This Week in Car Buying: Strong market, higher prices, yet deals to be had
Sales momentum from the summer carried into September as the industry saw a 9-percent jump in sales over a year earlier and year-to-day numbers are a solid 5 points ahead of 2013. Lower gas prices continue to fuel the popularity of trucks and crossover SUVs. The big gainers again were Jeep, Ram and GM thanks to strong sales of its full-size pickups and SUVs.
According to KBB data, new car transaction prices continue to climb, edging up almost a half percent to $32,500 on average. Longer loan terms and lease deals are resulting in buyers opting for more well-equipped vehicles, which also boosts transaction prices. Also affecting this upward trend is the shift to crossover SUVs away from lower-priced sedans.
"Non-luxury utility vehicles are driving some of the strength in transaction prices, with combine market share expected to rise 2 percentage points to 27.8 percent of the market," reported Alec Gutierrez, a KBB senior analyst. "In addition to strong utility sales, average transaction prices are up for small, medium and large SUVs/crossovers. With consumers continually shifting toward utilities rather than more traditional sedans, we expect to see transaction prices continue to rise."
Sonata surge, Cadillac oversupply
While sales of sedans have suffered at the hands of crossovers, there are a few bright spots in the 4-door world. Hyundai's all-new Sonata has been well received. KBB Analyst Tim Fleming attributes the car's popularity to the 6.4-percent in average transaction price for the model. That means that Hyundai dealers are less likely to wheel and deal on an all-new model like the Sonata, so buyers looking for a deal on that car might shop the Kia sister division for the Optima, which is midway through its product cycle.
Meanwhile, Cadillac's new boss Johan deNysschen is resisting calls for across-the-board price cuts on the model range in order to boost competitiveness. A believer in delivering parity in both product and pricing to rivals like BMW and Mercedes, the new Cadillac boss told dealers that things will get worse before they get better from a volume standpoint. According to Automotive News, "I'm far more interested in the quality of the business than the quantity," deNysschen told dealers.
Still, before he can hold the line on prices and align the division factory output with asking prices, there's a lot of Cadillacs on the ground that need to be moved before the new strategy can take effect. Automotive News pointed out that Cadillac was sitting on a 132-day supply of cars as of Sept. 1 compared to 45 days for BMW, 52 for Mercedes and 42 for Audi. Cadillac has the highest incentive spending of 35 U.S. brands at $6,425 per vehicle, according to Alldata Corp. numbers. It's double the incentives of Audi and well above those offered by BMW and Mercedes. In clearing out 2014 stocks, Cadillac is offering consumer rebates of at least $2,000 on SRX crossovers to $5,000 on full size Cadillac XTS models.
For your 2015 consideration
Bargain hunters may be scouring dealer lots for outgoing 2014 models, but for those looking for something newer, there's plenty of significant new model launches for the 2015 model year that warrant attention. While some of the cars have yet to hit the showrooms, we've had an opportunity to sample these models and it might be worth a look at the reviews and news before making a final decision on that new vehicle.
2015 Subaru Legacy
Our video crew has gotten ahold of the all-new Subaru Legacy, a car that impresses for its style, redesigned interior, standard all-wheel drive and unique boxer powertrain. Subaru is on a roll and looks to crack the half-million sales barrier this year and a good bit of that effort will come as a result of new product like the Legacy.
2015 Honda CR-V
Honda is set to launch a revamped version of its popular CR-V crossover SUV. One of the first of the so-called sport-cutes, the CR-V continues to add features and new trim levels. It benefits from a refreshed exterior and a new 2.4-liter 4-cylinder engine that promises better performance and economy. All this comes with a sticker price increase of only $200.
2015 Toyota Camry
A typical product cycle for a new car is about four to five years between makeovers, but Toyota is looking to regain a competitive edge in its high volume Camry range by refreshing the vehicle after just two years. In addition to edgier styling, the interior has been revamped and the performance enhanced. The 2015 Toyota Camry has a starting sticker price just under $24,000 and tops out closer to $35,000 for a fully loaded XLE V6 model. While those prices are essentially on par with the outgoing 2014 Camry, buyers should expect fewer/smaller incentives on the more attractive, more competitive 2015 model. Those higher purchase prices, however, will likely be mitigated by higher resale values.
2015 Chevrolet Colorado/GMC Canyon
Perhaps one of the most anticipated launched this side of the new 2015 Ford F-150 is the return of GM's midsize truck duo, the 2015 Chevrolet Colorado and 2015 GMC Canyon. Though both share the same mechanical platform, there are significant differences in styling-the Chevy has a shapelier (for a truck) exterior, while the Canyon has a more traditional squared-off look. Our first encounter with these vehicles reveal that they are capable both on- road and off, have great performance from a mix of 4- and 6-cylinder engines and a size and capabilities that should establish themselves in a unique niche without taking much away from GM's full-size and recently redesigned 2015 Chevrolet Silverado and 2015 GMC Sierra.