This Week in Car Buying: More incentives fuel sales; Industry cleans up sales abuses; VW to sell 2015 diesels again; KBB.com tops in mobile
The ongoing debate on whether or not sales have reached a plateau continues to rage as some analysts predict March sales will be the highest the industry has seen since 2000. Kelley Blue Book predicts that sales will come in 3 percent higher year-over-year for the month, while other analysts are expecting gains ranging from 0.2 to 2 percent.
While some of the impetus driving new car sales in recent years came from the pent-up demand from people who put off buying a new vehicle during the economic downturn of 2008, the high sales levels now are believed to be the result of high levels of incentives by makers looking to keep the momentum up. However, at some point the automakers may hit a point where this spending becomes unsustainable forcing them to dial back production to meet real, rather than inflated, demand.
“Despite considerably higher discounts and incentives, first quarter sales totals will likely only finish flat versus last year, a signal of weakening consumer demand for new vehicles”, said Tim Fleming, a Kelley Blue Book analyst. “As sales cool after years of robust growth, adjusting production accordingly and managing supply, especially in car segments, should be top priorities for automakers.”
Until the industry reaches that point, however, the incentives on traditional sedans and in a specialty segments like electrics and hybrids, will continue to be high as the various brands look for different ways to move these slow-selling vehicles. Some of the biggest offers also are on 2016 models. GM is offering 0-percent financing on all 2016s along with $4,000 in bonus cash.
Also feeling the pinch are luxury brands. According to AIS Rebates, Lexus is offering $10,000 in dealer cash on its GS F performance sedan, Audi has a $7,500 market allowance on the 2016 A8, Lincoln has $8,000 plus 0-percent financing for 72 months on 2016 Navigators and Volvo is offering $4,585 in lease cash plus a $2,000 market allowance on its XC90 T8 Hybrid.
Industry cleans up sales abuses
There’s a lot more than simple bragging rights associated with being a sales leader, since Wall Street investors closely look at the performance of various car company’s monthly reports and trade in these firms stocks accordingly. That’s what was involved in last year’s scandal, in which Fiat Chrysler Automobiles had to restate sales figures that showed some declines in monthly sales performance rather than an unending string of gains was a such a big deal.
According to Automotive News, the industry seems to be cleaning up its act and discontinuing the practice of “punching” sales cards to inflate volumes. Sometimes dealers would reports sales of cars which actually were going into their own fleets to be sold later as used units. The trade paper along with HIS Markit said evidence of tightening the reporting to eliminate these practices is beginning to surface in data showing vehicle registrations becoming more closely in line with announced sales figures. The report said that while registrations still lag sales, the gap is diminishing as a result of the documentation working its way through the system. In 2015 there was a 1.62 percent disparity between registrations and sales, a total of 282,675 vehicles, one of the largest discrepancies in 10 years. Last year, that margin closed considerably when the industry reported 17.54 million sales against 17.42 million registrations, a gap of 120,000 vehicles.
VW set to sell 2015 diesels
It’s been nearly two years since the diesel emission cheating scandal involving Volkswagen came to light and one of the first impacts was the immediate suspension in sales of brand new 2015 Golf and Jetta TDI models. A two-stage fix approved by the EPA now will allow VW to sell those vehicles to the public. A VW spokeswoman said the agreement covers 67,000 diesels from the 2015 model year, most of which are in customer hands. About 12,000 units remain in dealer inventories.
The first phase of the fix, which will permit the vehicles to be sold by dealers, includes updating the emissions software, which also eliminates the programming that enabled the vehicle to run cleaner only during emission testing. Later, as parts become available, the cars will be retrofitted with new particulate traps, diesel oxidation and nitrogen oxide catalysts.
While VW will be able to clear out the stocks of unsold diesels, it has said it will not offer any new diesel models at least through 2018. If it does get back into the segment, it would likely only do so with its SUVs as opposed passenger cars.
KBB.com tops in mobile
According to J.D. Power, KBB.com’s mobile site scored first in user satisfaction in its annual survey of third-party buying sites. It’s the first time the company has divided its study into mobile and desktop categories. KBB.com scored fourth overall in the desktop category.
In a new release announcing the results, J.D. Power said “The redesigned study evaluates automotive third-party websites from two perspectives across multiple platforms (desktop/mobile): overall site function and the importance of various site features to online shoppers. This study examines which current site functions and designs are most effective in helping shoppers narrow their consideration set and increasing their likelihood to recommend and return to the website. “
“Over the past five years, we’ve seen an explosion of innovation that has been employed by third-party automotive sites, among others, to guide automotive shoppers through the process,” said Thomas King, vice president of PIN OEM operations, media & marketing at J.D. Power. “However, in the end, it always comes back to content and we have found that the top-performing sites are better at delivering key information on different devices.”
According to J.D. Power, “Kelley Blue Book consistently offers intuitive dealer locator and inventory search tools that are critical to mobile shoppers, particularly those who are actively shopping. Furthermore, the site offers platform-appropriate content such as 360 exterior/interior viewers to help shoppers understand the vehicles inside and out.”
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