This Week in Car Buying: Inventories grow; Used cars flood market; Many are leasing to buy; Volvo prices XC60
Slowing sales coupled with GM’s decision to build stocks ahead of the summer shutdown is causing an increase in the vehicle supply, which means buyers will have slew to choose from for the foreseeable future. In addition, the higher inventory levels ensure that there will be slew of incentives to consider when shopping for a fresh car.
According to Automotive News, automakers had a seventy six days’ supply of vehicles on the ground May 1, up six days from a year earlier and a 3-day hike from April. Days’ supply is the number of days it would take to sell all the vehicles in inventory at the current sales tempo. Generally, a 60-day supply of vehicles is considered ideal.
GM’s vehicle stock grew by an extra two days from April to stand at 99, the 2nd highest to Mitsubishi’s 123-day supply. Ford has eighty three days’ worth, while Nissan and FCA both are at 80. BMW, which trimmed inventories to thirty six days last month to have the leanest pipeline, eyed its numbers go back up to a 52-day supply, while Subaru reasserted itself atop the list with a 44-day inventory, followed by Mercedes-Benz which had 50. Subaru’s inventory reflected industry trends by growing six days from April one levels.
GM’s vehicle stock grew by an extra two days from April to stand at 99, the 2nd highest to Mitsubishi’s 123-day supply. Ford has eighty three days’ worth, while Nissan and FCA both are at 80. BMW, which trimmed inventories to thirty six days last month to have the leanest pipeline, witnessed its numbers go back up to a 52-day supply, while Subaru reasserted itself atop the list with a 44-day inventory, followed by Mercedes-Benz which had 50. Subaru’s inventory reflected industry trends by growing six days from April one levels.
Among individual models, the vehicle with the highest days’ supply is the Acura RLX, which stands at two hundred forty five days, followed by the Buick LaCrosse at 232, underscoring the weakness of the full-size sedan market. On the other end of the scale, two Honda crossover SUVs, the Pilot and CR-V, are among the vehicles in shortest supply, the Pilot at thirty five days’ supply and the CR-V at 38. The low numbers are indications of how quickly they are selling, which also means that buyers are less likely to find generous incentives on those models.
Used cars flood market
While manufacturers were seemingly able to control the flow of off-lease cars coming back to the market, it shows up that the supply of these lower mileage, late model cars is rising rapid, thanks to a acute increase in leasing as the industry pulled itself out of one of its largest downturns in latest history.
Recovering from a 40-percent decline in sales in the 2008-2010 timeframe, automakers not only have set records for overall sales, but, according to Manheim Auctions, leased some twelve million vehicles from 2014-2016. These 2- and 3-year old vehicles are returning to the market, which is not only supplying dealer franchises with vehicles for their Certified Pre-Owned programs, but also are spilling over to independent dealers as well. The beneficiaries are car shoppers who now have a much broader array of vehicles to choose from, but also will see a softening in prices.
According to a report in Automotive News, used vehicles like late model Ford Escapes were in brief supply at Reel’s Auto in Orwell, Ohio. But a latest search for an Escape within one hundred fifty miles of the store demonstrated six hundred sixty eight available. “The automakers have flooded the market,” Dan Reel, possessor of the used car operation, told the trade paper.
GM and Ford report that prices on used vehicles have fallen as much as seven percent in the very first quarter, fueled primarily by these off-lease vehicles. Conventional wisdom holds that this slide in values would discourage the manufacturers from leasing, but Experian reports that lease invasion is at a record 31.44 percent. Part of the reason why the automakers are continuing to thrust the contracts is the fact that average transaction prices proceed to rise, so that in many cases the only way to get someone into a fresh vehicle without a big leap in monthly payments is to lease it.
Many are leasing to buy
Falling used vehicle values could play a mitt in current lessors’ desire to buy their rail once the lease is up. According to a KBB.com Quick Poll, forty percent of the respondents who lease a car are planning to buy it and keep it when the contract is up. Another thirty percent have determined to lease or buy another car, and nineteen percent are looking to come back the vehicle to the dealer. Only two percent are looking to extend their current lease.
Of note, nine percent say they are going to buy and resell on their own, hoping to make money. That’s not a bad strategy if you’ve driven the car less than the mileage cap on the lease. If that’s the case, you can reasonably expect to sell it for more than its market value, albeit it still is a bit of a gamble in a time when overall used vehicles prices are falling.
Volvo prices XC60
Ahead of its fall launch, Volvo has announced pricing on its all-new two thousand eighteen XC60 midsize crossover SUV and is now accepting customer orders. Suggested in three models, T5, T6 and T8, the XC60 comes with all-wheel drive standard and with a choice of Momentum, R-Design and Inscription trim levels. The T5 is powered by a 250-horsepower turbocharged Two.0-liter 4-cylinder engine and will embark at $41,500. The T6 uses a supercharged version of the same engine to produce three hundred sixteen horsepower and is priced from $44,900. The range-topping T8 Twin Engine plug-in hybrid produces four hundred horsepower and commences at $52,900.
In addition to being all-wheel drive, every XC60 will come tooled with panoramic moonroof, leather seating, LED headlamps and Apple CarPlay and Android Auto integrated into a 9-inch center touchscreen. Standard safety features include lane-keeping assist with oncoming lane mitigation that will automatically steer the car to lessen the influence of a head-on collision, as well as other features like blind-spot warning and automatic emergency braking. Options include Nappa leather interiors with ventilated and massaging seats, Bowers & Wilkins premium sound and a four-wheel air suspension system.
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