This Week in Car Buying: Used car prices soften; No reservations about Nissan's Leaf; Small crossovers continue to sizzle; Porsche's new delivery center; Cadillac eyes new entry
The expected glut of off-lease and used vehicles may already be making its presence known by a softening in first quarter used-vehicle pricing, Kelley Blue Book data shows. Overall, auction values for used 1- to 3-year-old vehicles declined 1.3 percent or about $235 per vehicle through March. Typically, the used vehicle market sees an increase in prices ranging from 2 to 4 percent during the first quarter.
An abundance of vehicles in auction lanes are a key force in putting downward pressure on auction prices. This means better deals on used cars in general and indicates greater activity on the part of new car dealers to get in on the action with Certified Pre-Owned vehicles. Used-vehicle sales among the top 100 franchised new car dealers increased by 10 percent over the past year to more than 2.6 million units, according to Automotive News.
While sales of new high-performance and sports cars continue to lag overall growth in vehicle sales, low gas prices have made them hot commodities on the used vehicle market, Sean Foyil, a Kelley Blue Book analyst observed in the quarterly Blue Book Market Report.
“Interestingly, the high performance and sports car segments outperformed all other segments,” Foyil said. “As a result of low fuel prices, consumers are less concerned with fuel efficiency as a factor when choosing their next vehicles and more concerned with other aspects, such as performance. This explains the continued decline for electric and hybrid vehicles compared to the rest of the market.”
Fuel prices dropped to their lowest levels in the first quarter, starting at $2.03 per gallon nationally before rebounding to $2.08 this month. “The average price per gallon of fuel is down 14 percent year-over-year,” Foyil added. “However, we are seeing seasonal trends consistent with previous years and expect fuel prices to rise at a slow and steady pace into the summer months.”
Nissan Leaf is ready to roll
While low gas prices have cooled demand for EVs and plug-in hybrids, that didn’t stop some 400,000 intenders from plunking down $1,000 to reserve a Tesla Model 3, which is still nearly two years away. Nissan decided to poke a bit of fun at its erstwhile rival with an ad proclaiming that “No one should have any reservations about getting an electric car today.” It added that “Why wait when you can drive an all-electric Leaf now?”
In addition to reminding people that the Nissan Leaf EV has been on the market since 2010, the ad also touts a $4,000 rebate for the vehicle.
Small crossovers hot, hot, hot
Led by an expanded roster of competitors, the subcompact crossover segment remains the fastest- growing vehicle category with first quarter sales skyrocketing by 83 percent. More than 43 percent of the 46,346 sales were taken by just four entries, the Jeep Renegade, Honda HR-V, Mazda CX-3 and Fiat 500X, according to Automotive News. None of the vehicles, except the Renegade, were on the market during that period a year ago, and then, the Jeep only sold 943 units.
Still, subcompact crossovers represented only 4.5 percent of all truck sales. Meanwhile larger crossovers continued to see their sales grow, outpacing the overall market, which grew by only 2 percent. Mid-size crossovers saw a 3 percent gain in the first three months, while compact models grew at 6.3 percent.
Porsche opens U.S. delivery center
Porsche buyers looking for a unique experience can take delivery of cars ordered through their dealers at the German automaker’s Porsche Experience Center (PEC), which is adjacent to the company’s Atlanta headquarters. Those who participate in the program are given a VIP tour of the PEC, an in-depth orientation session on their car with a delivery specialist, a 90-minute experience in a Porsche on the driver development track and lunch at Restaurant 356.
The first customer to take delivery was Tracey Blumenthal, an accountant and attorney from California who picked up a Cayenne S E-Hybrid. As the first delivery customer through the doors, she was also given a demonstration lap in a Porsche 918 Spyder with race car driver David Donohue.
The program is a no-cost option to customers who factory order a vehicle from a Porsche authorized dealer. The buyer is responsible for travel arrangements; reservations are limited and scheduled by appointment. The PEC, which includes a 1.6-mile track, conference facilities, as well as a vintage car workshop, museum and restaurant opened last June and already has logged about 17,500 visits.
Cadillac eyes new entry
Although Cadillac denied the report, the GM Insider blog (which is not affiliated with the automaker) speculates that the luxury division is working on an entry level front-drive sedan to compete with the Mercedes-Benz CLA. The website cites documentation that says GM is working on a project codenamed D2JL, which would be a variant of the second generation Delta platform (D2XX), which underpins the new 2016 Chevrolet Cruze (see our First Review here).
While a front-drive entry level sedan makes sense on some levels, our money is on a compact crossover SUV to compete more with the Mercedes-Benz GLA. The clue here is the J, which means hatchback. It’s doubtful that Cadillac would position a hatchback in its car lineup. Recent news that a proposed small Cadillac product is being moved from the Orion Township plant to GM’s Fairfax, Missouri facility outside Kansas City lends credence to the existence of the D2JL project. It’s doubtful we’ll see this crossover much before 2018 at the soonest.
A refreshed version of the 2017 Lexus IS sedan is headed our way as after making its recent debut at the Beijing Auto Show.
Also bowing at the Beijing Show is Porsche’s new 4-cylinder turbocharged Cayman lineup. The 2017 Porsche 718 Cayman and Cayman S are slated to make their way here this November.
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