This Week in Car Buying: Tesla drops pricing; Lexus touts UX short term; Ford doubles down on trucks, loyal owners; Inventories in check
The much anticipated $35,000 “entry-level” Tesla Model 3 might not be here, but it appears to be getting closer as the auto maker introduces a new “mid-range” model promising about 260 miles on a charge for $45,000. Tesla said it will be taking orders for the new rear-drive only model that offers about 50 miles less per charge than the previously lowest priced version that retailed for about $50,000.
The move comes as Tesla faces a reduction in the $7,500 federal tax credit given to buyers. It has sold over 200,000 units and as a result, the incentive is being phased out under the current law. After Jan. 1, buyers will only be entitled to half the credit before it drops by another half mid-year. Given the 6- to 10-week delivery time promised by the factory, some orders placed now may be eligible for the full $7,500 if they get into owners’ hands by the end of the year.
A recent bill introduced by Sen. Dean Heller of Nevada, would extend the $7,500 tax credit another four years which would not only help Tesla, but also GM and Nissan, which are getting close to the 200,000-unit threshold where the tax break begins to phase out.
Lexus touts UX short term lease
Toyota’s luxury brand is going to experiment with an all-inclusive short-term lease program not dissimilar to a subscription on its new 2019 Lexus UX subcompact luxury crossover. Like Care by Volvo, the program offers all-inclusive monthly payments that cover the vehicle, maintenance and insurance. Called the Lexus Complete Lease, the 2-year, 20,000-mile contract also includes tire-and-wheel protection and telematics services.
The catch here is that Lexus will be allowing local dealers to set overall monthly charges for the subscription, but that some of the add-ons, the like the wheel-and-tire protection, will have fixed pricing. Lexus said some of those products will come from its in-house financial arm, while the insurance coverage will be from an outside firm it declined to identify at this time.
In explaining the rationale behind dealer-set pricing, Cynthia Tenhouse, Lexus general manager of product and consumer marketing told Automotive News that “For us, it's really important that the dealers are the ones, front and center, to work with the customer because that's where the relationship exists." These subscription leases will be available in Los Angeles, Boston, Chicago and Miami.
While prices have yet to emerge from the program, by comparison, the Care by Volvo flat-rate is around $600 to $700 per month depending on trim level. Participants can also swap out of an XC40 after one year for a new vehicle, but again must make another two-year commitment to the program.
Set to show up at dealerships this December, the 2019 Lexus UX will be priced at $33,025 for a front-drive model. The F Sport variant with suspension upgrades will be $2,000 more. The all-wheel drive hybrid model, the UX 250h, which comes in January will be priced at $35,025.
Ford doubles down on trucks, loyal owners
After taking a lot of heat over its decision to abandon the traditional car market by killing off the Fusion, Taurus, Focus and Fiesta in the U.S. market, Ford has decided that the best defense is a good offense, introducing a new “Built Ford Proud” ad campaign touting its trucks and crossovers. In addition, the auto maker said it would concentrate its efforts on retaining loyal customers rather than trying to attract new buyers to the brand.
The ads, which features voiceovers from actor Bryan Cranston, were shown to dealers at a Las Vegas meeting. The retailers were also given previews of future models including the upcoming Ranger as well as the new rear-drive biased Ford Explorer due next year. Ford also promised it would have new crossovers designed to fill white spaces in the market, including an all-electric model with Mustang-inspired styling cues.
Fueling the decision to bank on its customer base, Ford touts it has the highest owner loyalty in the industry at about 63 percent. Most of that comes from its best-selling F-Series pickup. Analysts say part of this move is an effort to retain consumers who own Ford cars by converting them to these new crossovers rather than making a broad scale effort to find new customers. And while the brand has been criticized for dropping car models, Ford execs said the new truck and SUV entries will increase the overall model count by three.
Inventories in check
Manufacturers are exercising discipline in keeping vehicle production in check in the face of slowing sales. Inventory numbers for September shows stable stocks, which reduces the pressure to ramp up costly incentives. According to Automotive News, the 3,745,500 vehicles on the ground represents a 65-day inventory at current sales levels. Usually 60 days is considered ideal, though this number matches last year’s levels at a time when sales were peaking in the wake of Hurricanes Irma and Harvey. The days’ supply dropped by four days month-over-month.
Cars continue to account for a third of those vehicles which mirrors their performance in the market, where two-thirds of all new vehicle sales are trucks or crossovers. If unsold cars drop below 1 million units, it would be the first time it has hit that number since November 2011.
Subaru continues to have the tightest supply chain, reporting only 24 days of inventory, while BMW was second with just a 42-day supply. Audi reported a 44-day supply, while Mercedes was at 48 followed by Nissan and Toyota with 52 days’ each.
At the brand level, BMW's 42-day supply was second to Subaru. Audi was third, at 44 days. At the other end of the spectrum, four brands had inventory levels well into triple digits: Fiat, at 196 days; Buick, at 143 days; Mitsubishi, at 124 days; and Jaguar, at 123 days. Among individual brands, Fiat has the most stock (196 days), followed by Buick at 143 and Mitsubishi with 124.
While Tesla hopes to boost sales with a lower-price Model 3, Hyundai is launching an EV at the opposite end of the spectrum. We get behind the wheel of the 2019 Hyundai Kona EV in this First Review.
Speaking of Hyundai, we were able to drive the 2019 Hyundai Veloster N. See how it stacks up against the 2019 Honda Civic Type R in this Comparison Test.
BMW has taken the wraps off its long-awaited flagship 3-row SUV. Going on sale next March, the 2019 BMW X7 will be priced from $73,900.
In the market for a new car? Explore these useful tips on how to get the best deal: