This Week in Car Buying: Three Ford cars axed; Honda trims Accord lease; Ram pickups pushed as loaners; GM ups GMC Acadia, Cadillac XT5 ouput
Ford is realigning its product portfolio to emphasize crossovers and SUVs while making dramatic cutbacks in its car lines by ending Taurus, Fusion and Fiesta once those products reach the end of their lifecycles. Ford said that it will continue to offer the Mustang as well as the Focus Active, a 5-door hatch with crossover styling cues based on the next generation of the global compact car.
While it gets rid of the Taurus and Fusion sedans as well as the subcompact Fiesta hatchback and sedan in the U.S., Ford will be expanding its offering of crossovers and SUVs as well as undertaking major revisions to existing models like the Explorer. Also expected is the return of the Bronco compact SUV as well as a new, smaller and yet unnamed off-roader.
It’s not clear from the announcement whether the cuts will affect Lincoln’s two sedans, the Continental and MKZ. That luxury division is expanding sales in China where the next generation Fusion will be built and both those cars share architecture with the midsize Ford. Conceivably Continental and MKZ could remain in production in China for export to the U.S.
There’s no question that sales of small hatchbacks as well as sedans across the board have been struggling. And until production of these cars ceases, buyers will be able to reap the benefits of some rather hefty incentives. On 2018 models, Ford currently has up to $6,000 on the Taurus, $3,250 on the Fusion and $3,750 on the Focus. For 2017 models, the Taurus and Fusion discounts are about $4,500, while the Focus has $4,000 on it.
Honda trims Accord lease
Hoping to hold the line on discounts thereby preserving margins and resale value on the all-new 2018 Honda Accord, the Japanese automaker has blinked against its archrival Toyota, which is offering more attractive deals on its redesigned 2018 Camry. According to Automotive News, Honda has trimmed the down payment on its 3-year leases from $3,199 to $2,399, an $800 climbdown, while keeping the monthlies at $249.
In some markets like Los Angeles, however, Toyota remains far more aggressive than Honda, offering the Camry for as little as $199 per month for 36 months with just $1,999 down for a base model, while the SE model goes for $209 per month. Some Honda dealers told the trade paper the lower down payment is having the desired effect, reporting that deals at some locations have doubled on Accord since the change was announced. Others said that it was too soon to tell if the lower upfront costs will lift sales of the sedan.
However, it’s believed for now the down payment reduction is all that Honda is prepared to do in promoting the Accord on the retail level. The most recent days’ supply report puts inventory at 97,000 vehicles for a 112 days’ supply (the number of days it would take to sell them all at current rates). Honda said it will be trimming Accord output over the next quarter in order to reduce that backlog and the need for further incentives.
Ram pickups pushed as loaners
The Ram truck unit of Fiat Chrysler Automobiles is offering incentives for dealers to put its redesigned 2019 Ram 1500 pickups into loaner and demonstration fleets (also known at the Courtesy Transportation Program). While the move may appear to help pump up initial sales figures, it has further implications down the line for shoppers.
Automotive News reports that the units registered as loaners or demos will count towards dealers’ monthly retail sales goals, however, the trucks won’t count towards per vehicle factory cash to dealers as part of the company’s stairstep incentive program. But by hitting their monthly target with the help of vehicles placed in the Courtesy Transportation Program, dealers are eligible for additional bonus money for other vehicles sold at retail during the month.
More important, however, is the fact that dealers will have 2019 Ram pickups available to consumers to test and drive while their vehicles are being serviced and these units in turn would then be a source of Certified Pre-Owned units for retail at prices lower than the newer trucks. So, buyers who may not be able to swing payments for an all-new Ram, may have the option in getting into a low-mileage used version at a more attractive price.
GM ups GMC Acadia, Cadillac XT5 output
GM announced that it is adding a third shift to its Spring Hills, Tenn., assembly plant to boost output of the 2018 GMC Acadia and 2018 Cadillac XT5. The two crossover SUVs have seen sales climb this year, with the XT5 up 10 percent and the Acadia growing 3 percent. The company says the additional output is justified by the strength of the crossover market.
The third shift, which is expected to begin operation in September, will employ 700 workers. In addition to the XT5 and Acadia, the plant also builds a version of the latter marketed under the Holden brand in Australia and New Zealand.
While the sales reports are up for both models, GM is currently offering up to $4,000 on the Cadillac and $3,800 on the Acadia. GMC has a 55 days’ supply of the Acadia, or about 23,000 vehicles as of April 1, which is a bit tighter than the 60 days’ supply considered to be ideal. Cadillac has an inventory of 19,000 XT5 models, which translates into 86 days’ supply.
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