This Week in Car Buying: Model year closeouts start early; Genesis woos luxury buyers; Infiniti tops among shoppers; Auction's busy, prices drop

By Matt DeLorenzo on July 22, 2016 11:30 AM

Much like seeing Christmas decorations going up around Halloween, the end-of-the-model-year sales events, which typically crank up in August and roll through the big Labor Day Weekend, are now getting started in mid-July. Rebates, lease deals and low-interest loans are being offered across the board on 2016 models, and as we observed recently, are also being offered on select 2017 models.

Some of the most generous cash deals out there are being offered by Lexus, Fiat Chrysler Automobiles, Ford and General Motors. At Lexus, rebates can top $5,000 on 2016 ES, GS, IS and RC models, while $4,000 back is being offered on the 2016 Cadillac XTS and Ford Fusion Energi. The 2016 Ford C-Max Energi carries a maximum rebate of $4,500. At FCA, cash back of $3,500 can be found on the 2016 Jeep Patriot and Compass. A similar amount is available on previous-generation 2015 Ford F-150, F-250 and F-350 pickups. Hyundai is offering up to $3,000 on the Equus flagship, while sister division Kia has $3,000 on virtually all its leftover 2015 models. Among 2017 models with rebates are the Ford Fusion Hybrid with up to $2,000 back, the Toyota Camry with $1,500, plus $500 on the recently introduced 2017 Chrysler Pacifica and Fiat 124.

Even Subaru, which has the lowest days’ supply in the industry, isn’t immune from cranking up its sales efforts, offering zero-percent financing and lease deals on the 2017 Legacy, Outback and Forester. Lease deals start as low as $199 per month for 3 years with $1,899 down on the Legacy, $229 per month for 3 years with $1,729 down on the 2017 Outback, and $209 per month for 3 years with $1,709 down on the 2017 Forester. Leases on 2016 models range from $199 per month up to $325 per month with no money down. The current sales programs continue through August 1.

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Genesis woos buyers with perks

Joining Lincoln in looking to coddle owners, the Genesis luxury division of Hyundai just announced a range of customer care programs that will be introduced with the all-new G80 and G90 sedans. The programs will also apply to all subsequent models introduced by the brand.

Among them are 3-year/36,000-mile complimentary scheduled maintenance, along with a valet service similar to the one recently announced by Lincoln in which vehicles will be picked up from and returned to locations of the owner’s choosing. The owners will also be given loaner cars when their cars are picked up. All models will be equipped with 3-year complimentary Genesis Connection Services including Connected Care, Remote and Guidance, as well as 3 years of Sirius XM Travel Link and Map Care.  Connected Care includes roadside emergency assistance, monthly vehicle health reports and on-demand diagnostics, while the Remote package allows the owner to start the vehicle and turn on the climate control, remotely lock and unlock the vehicle and use a car finder via a mobile app.

Genesis is also touting its warranty that covers the complete vehicle for 5 years, 7 years for anti-perforation protection, and a 10-year/100,000-mile powertrain warranty.

Mystery shoppers rate Infiniti highest, Tesla lowest

A mystery shopping study called the 2016 Pied Piper Satisfaction Index rated Infiniti highest among all automakers after visits to 6,157 dealerships from July 2015 until June 2016. Tied at second behind Nissan’s luxury division were Mercedes-Benz and Lexus stores, followed by Toyota, Audi and BMW.

The report also revealed that Tesla scored lowest, while the next higher brands in ascending order were Volvo, Mitsubishi, Mazda, Jeep and Chevrolet. Tesla’s score of 86 was 10 index points below Volvo’s 96 and Infiniti’s rating of 114. One of the reasons Tesla fared poorly is that it ranked lowest in sales personnel providing information about leasing and financing options.

“There is no question that the typical dealership sells more effectively today than it did ten years ago,” said Fran O’Hagan, President and CEO of Pied Piper Management Company LLC.  “However, plenty of variability remains.  We have watched some brands completely change the way that they sell, while others sell today no differently than they did ten years ago.” 

Among these changes are that sales staffs are being relied upon more to offer financing and leasing options and to demonstrate features that set their cars apart from the competition. Less important is the offer of printed material, asking how the vehicle is going to be used and asking why they are interested in a particularly brand. 

Auctions busy, prices drop

While auction volume decreased slightly in the second quarter, it did so from record highs in the first quarter as the auto industry deals with a glut of off-lease cars coming to market. Prices have declined for used 1- to 3-year-old vehicles by 3.6 percent or $671 in the second quarter of 2016.

“Despite what we know about the increase in lease returns for the foreseeable future, it’s interesting to note that Kelley Blue Book Field Analysts are seeing a decrease in auction inventory from last quarter,” Sean Foyil, a KBB analyst, reported in the Blue Book Market Report. “While year-over-year auction volume is up 61 percent, in the second quarter we saw a 2-percent decrease in the number of vehicles running through auction lanes from the first quarter of 2016. With auction volume at an all-time high for 2016, it is unusual that overall average decline in auction values matched last year’s pace. Vehicle values decrease when the market is oversaturated, so this indicates that automakers and rental companies are sending all of their off-lease vehicles to auction in an effort to keep values stable.”

All of these vehicles will eventually make their way into the second-hand market, exerting more downward pressure on used vehicle prices, which will in turn, put pressure on new car sales. Whether it results in additional incentives on new cars or innovative programs to move late-model vehicles through CPO programs, it appears that we are heading into a buyer’s market in both the new and pre-owned markets.

The rundown

Infiniti has launched an all-new competitor in the subcompact crossover SUV market. We take the wheel of the 2017 Infiniti QX30 in this First Review.

Honda is again adding a hybrid to the highly successful Accord lineup. Check out our First Review of the 2017 Honda Accord Hybrid here.

While the new 2017 models are rolling into showrooms, we are beginning to see the first images of what will be introduced for the 2018 model year. Get a first look at Kelley Blue Book’s Class of 2018.

In the market for a new car? Explore these useful tips on how to get the best deal:

Kelley Blue Books Complete Guide to Incentives

All you need to know about leasing

Which dealer services are right for you?

What to look for in your next economy car

Ten insider tips for new car buying


 

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