Auto manufacturers are keeping a tight rein on inventories as the days’ supply of vehicles clocked in at 66, down 3 days from both month and year earlier levels. Days’ supply is the number of days it would take to sell all the vehicles in stock at the current sales rate. A 60-day supply is considered ideal and the industry has been disciplined in its drive to avoid excess supplies, which could in turn, spark the need for expensive incentives to move the iron.
Subaru, which is among the brands with the lowest days’ supply, saw its inventory drop to just 26 days as its sells down 2018 Forester models in anticipation of the all-new 2019 model, which is expected to go on sale soon. The company announced pricing, which will range from $25,270 to $35,270 including destination.
Mercedes-Benz had the next tightest supply at 45 days, followed by Acura and Audi with 47 days and BMW at 50. Fiat sales continue to lag, and its supply of vehicles has grown 186 days, followed by Buick with 118 and Jaguar with 102.
Among individual models with high inventories, the Fiat 500 is at 198 days, Buick’s Regal is 204 and Acura’s RLX is at 162 days’ supply. Among those nameplates that are in high demand include the Honda CR-V with 39 days’ supply and Lincoln’s all-new Navigator at 42 days.
Used prices remain firm
Despite predictions of a higher supply and lower prices for late model used cars, the prices on the resale market have risen this summer, according to Jonathan Smoke, chief economist for Cox Automotive. Smoke says that the price index has climbed 2 percent for 3-year-old cars at Manheim Auctions. The last time prices jumped on the used market was last fall in the aftermath of hurricanes Irma and Harvey, which spiked demand for vehicles.
Smoke attributes the elevated pricing in used cars to the strong economy as well as mounting affordability challenges among new vehicles, which have seen record high average transaction prices. Demand for used cars has increased 3 percent over last year. Smoke also believes that the strong values are having an impact on the supply of off-lease vehicles, which was also expected to reach record levels. However, the strong prices mean that many of these cars are worth more than the residual value in the lease contract, with more lessees purchasing the car at the end of the contract instead of returning it to the market via wholesale auctions.
“While used retail sales will peak soon, we expect they will plateau at the peak and not decline for at least a year,” according to Smoke.
Subscriptions under scrutiny
The emerging trend of subscription services may hit a bump in the road as several states are looking into the programs to see how they square with franchise dealer laws. One state, Indiana, has issued a moratorium on the subscription model through May 1 of next year as it studies the impact these programs may have on dealers. Automotive News also reports that New Jersey is studying the programs and may look at classifying the transactions differently than standard retail sales. In California, language that required all manufacturer subscription programs operate through franchised dealers was stripped from a bill as a compromise between makers and dealers.
Dealers are expressing concerns about competing with manufacturers who offer such subscription programs directly to consumers and that they may be left out as the subscription programs operate in an environment outside the traditional sales channel. “We want to make sure that any subscription program done by a franchisor is done with its franchisees,” Brian Maas, president of the California New Car Dealers Association told Automotive News.
The trade paper said that there are also concerns being raised by Volvo dealers over the Care by Volvo subscription program, where consumers sign up directly on Volvo’s website or through the app created by the auto maker. While the vehicle is delivered through a franchised dealer, there’s some fear that this business model’s dealer payments may be less than traditional margins and that these payments might be reduced by the manufacturer without recourse.
New Jersey Volvo dealer Matthew Haiken told the paper, “What happens down the road if this takes off and you try to cut our margin or you try to cut us out completely? We need to be able to protect our margins based on the expense structure we have the in the dealership.”
Honda prices Pilot, HR-V
Honda has announced pricing on the 2019 Pilot and HR-V, both of which received minor facelifts and new equipment. In addition to the new exterior look, Honda has expanded the availability of its Honda Sensing driver assists, making it standard on all Pilots and EX and higher trim levels on the HR-V.
The 2019 Honda Pilot starts at $31,450 plus $995 destination on front-drive LX models. All-wheel drive is $1,900 more. Front-drive EX versions start at $34,330, the EX-L is $37,760 and the Touring is $42,520. The range-topping all-wheel drive Pilot Elite is $48,020 plus destination. LX and EX models are equipped with a 4-cylinder engines mated to a 6-speed automatic transmissions, while the Touring and Elite models come with V6s and 9-speed automatics.
The 2019 HR-V also is facelifted and now comes with Apple CarPlay and Android Auto compatibility. A new all-wheel drive Touring model has been added to the top of the line. The base front-drive LX starts at $20,520 plus $995 destination. All-wheel drive is $1,400 extra. The front-drive Sport starts at $22,220, the EX is $23,720 and the EX-L begins at $25,320. The Touring model is $28,540 plus destination.
The rundown
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BMW has taken the wraps off its all-new 2019 Z4 M40i Roadster. The sports car was jointly developed with Toyota, which will have a Supra coupe.
A new front fascia and equipment are part of a mid-cycle refresh on the 2019 Hyundai Elantra. The Korean compact will be available this fall.
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