This Week in Car Buying: Tesla raises price; Higher prices, lower incentives hit affordability; PSA sets American launch; 2019 Hyundai Tucson priced
It was just a week ago that Tesla launched a new $45,000 lower-range version of the Model 3. The rear-drive model, which offers about 260 miles on a charge, some 50 miles less than the $50,000 model it replaces, will now cost $46,000. Still no word yet on when the “entry level” $35,000 version will be built. The $1,000 uptick in price comes just after the EV maker announced a profit for the third quarter. Analysts attribute the turnaround to the influx of Model 3 deliveries, which number more than 50,000. However, it remains to be seen if both deliveries and profitability are sustainable.
Perhaps those concerns over profitability are part of the reason for the price increase, as well as the announcement that Tesla will be cutting back on the number of interior trims it offers on its larger and more expensive Model S and Model X versions. Simplifying the build process and eliminating these choices will boost output and profit margins. Tesla chairman Elon Musk tweeted out that the company will be discontinuing the wide range of choices for Model S and Model X to streamline production and urged those who wanted one of the discontinued options to place their orders before Nov. 1.
Standard models come with black cloth seats and dark ash trim, while for an extra $3,000 a premium interior is offered with the choices of white or black with brown ash trim, a tan headliner with either interior, or a cream with light trim. You can also opt for carbon fiber accents. It’s not clear yet which options will be given the ax.
Higher prices, lower incentives hit affordability
Now here’s a headline in Automotive News that should give bargain hunters pause: “Not giving them away anymore.” Higher vehicle prices, rising interest rates and incentive spending that’s showing signs of a decline are raising not only monthly car payments but also affordability concerns.
Tighter inventories, reduced production and the shift away from less costly traditional cars to more expensive crossover SUVs and trucks are driving up average transaction prices. Manufacturers are concentrating more on the margins they make on individual sales rather than trying to make it up on volume. As a result, incentive spending, while still averaging just over 10 percent of a new vehicle’s MSRP, is beginning to drop. According to Autodata, the industry average on incentives for September was $3,791, which was down 2.7 percent from August. The drop is even more noticeable on cars, which are down to $3,564 or 7.8 percent from a month earlier, while light truck spiffs dropped 0.7 percent to $3,892 per vehicle. While sales are slower, manufacturers have adjusted by building fewer cars to meet the market, resulting in less of a need of incentives.
But it’s not just a shift away from cars to trucks that contributes to declining affordability. Billy Hays, Nissan’s vice president for regional operations told the trade paper that “Transaction prices are up. Payments are up. Customers are paying more for technology.” As more safety and driver assist features become standard and expected by consumers, the more these vehicles will cost.
PSA sets American launch
PSA Group, the French auto concern that owns Peugeot, Citroën, DS and Opel has announced that it has selected Washington, D.C. as the first city in its bid to return to the U.S. market. But there’s a catch, PSA isn’t coming in with any of its current model range sold in Europe, but rather is starting up a car sharing effort that will initially use Chevrolet Cruze and Equinox models leased from GM. The service was slated to start Oct. 25.
Rather that jump back into the market with a traditional dealer network, PSA, which last sold Peugeots in the U.S. in 1994, is starting Free2Move, a car sharing service that will allow customers 24/7 access to a free-floating fleet of 600 vehicles in the District of Columbia. By using the app, clients with a valid drivers’ license pay a $10 membership fee and can locate, book and pay for using vehicles throughout the city. Parking, gas and insurance for drivers older than 21 is included in the service.
“The launch of Free2Move Carsharing in Washington, D.C., is our first step in the deployment of our 10-year plan for a North America entry,” said Larry Dominique, who’s heading PSA’s North American effort. “Our unique ‘service first’ launch strategy allows us to pragmatically re-enter this market thoughtfully and with a greater understanding of the retail marketplace and its consumers’ needs.”
Over time, the service will be rolled out into other markets and eventually, PSA plans to introduce its own products into the fleets as part of its return to America. However, the company has yet to specify which models or brand will be used.
2019 Hyundai Tucson priced
A facelifted 2019 Hyundai Tucson has gone on sale with a price of $23,200 for the base SE model. The upgrades include a new cascading grille, redesigned wheels, a 7-inch touchscreen, Apple CarPlay and Android Auto as well as new safety features including standard forward collision warning, lane keep assist and driver attention warning.
Value models, which start at $24,650 adds blind spot monitoring, keyless entry with push button start, Bluetooth and a power 8-way adjustable driver’s seat. The SE and Value front-drive models are equipped with a 2.0-liter 4-cylinder engine with a 6-speed automatic. All-wheel drive is $2,400 extra
Moving up the line, the SEL starts at $25,600, the Sport at $27,700, the Limited at $28,900 and the Ultimate is $31,550. These models have 2.4-liter 4-cylinder engines and 6-speed automatics. AWD is $1,400 extra. Delivery adds another $1,045 to all prices.
Cadillac has prepared a pair of special edition V-Series models marking the end of the third generation. Check out the 2019 Cadillac CTS-V Sedan and ATS-V Coupe Pedestal Editions here.
Porsche has a refresh of the 2019 Macan compact luxury SUV coming early next year. In addition to exterior tweaks, Porsche promises a better handling suspension.
Is there a teen driver in the house? Here’s how to find peace of mind with Top Teen Driver Tips: 8 Steps to Saving Lives.
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