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This Week in Car Buying: Sales slow, incentives cool; Trucks new and used remain hot; Ford opens mobility gallery

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Sales slowed in January, down 1.9 percent from the year-earlier pace as the industry felt a bit of a hangover from its Holiday Sales Event bash in December that pushed overall volume to a new record. As expected, crossover SUVs and trucks fared better than traditional sedans, which continued to see their share of the market shrink.

Two manufacturers that posted gains were Nissan and Honda, largely on the strength of demand for their truck products. Nissan launch of the half-ton Titan pickup to complement its more heavy-duty oriented XD model helped lift sales by 3.6 percent over a year earlier. Honda’s all-new Ridgeline and the popularity of the Acura MDX and RDX crossover SUVs were responsible for a 5.9 percent gain in volume.GM, Ford and Fiat Chrysler along with Toyota saw sales drop from year-ago levels, that latter two recording respective decreases of 10.9 and 11.3 percent. GM was down 3.6 percent, while Ford was off a marginal 0.7 percent. 

While the number of incentive programs remained stable, there was some pulling back from December levels. The high number of spiffs is somewhat deceiving because there are additional local deals put on for various auto shows.

Also: Class of 2018 – New Cars Ready to Roll

“Traffic for new-car shoppers in January was relatively light,” said Brad Korner of AIS Rebates, which along with Kelley Blue Book, is part of Cox Automotive. “The fact that the industry had more incentive programs in place…is not surprising. It’s auto show season in many markets and we see multiple, short-term incentives dropped in to help stimulate sales. Yes, some auto makers throttled back on incentive programs compared to last month, notably the Nissan brand, we saw other makers such as Fiat Chrysler and Ford add more programs in January to help stimulate traffic, move stagnant inventory and defend market share.”

As a result of the dip in sales, savvy shoppers should watch for more incentive programs to launch this month, especially in time for traditional Presidents’ Day sales.

Trucks new and used remain hot

Just as strong demand for new trucks helped some makers post sales gains in January, pickups in particular are keeping overall used-vehicle prices from dramatically dropping. Analysts have expected a large return of lease vehicles to depress used-vehicle values and while that is starting to happen among some segments, sedans in particular, the demand for pickups has buoyed truck residuals.

Tom Kontos, chief economist at ADESA, told Automotive News that the combination of returning lease vehicles and heavy incentives will take a toll on used-vehicle prices. “I don’t want to say the market hasn’t been resistant, but we’ve been seeing some softening already. The softening in the market has been there, but it’s been masked by other factors.”

Also: Kelley Blue Book Best Buy Awards of 2017

One of those factors is the popularly of trucks. “If trucks in that mix (of demand for new and certified pre-owned vehicles) are doing better than cars, it will impact all the averages,” Kontos said. Recent Kelley Blue Book data shows that even though average values for 1- to 3-year-old pickups have dropped 6.8 percent in the fourth quarter of 2016, values for all vehicles at auction are down some 15 percent for the years. As the supply of used vehicles increase, thanks to three back-to-back record years of new car sales, used vehicle prices will come under pressure even if the market continues to expand.

“The growth [in demand] is going to occur, but it’s not going to occur as fast as the increase in the wholesale supply” said Tom Webb, chief economist at Cox Automotive. “As a result, yes, there will be downward pressure on used vehicle prices.” 

Ford opens mobility gallery

Ford is looking to expand beyond its core business of building cars and trucks to providing mobility services to consumers. As part of that reimaging of its mission, the company is looking at opening what it characterizes as an “interactive brand experience studio” in New York. The idea behind the location is not so much to tout its cars and trucks but rather to focus on a range of transportation options for personal mobility.

Called the FordHub, this new consumer-outreach experience is located in the Westfield World Trade Center collection of shops and will allow the public to learn about Ford’s approach to future transportation cover a wide range of topics from autonomous cars to ride-sharing services.

“Our first FordHub is a place designed to spark questions and curiosity,” said Elena Ford, the company’s vice president for global dealer and consumer experience. “This isn’t a store or a dealer, it’s a place for participation and creativity. We want people to have fun while engaging in a conversation about the future of transportation.”

Sounding more like a World’s Fair exhibit than a retail location, FordHub will have information on future Ford EVs, vehicle connectivity and interactive activities using virtual reality. Among the latter, visitors can don VR gear to build a Mustang atop the Empire State Building, recreating a stunt pulled by Ford both in 1964 when the original car was introduced and again, 50 years later in 2014 during the New York Auto Show. You can also keep tabs on transportation in the Big Apple with a map of the city’s transportation activity showing real time data on trains, ferries and traffic jams.

The rundown

Check out the This Week in Car Buying Podcast here.

Adding to the Korean auto maker’s stable of value editions, the 2017 Hyundai Veloster Value Edition has been introduced. Prices start at $22,185.

Splitting the difference between station wagons and crossover SUVs, the 2017 Volvo V90 Cross Country is headed our way in March. We take the wheel in this First Review.

Speaking of wagons, Mercedes has taken the wraps off the 2018 Mercedes-AMG E63 S Wagon, which will make its formal debut at the Geneva Motor Show.

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

Kelley Blue Book’s 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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