Amidst the uncertainty caused by the spread of COVID-19 across North America, the automotive world, along with all other business sectors, is experiencing a slowdown period that will inevitably impact sales volume and test business leaders’ preparedness to tread in these uncharted waters. The reality is sales cycles, which reflect the overall confidence of consumers and the economic situation at a given time, are an integral part of the automotive business. These disruptions prompt central banks to become more effective at stabilizing the economy and one of the immediate steps is to reduce the lending rate.
In the past few days, the Bank of Canada has reduced its prime rate from 1.75% to 0.75% and the Federal Reserve in the US has dropped the US benchmark rate to 0%. In turn, this will prompt the major banks and financial institutions to cut their lending rates as well. In the M&A world, these cuts are reflected in the buyers’ ability to finance acquisitions at a lower cost, hence providing better financial tools to manage growth in the future. Borrowing rates were already advantageous, they have now improved even more so.
Social and economic disruptions related to the virus will continue for the foreseeable future and safeguarding people will remain the priority. When the normal level of business resumes, albeit with unknown specific timelines, there will be additional benefits available to savvy ready buyers.
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