This Week in Car Buying: Prices continue to climb; Mini banks on used cars; Overall CPO sales hit plateau; Nissan extends incentives
Although average transaction prices (ATP) continue to outpace year ago level, since the beginning of the year, they’ve actually dropped month-over-month as manufacturers rely on bigger discounts and incentives to move the metal. The shift towards more expensive trucks and crossovers, however, are still keeping the industry’s ATP at near record levels.
Kelley Blue Book data indicates the light vehicle average transaction prices for May stood at $33,261, up 2.6 percent or $847 over 2016. But average prices actually fell by $266, nearly one percent, over April’s level.
“Transaction prices continue to climb at a steady rate, driven by the weakening sales mix of cars, which is estimated at 38 percent in May, down from 41 percent one year ago,” said Tim Fleming, analyst for Kelley Blue Book. “Compact SUVs, the most popular segment in terms of sales, saw an increase of 2 percent year-over-year and clearly remain in very high demand. There are signs, however, if discounts in SUV segments that are growing quickly, including subcompact and luxury SUVs, which are likely helping to fuel those segments’ double-digit growth this year.”
Ford Motor Company saw one of the biggest jump in prices, gaining 5 percent in May on the strength of the F-Series pickups, which grew 3 percent, and counter to industry trend, high prices for the Fusion, which has been refreshed and has a new premium Sport model in the lineup. At Lincoln, however, the transaction price on the compact crossover MKC actually fell 4 percent, a signal that there are some discounts and incentives to be had in this hot segment.
Volkswagen also saw its ATP climb 5 percent, due in part to its resumption of sales of 2015 diesel vehicles that were sidelined while the company sought a settlement on its emission cheating scandal. Those vehicles have undergone the first of two fixes, which allowed VW to put them back on the market.
By segment, minivans again led the way with a 5.1-percent increase in prices fueled in part by the all-new 2017 Chrysler Pacific minivan. The more expensive hybrid is finally beginning to hit the market in significant numbers. Look for that segment to remain strong as the all-new 2018 Honda Odyssey minivan goes on sale. Taking the biggest hit in ATP are electric vehicles and hybrids, down a respective 7.4 and 4.0 percent over a year earlier. The lower EV transaction prices can be attributed in part to the introduction of the 2017 Chevrolet Bolt, which, after federal incentives are factored in, essentially retails for less than the industry’s ATP.
Mini banks on used cars
Looking to increase its dealers’ used car sales activity, Mini USA has launched a program to pay bonuses to stores that meet targets developed for each location. Automotive News reports that bonus amounts to an additional 1 percent margin on each new vehicle sold if the dealer hits its used vehicle goal.
“The used-car business is a huge potential for Mini dealers in the U.S., Thomas Felbermair, vice president of Mini Region Americas, told the trade paper. He added that about a third of Mini’s 127 dealers fail to meet the preferred minimum standard for used vehicle sales expected by the brand. The ideal level would be one used for every new vehicle sold, although Mini is looking at a minimum of one used to every two new vehicles sold at this point.
The push for more used vehicle sales comes at a time when Mini new vehicle sales are falling off. Through the first five months of 2017, Mini volume is off 12 percent to 17,792 compared to 20,230 a year ago. The bonus program is expected to run through the balance of the year with quarterly payouts to the participants.
Overall CPO sales hit plateau
The pace of Certified Pre-Owned vehicle sales by major manufacturers has slowed, just growing 0.2 percent through the first third of the year. Automotive News reports that the biggest makers with CPO programs have seen the largest drops. Ford’s CPO activity is down 11 percent, GM’s fell 9.3 percent, VW is off 7.6 percent and Toyota experienced a 5.4 percent decline. Toyota led in CPO sales retailing 159,773 units through the period. GM was second with 132,608 vehicles.
BMW, which has sold 50,731 CPO units, has seen it volume go up 20 percent. Other makers showing gains included Nissan and Subaru, both up 13 percent; Honda and Mazda recorded 12 percent increases.
Nissan extends incentives
After a big sales event weekend like Memorial Days, manufacturers will let the deals expire for a short time before it spools up the next round of incentives. Nissan on the other hand announced in May that it would keep its current program in effect until the beginning of July. Most of the program centers on 0-percent 6-year loans for 2017 Nissan Altima, Leaf, Murano and Rogue, with 0-percent 5-year deals on 2017 Titan and Titan XD. The 2017 Titan XD Platinum is also eligible for $10,000 cash in lieu of the financing.
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