This Week in Car Buying: Spring sales kick into high gear; Dealers take hit on 0-percent financing; Chevy Bolt marked-up, discounted
Now that winter is officially over, manufacturers are fully into their spring sales events and while some of the biggest discounts are on traditional full- and midsize sedans, incentives are popping up on other vehicles including crossover SUVs. In addition to cash back, makers are also offering discounts of up to 20 percent off MSRP and low monthly payment lease deals.
Chrysler has hefty rebates on its 2017 300 Limited sedan with up to $4,250 off, as well as 20 percent off the all-new 2017 Pacifica minivan with advertised savings of up to $3,500. Sister division Dodge is also offering 20 percent off MSRP. The 2017 version of its crossover SUV Journey can be purchased with a $4,000 rebate or leased for $149 per month for 24 months with $1,999 down.
Last week we reported on the 340-day supply of Buick LaCrosse sedans and a check of the division’s website shows a combined rebate of $3,000 on 2017 models. Buick is offering rebates and lease deals across the board on its Verano and Regal sedans, Cascada convertible and all three of its crossovers, the Encore, Envision and Enclave.
Toyota is running a “1 for Everyone” spring sales event with some of its biggest discounts coming on the 2017 Camry, with as much as $2,500 off that mainstay in the lineup. There’s also a $189 per month 3-year lease with $1,999 due at signing. The company also has an offer of $2,000 cash back on its full-size Avalon and a $1,500 rebate on Prius.
Similar to Hyundai’s Spring Cleaning Sale, stablemate Kia has a Spring Savings Time program going on in which it is offering $2,000 cash back on the 2017 Optima midsize sedan as well as 2-year $185 per month lease with $1,999 down. For its part, Hyundai is offering a low lease rate on its recently introduced 2017 Ioniq hybrid, which you can get into for $1,999 down for 3 years at $219 per month.
Dealers take hit on 0 percent financing
With the Federal Reserve recently hiking interest rates another quarter-point, the higher cost of borrowing money is beginning to have an impact on retailers like auto dealers who offer 0 percent financing as an incentive. According to Bankrate.com, the rate used to finance these low-cost loans has increased from 0.9 to 1.43 percent over the past year. But most analysts don’t expect the higher rates to have an immediate impact on the no-interest loans. Most dealers and manufacturers are willing to absorb the higher cost or pass it on by offering less cash in conjunction with the 0 percent rate.
Another way to mitigate the increase in costs would be to reduce the terms. Some 0 percent loans are being offered for up to 72 months. Cutting the loan term back to 60 months would offset the higher rates, but also would result in higher monthly payments to the borrower.
Ford to push regional incentives
When shopping for a new Ford, it will become even more important to make sure to use your zip code when visiting the automaker’s websites as its new director of sales told Automotive News that the division will be relying more on regional incentives to boost sales.
Dianne Craig, who took over the position at the first of the year, said Ford will be moving away from national program to a more targeted regional approach. Ford is already spending more than the industry average on incentives ($4,570 per vehicle vs. $3,830), though she pointed out that the rate of growth is less with a year-over-year gain of just $90 while the industry saw a $380 jump in spiffs. “We’re very, very disciplined with our incentive approach, but we have to balance that with keeping our dealers competitive,” she told the trade paper. By going regional with the incentive programs, Ford will be able to tailor rebates, lease deals and dealer-direct cash to local market conditions.
Ford has seen a decline in its traditional passenger car sales, which has been offset by growth in the crossover SUVs and pickups. In order to grow overall market share, look for more deals on cars than trucks. Ford was able to increase Fiesta sales by 6 percent in February as a result of big incentives.
Chevy Bolt marked up, discounted
The 2017 Chevrolet Bolt EV is rolling into showrooms with mixed results primarily in California, which has a Zero Emission Vehicle (ZEV) mandate that requires the sale of pollution-free vehicles. While the car has been much-anticipated due to its relatively low sticker of $37,495 (effectively $29,995 after a federal tax credit) and 238-mile range, Automotive News reports that some dealers are discounting the electric by as much as $5,000, while others are marking them up by that amount.
According to the report, the dealers asking over sticker are in more rural areas where inventory is limited, while most of the discounting is occurring in the Bay Area and Los Angeles, which has a higher concentration of dealers and more vehicles in stock. The only factory support on the Bolt is a 3.9 percent finance deal. Most of the local offers include discounts ranging from $1,285 to as much as $5,200, with two dealers offering 3-year leases of $260 per month with $3,995 down.
Jim Cain, a GM spokesman, told the trade paper that “If somebody’s marking them down, it’s coming out of their margin. Dealers are independent businesses, and capitalism at work tends to drive local market pricing.” It will be interesting to see if the discounting is just a local phenomenon particular to California, as GM ramps up Bolt production and rolls out the vehicle nationally.
Check out the This Week in Car Buying Podcast here.
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