This Week in Car Buying: Inventories trimmed; Heavy incentives continue; Subaru shares the love; Auto shows benefit sales
Strong September sales fueled by big year-end incentive packages, plus the replacement of vehicles lost in Hurricanes Harvey and Irma, helped manufacturers trim their inventories to more normal levels. Further cutbacks in production, plus the ongoing push to clear out 2017 models, are likely to play a role in the days ahead in keeping vehicle stocks in check. Through the first nine months of 2017, the industry produced nearly 500,000 units less than it did a year ago.
According to Automotive News, the industry had a 65 days’ supply of vehicles on hand Oct. 1, five days more than the 60 days’ supply that is considered ideal. That number represents how many days it would take to sell all vehicles in inventory at the current sales pace.
September stocks had grown to 71 days, about 15 days higher than a year earlier levels when auto makers where on their way to setting a sales record. Other than September, sales have lagged behind 2016’s results by a couple of percentage points.
BMW leads individual brands in having the smallest supply on hand, just 39 days’ worth; two days less than Subaru, which usually runs the tightest stocks in the business. Toyota reported a 47-day supply, while Audi had 48 and Mercedes-Benz 49 days’ supply. Volkswagen has the largest inventory right now, which stands at 132 days, but that is due in part to ramping up its supply of the all-new Atlas and 3-row Tiguan models as the German brand makes a big push into the truck market. Fiat is right behind with a 130-day supply of vehicles followed by Buick with 117 days.
While GM has trimmed its inventory down to 76 days (among the vehicles in shortest supply are the Chevrolet Bolt, Malibu, Traverse and Equinox), Buick still has an excess amount of sedans on hand, including the Regal and LaCrosse, which have respective levels of 222 and 284 days’ supply. At Fiat, the 500X, which is in the subcompact crossover segment, is struggling with a 140-day supply.
Heavy incentives continue
With the 2018 model year officially underway as of Oct. 1, there are still plenty of 2017 models with rather large discounts, with some of the bigger spiffs going on vehicles that are being replaced by all-new 2018 versions. A case in point is the 2017 Buick Enclave, which has total discounts and option package credits that can top $10,000. Toyota, which has an all-new 2018 Camry hitting showrooms has up to $3,500 on previous generation 2017 models. And Ford continues to put large rebates on its Expedition SUV with up to $7,750 cash back.
On carryover models, Ford is particularly aggressive with incentives of up to $5,000 on Focus, $4,500 on Edge, Escape and Explorer, $4,000 on Taurus, C-Max Hybrid and Transit 150/350. Hyundai is continuing its $6,000 discount on 2017 Sonata, Mazda has $2,500 on the midsize Mazda6 and Chevrolet has incentives worth over $7,000 on its 2017 Malibu.
Among crossovers, there’s $4,500 on Jeep Cherokee and up to $4,250 on Renegade, Kia has $3,000 on the 2017 Sorento, and Hyundai, $3,750 on the 2017 Santa Fe Sport. Nissan is offering up to $3,500 on 2017 Rogue and $3,000 on 2017 Murano models.
Subaru shares the love
Subaru announced that the annual Share the Love Event in which it donates money to charitable partners for each car it sells will return for its 10th installment between Nov. 16 and Jan. 2, 2018. As part of Subaru’s 50th anniversary of being in the U.S. market, it also announced that there will be no cap on the amount of money it will give away. The charities include ASPCA, Make-A-Wish, Meals on Wheels America and the National Park Foundation.
The auto maker will give $250 for each new Subaru sold or leased during the period and is promising to give at least $250,000 to each of the partners. In the 10 years of the program, Subaru has donated more than $115 million and is looking to give at least that much in this year’s program alone.
“It is part of our culture at Subaru to support causes important to our employees, retails and owners and we are proud to have continued that tradition for 10 consecutive years,” said Alan Bethke, senior vice president of marketing for Subaru.
Besides the national charities, Subaru dealers can select a hometown charity for their customers to support. More than 660 local charitable organizations are enrolled in the Share the Love program.
Auto shows benefit sales
While much of the focus on auto shows and their media coverage is on the all-new models unveiled during press days, a recent study indicates that the public days of the events themselves have a long lasting and positive impact on local sales. The importance of public access to the shows is often overlooked or underestimated by some manufacturers who are opting out of some of these exhibitions because of rising costs.
However, a study by Foresight Research, which according to Automotive News, surveyed 621 new vehicle buyers in the top 25 markets who visited a show and later bought a new car say they were influenced by their attendance in their vehicle purchase decision.
Part of the purpose of the study was to see if the influence of the show attendance on the vehicle purchase declined after three months, as is generally assumed by conventional wisdom. Steve Bruyn, CEO of Foresight said it doesn’t. According to the survey, show visits “highly influenced” vehicle purchases within that first three-month window, but also, that rate held steady and had a bearing on transactions up to 12 months later.
“We have been measuring auto shows for about 10 years and measure 55 markets each year—about 15,000 respondents—with very detailed questionnaires,” Bruyn told the trade paper. “We find that auto shows are far more powerful than believed by most people in the industry.”
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