup when compared to Diesel ones. Diesel ones need to maintained well & need to be used on a regular basis to be in condition. So this is add up to the cost to the owner as discussed above.

B) Following are other economic factors effecting the industry and the consumers:

● The % change in new car registration in UK whose fortunes seems to permeate nearly every part of the economy. In 2010 just over two million new cars were registered in the UK a rise of 1.8% on the 2009 figure. The biggest single course of rising demand came from the fleet market which rose by over 10% in 2010.

● The end of the government’s Scrappage Incentive Scheme and the rise in VAT
The car scrappage incentive scheme came to an end in May 2010 offered at £2000 subsidy for owners of 9 year old cars who traded them in for a new one. In January 2011 VAT has increased from 17.5% to 20% - an increase which has added almost £320 to a £15,000 car.

● Petrol and Diesel prices & World Oil Prices are as reflected in the graph attached adding up to consumers cost of ownership.
● Overall : Most analysts are forecasting between 16.5 million and 17 million new-vehicle sales this year. Analyst are projecting light-vehicle sales to finish between 16.9 million and 17 million, with retail light-vehicle sales projected between 13.6 million and 13.7 million.

● Tax Reforms: Tax reform was one of the key drivers for the boost in 2018 sales, but it also could contribute to a decline in 2019. Federal consumer spending data revealed 2018 tax reform gains spent during the year helped offset the pain of interest rate increases, though Smoke said consumers who anticipate and rely on sizable tax returns may be disappointed in the spring.

The tax withholding tables were too aggressively adjusted, and when we look at the data, we actually have seen that withholdings have declined by a larger percentage than the tax rate change would have implied.

● Other Short Term factors: Other economic factors will only improve sales in the short run. For instance, the recent drop in gasoline prices benefits the average consumer, but adversely impacts the overall economy amid a rapidly growing energy sector in the U.S. Also of concern is volatility in the equity market and general weakness in the housing market.

● Economic Headwinds: Thousands of consumers are expected to be priced out of the new-vehicle market, and worsening financial conditions will peel off cash-strapped customers first. Some Say, We may see that as interest rates start to rise as well as the economy starts to falter a little bit in 2019, companies may be a little less aggressive in trying to provide credit to lower-credit tier customers.

Tariffs will also be a concern. Aside from news headlines potentially leading to some pull-ahead sales in 2018, there is the lingering prospect of duties on all foreign vehicles and parts. Higher tariffs on imported vehicles would likely drive up prices for consumers and could lead to automakers further exiting certain vehicle segments.

● The attached charts also shows “New Vehicle Sales Forecast for 2019”