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Posts Tagged ‘car incentives’

US Car Market Showing No Signs of Cooling Down

SUVs, crossovers and luxury vehicles drive demand.

by on Jul.28, 2014

Strong demand for products like Altima mean Nissan will deliver a double-digit July sales gain.

It may be an unexpectedly cool summer in much of the country but you wouldn’t know by looking at July’s sales numbers – which have many industry observers expecting the rest of the year to remain hot.

Mark Fields, Ford Motor Co. chief executive officer, noted the general economy appears steady, which should lead to strong sales during the second half of the years. Chuck Stevens, General Motors chief financial officer, also said the second half of the year looks very promising.

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Preliminary data suggest that July new-car sales will be up about 12% over year-earlier numbers, putting the industry on track for its best July since 2006, well before the U.S. economy began to collapse. Overall sales should reach about 1.46 million for the month, according to new forecasts from TrueCar and Kelly Blue Book, and that translates into a seasonally adjusted annual rate, or SAAR, of 16.6 million to 16.7 million, roughly a million ahead of total sales in 2013.


Luxury Cars, Japanese Brands Gain Big During August’s Sales Surge

Transaction prices top all-time record.

by on Sep.04, 2013

The traditionally strong selling season has proved hotter than expected this summer.

Japanese carmakers succeeded in picking up market share during August’s automotive sales boom, while surging demand for luxury cars, trucks and crossovers helped push up the vehicle prices to record levels across the board.

A sharp upturn in recent months has hit consumers squarely in the pocketbook. According to a report by, the Average Transaction Price – what consumers pay factoring in both incentives and options – surged 3.2% year-over-year to $31,252.

That hasn’t kept buyers out of showrooms, however, with the industry expected to have garnered sales that, on an annualized basis would have come in at or slightly above 16 million, according to industry analysts.  Most have been raising their forecasts sharply in recent months as showroom traffic continues to defy concerns about the unsteady economy.

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“The market is continuing to pick up steam, our sales momentum is on record pace and we have two major new products hitting the market in the next few weeks,” said Steve Cannon, president and CEO of MBUSA, which saw the Mercedes-Benz brand post a 21% increase for August to stay ahead of BMW.


March Car Sales Looking Strong

Buyers spending more – but taking longer to pay off loans.

by on Mar.22, 2013

U.S. car sales are maintaining a strong pace for March, according to several mid-month reports.

New car sales have remained steady in March and are expected to increase by 8 to 10%, year-over-year, according to new estimates from J.D. Power and Associates.

Using data from a broad network of dealers, Power estimates both retail light-vehicle sales and the total light-vehicle rate are consistent with February’s strong performance market.  That would work out to around 12.1 million vehicles by consumers and 15.3 million when fleet buyers are included in the mix.

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Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles. They also tend to be more profitable than fleet sales, especially those to daily rental companies. Most makers have been shifting focus to the retail side of the market – in part because that also tends to prop up residuals, or trade-in values.


Motorists Paying More – But Loans Easier to Get

Incentives also increase.

by on Dec.05, 2012

Hyundai boasted the lowest incentives -- and the lowest transaction prices -- last month.

If you bought a car in November odds are you paid more than you would have at almost any time in the past year.  Transaction prices – what motorists actually spend after working in incentives and factory options – are at or near record levels.

That’s despite the fact that many manufacturers increased givebacks last month, hoping to keep sales momentum going. They’ve also been working with lenders to ensure that credit continues to become more readily available – though motorists have been stretching out loans and are now taking an average of 64 months to pay off a car purchase.

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“Industry average transaction prices climb once again with consumers’ continued appetite for highly contended vehicles,” said Jesse Toprak, Senior Analyst at the data tracking service TrueCar. “Today’s consumers value a nicely equipped vehicle as much as they do a low cost of ownership. Automakers are getting better at providing all the modern conveniences consumers come to expect for more of their models, resulting in higher overall prices hence improved profitability.”


Sales Up – Incentives Down

Pent-up demand, not givebacks, draw shoppers to showrooms.

by on Sep.04, 2012

Hyundai's updated Genesis coupe helped the maker drop incentives and demand higher prices in August.

While a number of key automakers have yet to report their final numbers for August, there’s little doubt it was a strong month for the industry, likely bringing an overall sales increase of around 16%, year-over-year – a sharp contrast to the stuttering numbers from other sectors of the economy.

The August numbers are all the more impressive when considered in light of the fact that incentive spending continued to drop during the month – while transaction prices were up sharply compared to August 2011.

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“There’s still pent-up demand,” driving buyers back into showrooms, suggested Frank Trivieri, vice president of sales for Volkswagen of America, which reported a striking 62.5% year-over-year sales increase.


Sales Up but Transaction Prices Slip

But customers continue moving up-market.

by on Feb.03, 2012

With products like the Elantra flying out the door, Hyundai (and sibling Kia) had the lowest industry incentives last month - but also the lowest average transaction prices.

Trend or just a temporary setback?  In recent months, buyers have been steadily moving up-market while also adding significantly more content to the vehicles they buy.  Along with cutbacks in the typical industry incentive package that has rapidly driven up the price motorists pay – the average transaction price, or ATP, in industry lingo.

But while January saw a surge in sales, preliminary data suggest they may also be reining in their spending by focusing on lower-priced, less lavishly-equipped models.

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Including cars, light trucks and crossovers, the typical motorist spent $30,512 in January, according to car pricing information tracked by, a 0.6% decline from December.  But while that’s a notably reversal of recent trends, it doesn’t appear to signal an end to the industry’s current upward momentum, analysts stress.


September Auto Sales Surge – But Worries Remain

Japan’s Toyota, Honda still struggle despite hefty incentives.

by on Oct.03, 2011

Strong demand for the newest Beetle help drive a big month for Volkswagen.

New car sales defied dire economic news and grew in September with several car makers posting healthy sales gains, pushing the industry’s annualized sales rate to nearly 13 million units, the strongest it has been since the economy began showing signs of a double-dip recession.

But there were some worrisome notes amidst the overall bright picture.  The two leading Japanese makers bucked the upward trend again last month despite hefty increases in incentives. Overall, givebacks were up slightly, though some makers were able to cut spending on rebates and cut-rate loans in the face of strong market demand.

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“Auto sales continue to be one of the economy’s few bright spots,” said Robert Carter, Toyota Motor Sales vice president, who also predicted Toyota will start posting positive sales results in October after a long string in sales declines.

Toyota saw another 17.5% drop, year-over-year as the maker continued to struggle to overcome the impact of Japan’s devastating March 11 earthquake and tsunami.  Honda, meanwhile, saw its numbers fall 8% last month.  Both makers took sharp cuts in production due to supply issues but both Toyota and Honda say they are now back up and running at normal speeds.


Americans Paying Record Prices for New Cars

Used cars not far behind.

by on Jun.02, 2011

Ford has taken three price hikes this year, one reason it had the highest average transaction price of all major makers in May, analysts report.

There are plenty of reasons why new car sales took a tumble last month – everything from a weak economy to a shortage of some popular Japanese vehicles.  But pricing also appears to have been a significant issue, according to industry analysts, with Americans now paying more than ever for new cars, trucks and crossovers.

The average transaction price – what a typical customer actually pays, as opposed to sticker price or the low come-ons you might see advertised – surged to $29,817 in May, according to the data tracking service  That was up a full $608, or 2.1%, from May 2010 and an increase of $215, or 0.7% over April of this year.


Significantly, prices rose sharply even though many buyers began shifting from larger to smaller vehicles in a bid for better mileage, analysts noted.  Traditionally, U.S. motor vehicle prices are closely linked to the size of an automobile.

And while some potential buyers are rethinking their options, used car prices also are heading skyward.


Car Sales Dip as GM, Japanese Tumble

Ford sales flat, but Chrysler, Koreans buck the trend with comfortable gains.

by on Jun.01, 2011

Even the biggest Chrysler products gained ground in May. The maker was the only one of Detroit's Big Three to post a gain.

Crushed under the weight of declining consumer confidence, rising gas prices, lower incentives and shrinking inventories of Japanese-made vehicles car sales took a sharp tumble in May, though some makers, including long-struggling Chrysler, managed to buck the downturn.  It was the first significant downturn for the industry since the American market began to recover in late 2009.

The biggest losers were Japanese makers, like Toyota, who expect to continue being hammered for months by the impact of the March 11 earthquake and tsunami , which nearly shut that country’s auto industry down for a month.  Some key models, such as the new 2012 Honda Civic aren’t expected to be back in full supply until late this year.

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But General Motors also saw an unexpected dip in demand reflecting sluggish sales of its big trucks even as consumers rushed to buy the maker’s new and more fuel-efficient small cars.

Overall, analysts described May as a disconcerting start to what is normally the annual spring buying season.  Sales had, in fact, been rising steadily all year, reaching a seasonally-adjusted annual sales rate, or SAAR, of 13 million in April.  But for May the annualized rate dipped to just 12 million.


May New Car Sales Off to “Dismal” Start

Shortage of Japanese products part of the problem.

by on May.20, 2011

Sales have taken a tumble at dealerships around the U.S. in recent weeks.

After months of steady growth, the U.S. new car market appears to be taking a nosedive in May, according to observers tracking traffic at the country’s dealer showrooms.

The “dismal” start appears to be the result of a variety of factors, according to a preliminary reports by J.D. Power and Associates, including a sharp cutback in rebates and other incentives.  But many potential buyers also appear to be holding back because of a worsening shortage of Japanese vehicles.

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The industry picture isn’t entirely gloomy, however. Demand for used cars is skyrocketing, with price increases hitting never-before-seen levels, as reports.  (Click Here for that story.)

The soaring cost of fuel is another factor impacting the new car market, according to Jeff Schuster, executive director of global forecasting at J.D. Power and Associates. “As a result, the industry will likely be dealing with a lower sales pace at least through the summer selling season, putting pressure on the 2011 outlook.”