This Week in Car Buying: Dealers fret at rising prices; Subscription programs grow; Ford opens Bullitt Mustang order book; Ford rolls out online car shopping
Shoppers who have been out of the market for some time aren’t the only ones suffering from sticker shock when they walk back into a dealership. With average vehicle transaction prices hovering at over $35,000, dealers are beginning to fret that their wares are getting too expensive and that prices will continue to rise as new tech, like autonomous capability, is incorporated in more and more vehicles.
According to the Wall Street Journal, National Automobile Dealers Association President Wes Lutz fears that if prices continue to rise at the current pace, “it will stop sales. It’s just more than consumers can handle.”
Further complicating the upward pricing spiral are higher interest rates, tighter credit requirements and even aluminum and steel tariffs that could impact the cost of building vehicles. As a result of climbing monthly payments, some analysts are predicting an increase in leasing or longer-term loans to keep those payments in check. Higher prices and dropping used vehicle values in 2018 could result in fewer new cars being sold in 2018. Charlie Gilchrist, NADA’s vice chairman told the paper that “You can’t continue to raise the price, because at some point, people won’t buy cars.”
Subscription programs grow
While they may not be less expensive than traditional leases or loans, the idea of car subscriptions is continuing to catch on with manufacturers, if not with consumers. Volvo Care, the program that offers a two-year deal including all maintenance and insurance on 2019 XC40 models will be expanded to include the upcoming V60 wagon, according to the company. Volvo also launched a smartphone app that makes it easier to subscribe to the service.
Currently, the program in which a consumer commits to a two-year contract, runs about $600 per month for an XC40 Momentum and about $700 for the R-Line trim level. Pricing for the V60 in Volvo Care has not been announced. After a year, subscribers are given the option to turn in their vehicle for another or continue in the program with their current car.
Other subscription programs offered by Cadillac and Porsche allow program participants to swap vehicles on a shorter-term basis. The latest manufacturer to announce that they will offer vehicles by subscription is Lexus, which will have a program tailored to its new entry level 2019 Lexus UX subcompact crossover which goes on sale late this year. However, Lexus hasn’t announced pricing or full details of the subscription program yet.
While manufacturers are looking into expanding these services, consumers in general aren’t showing an overwhelming demand for this alternative way of getting into a vehicle. According to a Kelley Blue Book Quick Poll with 873 respondents, 55 percent said they were aware of the subscription approach, but that it doesn’t interest them. A total of 28 percent said they didn’t know what a subscription service is, while 10 percent said they didn’t know, but are intrigued by it. Only 7 percent said they are aware and are interested in using a subscription service to acquire a new vehicle.
Mustang Bullitt order book opens
Ford has opened the order book on the 2019 Mustang Bullitt, a special edition inspired by the 1968 Mustang used in the iconic Steve McQueen movie “Bullitt”. Available in two custom color choices, Shadow Black and Dark Highland Green, the car comes with subtle chrome accents on the black grille and front windows as well as classic 19-inch 5-spoke alloy wheels and red Brembo brake calipers.
Ford has confirmed that the Bullitt’s tweaked 5.0-liter V8 will produce 480 horsepower and 420 lb-ft of torque with a top speed of 163 mph—8 mph higher than the standard Ford GT. The Bullitt is priced from $46,595 with $900 delivery.
“The new Bullitt will be every bit as cool and charismatic as the original ’68 Mustang,” said Corey Holter, Ford car group marketing manager. “Since its introduction earlier this year, Ford dealers have been fielding calls from customers wanting to know when they can order this unique piece of automotive history.” Deliveries are expected to begin later this year.
Ford rolls out online car shopping
Speaking of Ford, the auto maker is rolling out an on-line car buying program in Michigan, and plans to expand the program to other parts of the Midwest before taking it national by the end of the year. The enhanced online experience, which is called Ready.Shop.Go. is designed to make shopping and buying the company’s products faster and easier.
“Our customers are busy people, whether with daily work demands or spending time with their families,” said Mark LeNeve, vice president of Ford’s U.S. marketing, sales and service. “Ready.Shop.Go. allows them to find the perfect vehicle online, spend significantly less time at the dealership and drive away with their new ride sooner.”
Among the features available through the program are pricing transparency that shows all costs including taxes and fees, personalized incentives, finance and lease options, a promise honoring a quoted deal for two days, test drive scheduling, Ford Credit applications and a single point of contact on the dealer end. Pricing tools on the site include Kelley Blue Book Price Advisor and Trade-In Values.
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