by Jon LeSage, editor, Used Car Market Reports
CNW Research President Art Spinella sees new vehicle incentives coming back up that will eventually hit used vehicle values.
In this video, he uses Ford F-Series pickups as an example with Ford Motor Co. offering up to $8,000 cash back, and then if you add dealer and regional incentives, that could bring it up around $12,000 in incentives on a $35,000 vehicle. Chrysler and GM have to respond with their own incentives in the battle for market share, he said.
Dealers are in a position where they have to increase dealer amount – such as discounting more and giving more on trade-ins to close deals.
Data for 2013 shows a re-widening between MSRP and transaction price for both cars and trucks, impacting everyone’s bottom line – CNW Research said in its latest Retail Automotive Summary.
Other remarketing experts appear to disagree with Spinella’s warning.
Tom Kontos saw a decline in new vehicle incentives in August, which was part of strengthened wholesale prices. He sees prices softening in months ahead through an influx of wholesale volumes.
NADA Used Car Guide saw incentive spending drop in August to its lowest level since February – down from its June high of $2,700 to $2,520 in August.
See chart above from NADA UCG on where incentives have been in past year. While spending increased slightly by 1%, year-over-year, the rise in incentives lagged greatly behind the sizable growth in sales for the industry, according to Guidelines.
Perhaps there’s a difference between how CNW Research counts incentives versus Autodata (which is widely used in the other reports)?
CNW counts subsidized leases, low interest loan rates, higher trade-in values, dealership salespeople spiffs, quota awards, short-term upgrades in equipment, extended warranties, local and regional discounts, and more.