This Week in Car Buying: Deals of the month; Inventories moderate; Tesla reverses course; Affordability issues loom
Spring may still be a few weeks away, but manufacturers are gearing up for the ensuing selling season with under $200 lease deals and rebates of up to more than $6,000. While sedan sales are lagging, the competition in the SUV segment is heating up and so are the deals.
Among the sub-$200 per month leases, the 2019 Chevrolet Equinox is available on a 39-month contract requiring $3,889 down resulting in monthly payments of $189. A competing compact SUV, the 2018 Hyundai Tucson has a $199 per month lease for three years and while it has a $10 higher monthly, requires only $1,899 at signing.
Other crossover SUV leases include the 2018 Ford Escape which is being offered on a 3-year deal for $239 per month with $2,989 down and the 2019 Buick Envision can be had for $299 per month on a 39-month contract with $2,099 down.
Big rebates are available on other crossovers, like the 2018 Dodge Journey, which has a $6,250 rebate to go along with its 3-row seating. The 2-row 2018 Nissan Murano has a $4,500 rebate, while the subcompact 2019 Jeep Renegade is offering cash back of $4,250.
On the car side, the 2018 Ford Focus has a $4,000 rebate, while Hyundai continues its lease deal on its sporty 2019 Veloster hatchback, with a 3-year lease at $189 per month with $2,299 down. Honda is offering a rare lease deal on its Accord with 2018 models eligible for a 3-year deal at $219 month with $1,399 down. All deals are valid through April 1.
While the March 1 figure of 78 days’ supply of vehicles on hand is the highest the industry has seen on that date since 2009, according to Automotive News, the number is more a reflection of slightly softening sales as opposed to production far outstripping demand. The inventory number is only 4 days’ worth higher than last year and represents a 10-day drop in supply from February 1. The days’ supply number is derived from how long it would take to retail all the vehicles in stock at the current sale rate.
Dealers will typically see inventories rise as the slow winter season ends and that build-up in vehicles on their lots is in anticipation of the start of the spring selling season. The trade paper reports that there were more than 4 million vehicles in stock as of March 1.
Subaru continues to lead manufacturers in keeping supplies tight at 41 days, followed by BMW, which has a 49-day supply and Jaguar Land Rover at 52 days. VW Group tops the list with a 100-day supply followed by FCA at 96 days and GM with 94. By brand, Genesis beats Subaru with just a 36-day supply, while slow-selling Fiat would need 285 days to exhaust all the vehicles it has in inventory. Among vehicles with high inventory figures (and a better chance at negotiating a better deal) are the Buick Envision at 171 days, Honda Insight at 197 days; and Lincoln Continental at 165.
Tesla reverses course
After announcing that it would be moving to on-line sales only and close most of its retail stores keeping only a few high traffic locations, Tesla has reversed course and will keep the doors open on many of its operations. The about-face is reportedly driven by the inability of the company to get out of the leases for its factory-owned stores.
In an announcement tweeted out by Tesla CEO Elon Musk, the company was looking at an on-line-sales-only model as a way to cut costs and said it would lower prices by 3 percent as a result of the move. Following an evaluation of its dealer network, the company said it will keep more stores open than previously announced, but that 10 percent of the locations that were closed didn’t have enough traffic and would have been shut down in any event. Another 20 percent are under evaluation and some will be closed, and others kept open. Tesla, however, is looking at reducing staffing at all locations and will encourage customers to buy the vehicles online over their smartphones.
The company’s blog stated that “As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3 percent on average worldwide. In other words, we will only close about half as many stores, but the cost savings are therefore only about half. Potential Tesla owners will have a week to place their order before prices rise, so current prices are valid until March 18th. There will be no price increase to the $35,000 Model 3. The price increases will only apply to the more expensive variants of Model 3, as well as Model S and Model X.”
Tesla also said it will be sticking to its new return policy allowing a buyer to bring back the car after a week or 1,000 miles for a full refund, which says eliminates the need for test drives. However, it added that “cars will still be available for test drives at stores at the potential Tesla owner’s request. Stores will also carry a small number of cars in inventory for customers who wish to drive away with a Tesla immediately.”
Affordability issues loom
Buyers seeking new car bargains less than $20,000 will see their options continuing to shrink, according to data compiled by Cox Automotive, company parent of Kelley Blue Book. Vehicles below that figure accounted for 7 percent of sales as recently as 2012, but last year dropped to about 2 percent of all transactions. Even vehicles priced between $20,000 and $30,000 are decreasing in market share, dropping from 47 percent of the market in 2012 to 34-percent last year.
Contributing to this trend is the move by manufacturers to kill a number of their subcompact and compact entry level car models. Among those vehicles that have been dropped or are on the chopping block include the Dodge Dart, Chevrolet Cruze, Sonic and Spark as well as the Ford Focus and Fiesta.
Kia’s redesigned Soul is about to head into showrooms and we had a chance to get behind the wheel. Check our 2020 Kia Soul First Review.
Winter may be on its last legs, but all-wheel drive may still be on your shopping list. We've evaluated the 2019 Nissan Altima AWD.
The Geneva Motor Show has just wrapped up with several launches that have implications for the North American market.
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