Euro Central Bank Loans Leading to Low-Interest Loans and New Car Development

The European Central Bank's 1% interest loans have been having an effect for European consumers. The financial arms of Volkswagen, PSA (Peugeot/Citroën) and Mercedes have all taken loans from the central bank with the intention of passing those savings on to customers and increasing sales. 

Specifically, Volkswagen borrowed €2 billion in February. It is now offering 3.9% APR interest on the Up. The real question is whether this money will every trickle down to buyers. The head of Volkswagen Financial Services, Frank Witter, told the New York Times that about 20% of money will make it to consumers. Much of the money will probably be moved to the Volkswagen brand for development and for paying of debt. 

These loans will hopefully have a positive effect on European sales that have been down 8.3% in January and February compared to 2011. 

Source: New York Times