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Cars Sold

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Submitted By am1225
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Some factors that could be considered in predicting future cars sales along with interest rates are: increase in replacement demand for vehicles on the road (11 years and older), fuel economy improvements, younger consumers entering the buying market, and the car prices themselves. Looking at the example, there definitely seems to be a strong correlation between lower interest rate percentages and car sales. When the interest rate was at 3%, 1,000 cars were sold as compared to 200 cars sold at the 8% interest rate. If we use the suggestion of the VP of Marketing and use the 7% interest rate, the dealership could forecast sales of 358 cars. This, in conjunction with a R2 value of 0.997738, is why I would suggest this forecasting model. The 7% interest rate could be affected by the downturn in the economy. Other factors could be the supply and demand of credit and the federal fund rate. If less cars are sold at the higher interest rate, the dealership will affected negatively.

References
Sawyers, A. (2015, January 14). Analyst forecasts 17 million U.S. sales in 2015, 20 million in 2018. Retrieved from http://www.autonews.com/article/20150114/OEM09/150119809/analyst- forecasts-17-million-u.s.-sales-in-2015-20-million-in-2018
Levin, D. (2015, May 11). U.S. car sales still growing -- but for how long? Retrieved from http://fortune.com/2015/05/11/auto-industry-sales/
Sharpe, N., DeVeaux, R. D., & Velleman, P. F. (2014). Business Statistics (3rd ed.)
Pearson Education, Inc.
Heakal, R. (n.d.). Forces Behind Interest Rates. Retrieved from

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