This Week in Car Buying: Black Friday deals; Inventories fatten; China's Zotye plans 2020 U.S. launch; Volvo subscriptions thrive
Black Friday sales, which roll into the nearly ubiquitous Holiday Sales Events, have gotten underway in earnest at several manufacturers. The programs, playing off the longstanding retail tradition of “black Friday” (the day after Thanksgiving sales day that kicks off Christmas shopping—and where retailers are looking to post black ink), feature some 0-percent financing, lease deals and cash rebates.
At GM, Chevrolet and Buick are touting specials that include both financing and rebates. Chevy is pushing 0-percent financing on select models as well as 90 days of no monthly payments if the vehicle is financed through GM. Buick is promoting rebates on two of its crossover SUVs, $5,500 on the subcompact Encore and $3,500 on the compact Envision.
Over at Fiat Chrysler Automobiles, Dodge has up to $3,250 in cash and discounts on Chargers and Challengers as well as $1,000 on the Durango SUV. The Black Friday program at Chrysler sees as much as $6,000 back on the Chrysler 300 full-size sedan and $2,750 on the Pacifica minivan. There is also a lease deal for people that move over that sets a $239 monthly payment for three years with $5,189 due a signing. Ram trucks has $1,000 back on its pickups as well as a 3-year $269 per month lease on select 2019 Ram 1500 trucks. That lease requires $2,999 down.
Jeep is also jumping on the Black Friday bandwagon with $4,000 cash on 2018 Grand Cherokee and Renegade models. The 2018 Compass has a $2,500 rebate, while 2019 Cherokees benefit from a $1,000 rebate and 0-percent financing.
Toyota is kicking off its Black Friday activities with a $259 per month lease on the 2019 Camry for 3 years with $1,999 down. And on the all-new 2019 Toyota Avalon, buyers can take advantage of 1.9 percent financing for 60 months.
Just in time for the Holiday Sales Event frenzy that is sure to unfold after the Thanksgiving holiday, industry inventories have been growing, reversing a trend where the manufacturers seemed to be keeping their stockpiles in check.
According to Automotive News, the number of cars in inventory rose nearly 11 days’ worth from 65 to 76 from Oct. 1 to Nov. 1 and the current supply is also 5 days higher than year ago numbers. It’s the biggest inventory the industry has had since November 2014. Inventory is measured in days’ supply, the number of days it would take to move all the cars on the ground at the current sales rate.
While the car supply edged upward to 66 days, these vehicles represent just 27 percent of the 3,971,000 vehicles in stock. Light truck inventory has grown to 80 days’ supply. Part of that growth may be attributed to the all-new 2019 Chevrolet Silverado, GMC Sierra and Ram 1500 production hitting its stride. With growing supplies, incentives may tick upward, a change from the stable or slightly falling averages recently reported.
Subaru remains the industry leader when it comes to controlling inventory, reporting just 29 days’ supply of vehicles on hand, followed by Mercedes at 51 days and Land Rover with 56. Fiat continues to have slow sales and ample stocks, reporting a 192 days’ supply, followed by Buick at 130 days and Mitsubishi with 119.
China’s Zotye plans 2020 U.S. launch
Seemingly out of the blue, a company from China called Zotye Automobile International announced that it plans to begin selling an SUV in the U.S. market as soon as 2020. The new company will be based in California and is led by a former Mazda and Volvo executive, Duke Hale, assisted by a former Hyundai exec, Bob Pradzinski.
Zotye USA will be run by Hale’s company, HAAH Automotive Holdings, which was specifically started to help foreign makes enter the U.S. market. The new brand is looking at alternative distribution approaches similar to Tesla and Saturn by employing techniques such as no-haggle stickers. In the announcement outlining the company’s U.S. plans, Pradzinski said HAAH "is a disruptor, and we will be adding innovative features and processes to the customer and franchise dealer system. These new ideas will dramatically improve the current system, bringing in greater simplicity to the purchase process and more transparency for customers while also offering dealers unique advantages. The result will be a system that will function better for everyone.”
Zotye (pronounced Zo-tay) said it will offer this new compact crossover SUV priced well below existing competition. One model listed on the company’s Chinese website that may be chosen to start sales is the T600, a crossover similar in size and look to the Audi Q5. In China, the vehicle is priced between $11,700 and $20,200. However, there’s no official word yet on which model will be the first to debut.
Volvo subscriptions thrive
While Cadillac announced last week that it is putting its Book by Cadillac subscription service on ice for a while, Volvo continues to roll with its Care by Volvo Program, which offers 2-year subscriptions on its XC40 compact SUV for either $650 or $750 depending on trim. The program includes insurance and all maintenance. The program has proved so successful, the company is coping with waiting lists as it capped the volume of XC40s eligible for the program at 10 percent from the 15 percent reported earlier. Those on the waitlist aren’t likely to get their vehicles until 2019.
Even as the program has found success, there has been a bit of tension on the part of some dealers who feel the margins involved in servicing the subscriptions is smaller than what they would earn if they sold or leased the vehicles outright.
Still, Volvo Cars of North America CEO Anders Gustafsson is pleased with the program, telling Automotive News that "Growth is fun, but it can also complicate things.”
As far as the dealers are concerned, Gustafsson said he intends to get them more involved, especially handling the units turned in either after the first year if a subscriber elects to trade for another car, or after the two-year subscription expires. He views these vehicles as an excellent source of margin-delivering CPO units for his franchised dealers. Another benefit is that subscribers are coming to the brand through their smartphone apps and therefore is a source of younger customers who may not have been attracted to Volvo. The company plans to expand the program next year adding the new S60 sedan.
Speaking of the 2019 Volvo XC40, this compact luxury crossover has won the Kelley Blue Book Best New Model in our Annual Best Buy Awards program. See all the results here.
BMW has launched the first M Performance version of its redesigned 3 Series. Get the latest information on the 2020 BMW M340i and M340i xDrive in this First Look.
Toyota’s midsize pickup, the Tacoma, continues to soldier on. We tout the virtues of the availablity of a manual transmission in this 2019 Toyota Tacoma Quick Review.
In the market for a new car? Explore these useful tips on how to get the best deal: