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This Week in Car Buying: Deals of the month; Incentives skyrocket; Ram closes in on Chevy; BMW revs up drive program 

By Matt DeLorenzo on April 14, 2017 1:00 PM
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As spring settles in and brings with it renewed interest in the car market, the warmer weather may also be an opportunity to find a good deal on an all-wheel drive vehicle better suited for winter. Several 2017 crossover SUVs are among the 10 Top Deals of the Month compiled by Kelley Blue Book.

“This month’s list showcases a wide variety of great deals on SUVs, sedans, small hatchbacks and a minivan,” said Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book. “The range of payment plans and cash-back offers featured fit nearly every new-car budget, helping shoppers make the best possible purchase decision. Topping the list is an alluring offer of $5,000 cash back.”

That rebate is for a 2017 Jeep Cherokee, which starts at $26,540 and which KBB’s Fair Purchase Price puts at $24,964. The high rebate may be due in part to the introduction and interest in the all-new Jeep Compass, which is slotted just below the Cherokee in the lineup. Meanwhile, Buick is offering a lease deal on the 2017 Envision. This 3-year contract is for $299 per month with $3,919 down. Also at GM, Chevrolet is leasing the subcompact Trax crossover SUV for just $159 per month for 39 months with $2,159 due up front.

Sedans of all sizes continue to slump in the market and as a result there’s deals on models ranging from compact to full-size. The 2017 Hyundai Sonata is carrying a cash back offer of $3,350. Hyundai just took the wraps off a restyled 2018 Sonata at the New York Auto Show, so it’s likely the deals will continue on the current model until the new one comes to market. The full-size 2016 Chrysler 300 sedan has a more generous $4,000 rebate on it, based on an MSRP of $36,465 and a KBB FPP of $36,465. Also in New York, Acura unveiled a facelifted 2018 TLX just as it is offering a 3-year lease deal on the 2017 model. The payments are $279 per month with only $999 down. Toyota is leasing the 2017 Corolla for $149 per month for 3 years with $1,999 due at signing. 

Two hatchbacks and a minivan round out the top 10, as the 2016 Hyundai Veloster continues to be offered with a $4,000 rebate, while the hybrid 2017 Lexus CT 200h is eligible for a 3-year lease at $249 per month with $1,499 up front. The 2017 Toyota Sienna minivan, which will soon be replaced by a facelifted 2018 iteration, is on offer at $289 per month on a 3-year deal with $1,999 down.

Incentives skyrocket

While the auto industry is enjoying healthy sales by any measure, some analysts see the gap between higher inventories and actual sales propelling incentive spending to new heights. Thomas King, vice president of JD Power’s Power Information Network told an industry gathering that the company expects average incentive spending per new vehicle to be more than $4,000 throughout the calendar year. Through the first quarter, incentives averaged $3,900 per vehicle, up $500 from just a year ago.

Even though transaction prices are also continuing to climb, providing some buffer for this increased incentive spending, King said at some point that leverage will run out. “Inevitably, with each escalation, you’re going to see some margin pressure on manufacturers,” King said in an Automotive News report. “Incentives at industry level only ever rise; they basically never come back down…because everybody is chasing that short-term fix.”  

While more incentives mean better deals for shoppers, at some point the spending can cause financial damage to some of the weaker manufacturers and ultimately create job loss. Also, the higher average transaction prices are leading to more buyers opting for longer term loans, some stretching as far out as 84 months -- which not only costs more in the long run, but also will keep them out of the new car market for a longer period.

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Ram closes in on Chevy

The Ram pickup truck has long been considered the little brother when it comes to sales in a segment dominated by the Chevrolet Silverado and Ford F-150. But ever since the Ram was redesigned more than 20 years ago to project a more rugged look, it has carved out a niche that has blossomed into a following that’s beginning to rival Chevrolet’s. 

Last month, the Ram actually outsold the Chevy 46,384 to 42,410 for the third time over the past three years, according to Automotive News data. Incentive spending may have something to do with that number, but still, Chevy’s lead over Ram in the first quarter is less than 10,000 units. The FCA division is expected to roll out an all-new replacement for the Ram next January, which should make the sales race this time next year very interesting.

BMW revs up drive program 

This past week, BMW kicked off a 6-city driving experience tour to get prospects behind the wheel of a wide range of the company’s vehicles. This dynamic driving program is set up in parking lots and features a full range of BMW cars including the new 5 Series, as well as models from the BMW i, iPerformance and M sub-brands.

The opening event is at MetLife Stadium in East Rutherford, N.J., from April 13-23. The tour moves to the West Coast with programs in the Los Angeles area at Santa Anita Park in Arcadia, Calif., May 11-21 and the Cow Palace in San Francisco, August 11-17. The Dallas event will be at Lone Star Park from September 2-10, Chicago will be hosted at Arlington Park, October 14-22 and the tour concludes back in the New York area at Citi Field from November 2-12. 

The experience features a number of different driving opportunities from free, 20-minute street drives, an autocross, and teen driving school up to an M Car Control Clinic, which costs $750. Participants in the 2-hour autocross course and the daylong M Car program will be eligible for the Ultimate Driver competitions, with winners from each city invited to a finals at the BMW Performance Center West track in Thermal, Calif., near Palm Springs.

The rundown 

Check out the This Week in Car Buying Podcast here.

Volkswagen has launched its new Tennessee-built 3-row SUV in the 2018 Atlas. We get behind the wheel in this First Review.

Subaru is also getting into the large 3-row SUV game with its 2018 Ascent, which it debuted in New York. Check it out along with other reveals on our New York Auto Show page.

Looking for a compact crossover SUV? Find out all the details on the newly launched 2017 Mazda CX-5 in this Buyer’s Guide

In the market for a new car? Explore these useful tips on how to get the best deal:

Kelley Blue Book’s Complete Guide to Incentives

All you need to know about leasing

Which dealer services are right for you?

What to look for in your next economy car


 

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