This Week in Car Buying: Automakers and buyers give thanks
Welcome to the Thanksgiving edition of This Week in Car Buying, there's a lot to be thankful for on both sides of the desk at dealerships across the country as we head into Black Friday and the Holiday Event selling season.
According to our top 10 deals of the month, if you're car shopping this weekend be sure to check out the 2014 VW Passat, which ranks as our top finance deal for the month with a Fair Purchase Price of $19,890 on an offer of no interest for 60 months. If you're looking to lease, Cadillac is offering a 36-month contract on its 2014 ATS with $749 due at signing for $299 per month. The top cash offer is on the 2014 Nissan Altima, which has a $1,000 rebate plus 0-percent financing for 60 months. Other big rebates include $3,500 on the Mazda CX-9 and $3,000 on the 2014 Ford Fusion.
Longer loan terms ahead
Even with some in the industry wringing their hands over loan terms that are stretching from 60 to 72 months Chrysler quietly introduced 84-month loans in October through its Chrysler Capital affiliate. These 7-year contracts are being offering on 2015 models of the Chrysler 200, Dodge Dart, Dodge Grand Caravan, and 2014/2015 Chrysler Town & Country minivans. Also included are 2014 models of the Jeep Patriot and Compass.
While some may equate the longer term loans with their lower payments as going to riskier borrowers, some observers say that isn't the real dangers with the loans in that it may keep buyers out of the market longer and that, according to Experian Automotive studies, the longer the loan, the less brand loyal the customer is when they return to the new car market.
Experian also reported that the length of the average automotive loan reached 66 months for the first time and loans in the 73- to 84-month category already make up nearly 25 percent of all contracts, up from just 20 percent a year earlier.
Hot November Sales Expected
KBB analysts expect November to be a good month for the industry, with overall sales to rise 2.2 percent fueled in part by these incentive programs. "Black Friday vehicles dealers should have a large impact on sales and make the final weekend of the month a busy one for car buying," said Alec Gutierrez, senior analyst here at KBB. "Shoppers continue to return to the dealership as economic conditions remain favorable." KBB data suggests that November should see as many as 1.27 million vehicles sold, up over last year, but down slightly (0.6 percent) from October. Fiat Chrysler is expected to gain the most, chiefly from booming sales by its on-fire Jeep division. Overall, small crossover and SUV sales are expected to grow at double digit rates.
Robust mid-size car sales
While crossovers remain the hottest segment in the market, mid-size sedan sales also continue to hold up, something that all manufacturers can be thankful for, especially Toyota, which continues to lead the segment with its Camry. Even though it has taken the unusual step of doing a major mid-cycle overhaul for 2015 of its bread-and-butter entry, sales of existing models continued to grow. Through the first 10 months of 2014, the company sold 368,142 units compared to 348,134 a year earlier. Camry outpaces its nearest rival, the Honda Accord by more than 30,000 units. If that gap holds up through November, Toyota can still beat Honda for the overall segment crown even if it sells no Camrys at all in December.
Underscoring the popularity of those two models, which outdistance the third place Nissan Altima (280,479 sold through October), total sales of Camry/Accord is 100,000 more than Chevrolet Malibu/Kia Optima/Chrysler 200/VW Passat/Dodge Avenger/Mazda6/Subaru Legacy combined. Still, 4th place Ford Fusion is having a good year and at 263,431 sold through October and is within 34,000 units of outselling all its domestic competition combined.
2016 Ford Explorer Pricing Announced
Ford is also thankful that it has an all-new 2016 Explorer on the way and shoppers should appreciate the fact that the company will hold the line on pricing, keeping the base price at $31,595 when it goes on sale next summer. Looking to exploit the redesign and the fact that many of the models currently sold are fully loaded, Ford is coming out with a brand new Platinum premium model starting at $53,495, almost $10,000 more than the current range-topping 2015 Ford Explorer Sport, which has a base price of $43,995. A comparable 2016 Sport will be priced at $44,195, while the XLT will begin at $34,295 and the Limited at $42,195.
In addition to revamped styling, the 2016 Ford Explorer will also boast a larger 2.3-liter EcoBoost turbocharged 4-cylinder engine. Even though the 2016 model is still some months away, Ford has incentives of $1,500 cash on 2014 and 2015 models.
What Lexus and Scion won't build
While auto shows are often about what new products manufacturers will be bringing to the market, the Los Angeles Auto Show is notable for news about future products that didn't quite make the cut. After Lexus showed its LF-C2 convertible, a concept clearly derived from the all-new 2015 Lexus RC Coupe, word came out that Toyota's luxury division wouldn't be following up with a production model. It will focus instead, at its dealers' urging, on a large three-row crossover SUV positioned above the current 2015 Lexus RX and based on the division's LS sedan architecture. Such a vehicle could replace the current GX, which is a traditional truck-based SUV. Also, don't expect any Mercedes-Benz CLA-type competitors from Lexus as Jeff Bracken, the division's general manager, says it won't sell any cars priced below $30,000. He added that on the strength of the all-new 2015 Lexus NX compact crossover SUV, he expects Lexus to eventually top sales of 300,000 per year.
Meanwhile, Scion vice president Doug Murtha told Automotive News that they are standing pat with the current 2015 Scion FR-S sport coupe and has no plans to offer a drop-top or turbocharging, despite toying with concepts for both.
Likewise, VW showed a high performance version of the 2015 Golf SportWagen, called the Golf R Variant, a station wagon version of its 292-horsepower Golf R hot hatchback. Even though the vehicle made its worldwide debut at Los Angeles, VW has no plans to actually sell this model in the United States at this time.