This Week in Car Buying: Deals of the month; Inventories tighten; Makers look to fill white spaces; Dealer tries new pricing approach
Auto makers are poised to offer deals on a wide range of vehicles from small hatchbacks to popular crossover SUVs in this month’s top 10 deals compiled by Kelley Blue Book. The incentives include low down-payment lease deals, generous cash offers combined with low-interest financing. The offers shown here expire on January 31.
Topping the list this month is the 2017 Nissan Rogue, which recently had a freshening and is the only compact crossover SUV to offer a third-row seating option. The Japanese brand is offering a 3-year lease with just $1,899 down for $189 per month. Another vehicle in the class worth cross shopping is the 2016 Jeep Cherokee. Instead of a lease, Jeep is offering its versatile off-roader with a hefty $4,500 rebate, which is considerable when you take into account the vehicle’s KBB Fair Purchase Price of $25,048 on an MSRP of $26,450. Also on the SUV side of the ledger is the 2017 Buick Envision. The GM division is offering a 3-year lease at $299 per month with $3,699 due at signing.
Not quite a crossover SUV, the station wagon-based Subaru Outback has a lease deal available on 2017 models. The 36-month contract has monthly payments of $229 per month with $1,729 down. It’s not that often Subaru offers deals like this as the company is enjoying record sales and has the tightest inventory among manufacturers.
Family sedans have not been faring well against crossovers and as a result of soft demand there are several deals worth noting on both mid- and full-size family 4-door models. Hyundai is looking to clear out stocks of 2016 Sonatas with a $179 per month 3-year lease with $1,499 down. If you need a larger cabin, check out the 2016 Chrysler 300, which has a $3,000 rebate plus 0-percent financing. Kia’s previous generation 2016 Cadenza, a front-drive sedan that competes with the Chevrolet Impala and Toyota Avalon, is available with a 39- month lease at $299 per month with $1,499 up front.
Entry level offers include the $14,635 2016 Chevrolet Spark, which has $1,000 cash back and 0-percent financing and the 2016 Hyundai Veloster, a slightly larger and sportier hatchback, which benefits from a $4,000 rebate on an MSRP of just $18,835.
The industry continues to do a pretty good job of keeping a lid on inventories as the market peaks. According to Automotive News, the pipeline of built vehicles stands at a 63-day supply, up 2 days over December, but 2 days less than a year ago. The days’ supply figure refers to the time it would take to sell all the cars in stock at current sales rates. Lagging demand for sedans pushed that category to a 70-day supply, up 8 days over a year ago.
Most makers are beginning to slightly scale back production in order to keep supply in line with demand, only two brands saw their stocks rise in December, Hyundai-Kia (up 5 to 58 days) and Mercedes-Benz (up 4 to 51 days), still, both were less than the industry average.
Subaru continues to have the tightest supply at 26 days, while Fiat, Buick and Mitsubishi have the most vehicles on hand with respective days’ supply of 135, 126 and 125. Buick, in particular, has ample supplies of Regal (196 days), LaCrosse (175) and Cascada convertibles (159). Fiat’s 500L continues to languish in the market. The Italian brand has a 225-day supply on hand with just 900 cars in stock, which shows how little demand there is for this particular vehicle. By comparison, the 159 days’ supply of the 500X crossover version, of which there are 4,400 on the ground, is evidence of its greater popularity.
Filling in the white spaces
Even as the industry is looking on ways to deal with the fundamental shift away from traditional sedans to crossovers and SUVs, several automakers are looking for so-called “white space”, little niches in the market that may be able to serve some unmet consumer needs. On the luxury end, Lexus is eyeing the subcompact crossover, EV and performance segments. Meanwhile Subaru is looking at offering a wider range of vehicles as it becomes more of a mainstream brand.
Lexus showed the radically styled UX subcompact crossover at Paris last fall and Jeff Bracken, general manager of Lexus, told Automotive News that the division is actively studying this entry, which would be positioned beneath the current NX. “That’s a gap we are watching very closely,” he told the trade paper, adding that he believes the lack of such a vehicle is costing the company about 25,000 to 30,000 sales per year. Other segments under consideration would be EVs to take on Tesla as well as the onslaught of electrics promised by Mercedes-Benz and Volkswagen Group. He is also looking at more variants of the Lexus performance “F” models. Also under consideration would be a 3-row SUV based on a more car-like crossover platform as opposed to the current body-on-frame construction of the GX and LX models.
Meanwhile Subaru is looking beyond the introduction of the updated Impreza and the redesigned Crosstrek to the addition of a large 3-row crossover in 2018. This new vehicle is expected to add about 60,000 units annually and help push Subaru beyond the 700,000 sales mark and maybe as high as 850,000 by 2020, according to company officials.
Dealer tries new pricing model
Looking to move beyond the current trend of localized incentives or even no-haggle one-price deals, Koons of Silver Spring, Maryland, which sells Ford, Lincoln and Mazda brands, is trying a 30-day price guarantee on all transactions. The program is called Total Confidence Pricing. Dealer principal Alex Perdikis told Automotive News that this is “a way to repackage and enhance what we offer as an organization.”
The program used metrics like Kelley Blue Book’s Fair Purchase Price to determine a market price for its offerings. It’s not a one-price or no-haggle deal, but represents a composite price of what a customer can reasonably expect to pay for a vehicle. “We may not be the lowest price, but we’ll be competitive and we have a large inventory so customers will find what they want,” he said in the interview.
The guarantee is that if Koons advertises a car for less than what a customer paid for a similar model, the dealership will refund the difference in the selling price. Exceptions include any changes in manufacturer discounts or incentives over the 30 day period.
Check out the This Week in Car Buying Podcast here.
While it doesn’t share the new platform as the new generation Prius and Prius Prime, the 2017 Toyota Prius C has undergone a mild refresh. Pricing starts at $21,015.
Mini is adding more muscle to its Countryman crossover variant with the introduction of the 2018 Mini John Cooper Works Countryman. It’s expected at showrooms this April.
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