OEM's who maintain the own financing arm, do so to increase sales of their products by making financing easy and available at their dealerships. They are not first and foremost bankers, but manufactures trying to sell appliances (GE credit), or autos (Ford Credit) or tractors (Kubota credit).
Yes, they really like to make a profit in the financing arm, but it is most essential to keep the manufacturing, sales, parts, repairs, licensing, and so forth running strong. To do that, they will sacrifice some profits in the financing division. A recent reported statistic from IBM states they perceive this nation's real unemployment to be between 15 and 18 percent.
Trying to charge higher interest rates in this deflated, broken economy would be foolish and impossible. The market will simply not bear interest rates right now, neither on the charge side or the pay side. Checked your bank's savings rates lately? Abysmal. If zero interest keeps their factories running, where charging 4% would mean far fewer sales, it is an easy decision.
It appears to me, and this is only one man's observation, that Kubota is choosing low interest incentives on financing rather than price cutting as the easier pill to swallow.
