This Week in Car Buying: Honda Accord vs. Toyota Camry, Part II; Inventories hold; Mercedes-Benz pushes CPO; KBB values on AutoGravity
Back in January, we did a quick compare-and-contrast on the incentive situation involving the all-new 2018 Honda Accord and the 2018 Toyota Camry. Honda was only offering lease deals on its previous generation 2017 models, including the discontinued coupe, while holding to retail levels on the all-new model. Toyota, on the other hand, launched Camry and quickly offered aggressive lease deals on the family sedan including offers as low as $209 per month for base LE models (a deal that has been subsequently raised to $219 per month with $1,999 down). A similar 2018 Honda Accord entry level LX model lease is $249 monthly with $3,199 down.
Not matching incentives is apparently costing Honda some sales as Automotive News reports that the model currently stands at a 104 days’ supply—in other words it would take that time for the auto maker to sell all the Accords in stock at the current sales rate. The trade paper reports that the company has 86,000 of the vehicles in stock. Toyota doesn’t break out its inventory by model, but across all its car lines, it has a 61 days’ supply.
Honda says the lack of discounting helps to keep the Accord’s resale values high. But higher sticker prices and the lack of incentives could prove daunting to customers who leased the previous generation Accord back in 2015 when they are confronted with a steeper price tag and no big incentives, which translates into a much higher monthly payment for the new model. Compounding the situation is the slowing demand for traditional sedans in favor of crossovers.
Supplies on dealer lots are growing and the trade paper says that some dealers are actually turning down shipments of additional vehicles. We will see in the coming months if the increase in supplies causes Honda to relent and introduce either incentivized lease deals or cash rebates.
While the Honda Accord is seeing its supply balloon, the rest of the industry is managing inventories relatively well, holding a 74-day supply at the beginning of March, which is identical to year ago levels and 10 days’ fewer supply than at the start of February. A 60-day supply is considered ideal. However, vehicle stocks typically grow this time of year because of slow winter sales and a dealer desire to build up supplies for the kick-off of the spring selling season.
Both BMW and Mercedes-Benz brands have the lowest inventories, tied at 47 days’ supply each, followed by Subaru with a 49-day count. On the flip side, Fiat has the largest inventory of vehicles at 161 days, followed by Volkswagen at 121 and Jaguar and Ram tied for third with 110 days’ supply.
Winter is hardly a time to buy a drop-top as shown by the 161-day supply of the Buick Cascada convertible. Other vehicles with big supplies include the Acura RLX, which stands at 159-day supply, the GMC Canyon at 155 days and the new Ford EcoSport, of which there are 14,000 in inventory with a 146 days’ supply. Lincoln’s in-demand Navigator has the tightest supply at 36 days. The Ford Expedition is running closer to an ideal number with 62 days’ supply.
Mercedes-Benz pushes CPO
Working off projections that it will see 15 to 20 percent more off-lease vehicles being returned during 2018, Mercedes-Benz is ramping up its Certified Pre-Owned vehicle program with ad campaigns, offers of free service visits and a dealer incentive program. The higher visibility and incentives are designed to draw attention to the availability of these low-mileage, factory certified vehicles.
“There’s an initiative on the part of Mercedes to support a greater increase in the pre-owned business and the certified pre-owned business in particular,” Greg Barnes, chairman of the Mercedes-Benz Dealer Board and South Florida dealer, told Automotive News. “it’s appropriate given the off-lease vehicle increases we’re seeing. It’s good. It helps us.”
Barnes said that Mercedes has launched an Olympic-themed dealer incentive program that is expected to run for three months where the auto maker will pay dealers bonuses if they hit Bronze, Silver or Gold sales targets for pre-owned vehicles. Smart shoppers might look towards the end of the month to shop CPO cars as dealers close out their books for the month and may be able to pass along some of that bonus payment incentives to their customers. Other spiffs to look for would be subsidized finance rates and free maintenance.
KBB values on AutoGravity
A smartphone app called AutoGravity, which can arrange indirect loan and lease offers to consumers via their mobile devices, now features Kelley Blue Book Trade-In Values on its platform. As a result, users will be able to access instant vehicle valuations when assessing their trade-in while searching for financing on either new or used models. AutoGravity.com currently counts 1.3 million users who have collectively requested more than $2 billion in vehicle financing. Users can receive up to four personalized loan and lease offers in minutes.
“Today’s shopper demands a seamless car buying and financing journey,” said Damon Bennett, senior director of syndication at Kelley Blue Book. “The inclusion of Kelley Blue Book’s trusted data provides consumers an added level of confidence, offering easy access to the information they need at the right time in the buying process within the AutoGravity platform.”
Andy Hinrichs, founder and CEO of AutoGravity, said “Dealers and car buyers are looking for a faster and simpler car financing process. In addition to serving customers with personalized loan and lease offers from the same finance providers our dealers use, AutoGravity users have instant access to trusted trade-in values that make the car financing process that much easier.”
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