This Week in Car Buying: September sales surge; Transaction prices rise; Incentives grow; Acura's new digital CPO checklist
New vehicle sales posted their first year-over-year gain in September fueled in part by buyers looking to replace flood damaged vehicles in the wake of Hurricanes Harvey and Irma. In addition to the surge in sales, the uptick was particularly strong in truck segments.
Both GM and Toyota recorded double digit percentage gains over last year’s sales and GM is particularly bullish about sales through the balance of the year. The seasonally adjusted sales rate for September was calculated at 18.1 million per year, though because of weaker sales earlier in the year, the industry may just barely crack 17 million total units for 2017.
Mustafa Mohatarem, GM’s chief economist, said in a statement that “The overall strength of the U.S. economy is the main force driving the market. With the U.S. economy strengthening, retail sales should remain strong for the foreseeable future.”
GM announced that September vehicle sales increased 12 percent year-over-year, while Toyota saw a 15-percent bump. Ford was up 8.9-percent, ending a 3-month string of declines, boosted in large part to a 20-percent spike in F-150 pickup sales. More than 80,000 were sold during the month. Nissan sales were up 9.3 percent, followed by Honda, which saw a 6.8-percent increase. Fiat Chrysler Automobiles, however, ran counter to the trend, seeing a 10 percent drop in sales.
Transaction prices rise
New vehicles continue to cost more, according to average transaction price data compiled by Kelley Blue Book for the month of September. The average cost of a new car rose by 0.4 percent or $144 over September, 2016, although ATP remained flat from August.
“Transaction prices were up very slightly in September, reflecting the industry’s trend of slowing demand for new vehicles,” said Tim Fleming, analyst for Kelley Blue book. “Despite pullbacks in vehicle production this year, incentives are still rising and averaging nearly 11 percent of transaction prices. In addition, with average prices nearly $35,000, we expect new car affordability to be a challenge, especially as more consumers stretch their loan terms out to 84 months to keep payments down.”
The only maker to see a decrease in its transaction prices was GM, which recorded a 3-percent dip. The sole exception at GM was Buick, which had a 4 percent increase in prices due to two factors, the end of Verano sales and a 2 percent bump in prices on a refreshed Encore.
At Honda, an all-new Odyssey saw its ATP climb 16 percent, while the overall brand experienced only a 1 percent gain. The CR-V was up 6 percent, but the subcompact HR-V actually saw a decline in ATP of 2 percent.
Among segments, high performance cars recorded the largest jump in pricing, up 4.8 percent, a huge shift from the previous month’s 5.0-percent decline in pricing. Meanwhile, sports cars, EVs and subcompact car prices all declined more than 2 percent.
Discounts on 2017 models are widening as the industry officially moves into the 2018 model year. It’s not unusual to see ads for up to 20 percent off MSRP as dealers look to unload all their 2017 models in stock. In addition, targeted conquest rebates and even incentives for buyers with poor credit scores are being offered by some manufacturers.
FCA is offering incentives ranging from $750 to $1,500 for consumers with FICO scores below 620. The money can be combined with all other rebates and incentives and is available on 2017 Chrysler Pacifica, Dodge Challenger, Charger, Grand Caravan and Journey, 2017 Jeep Cherokee, Compass, Patriot and Renegade, 2018 Jeep Cherokee and Compass and 2017 Ram 1500 pickups. Nissan’s Low Credit Down Payment Assistance Program is available to those with FICO scores of less than 600 and provides a $500 credit towards the purchase of a 2017 Versa and Versa Note as well as the 2016 Versa Note.
BMW is currently offering conquest cash payments of $700 for those buying or leasing a 5 Series and coming from another brand, while Cadillac has a lease pull-ahead program for existing customers allowing them to get out of their lease early and have up to four payments waived if their lease ends on or before January 31, 2018. Land Rover also has an early termination lease program that will waive the final three payments on contracts ending between now and January 31, 2018.
Acura’s new digital CPO checklist
In order to promote its Certified Pre-Owned vehicles, Acura has launched a program to make available to consumers a digital copy of the completed 182-point inspection for select vehicles in dealer inventory through www.AcuraCertified.com.
“With an influx of off-lease vehicles returning to market, it’s crucial we provide dealers a technology that will make certification of these highly desirable vehicles faster, easier and more transparent for customers,” said Dan Rodriguez, manager of auto remarketing at Acura’s parent, American Honda. This digital checklist also makes the certification process easier, quicker and more streamlined for dealerships.
In addition to allowing consumers to compare completed inspection checklists, the system also ensures that no paperwork is lost and that consumers can actually sign off digitally on a completed vehicle checklist.
“We’re really excited about this industry leading technology,” Rodriguez said. “It will give customers of these Certified Pre-Owned Acura vehicles even greater peace of mind.”
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