If you’ve been kicking yourself for missing out on the year-end sales events, here’s some good news.
Automakers have entered into a take-no-prisoners price war as foul weather and overproduction have stifled sales over the past six weeks.
Although most industry analysts agree the increase in incentives will be short-lived, ALG vice president Eric Lyman says, “The danger is that this could be the beginning of an escalating arms race for market share.”
Ford Motor Company and General Motors Company are offering hefty discounts on their 2014 F-150 and Chevrolet Silverado full size pickups. Toyota Motor Corporation and Honda Motor Company have also entered the fray.
Sales of the Honda Accord fell 14 percent year-to-year last month, causing inventories to swell from a 71-day supply in December to a 114-day supply in January. RBC Capital Markets analyst Joseph Spak says dealer incentives on the Accord are up 300 percent compared to a year ago. Honda will reportedly offer low-interest financing and more affordable lease deals on the 2014 Accord during its upcoming Presidents Day Sale.
Inclement weather is also being blamed for a 27 percent drop in sales of Toyota’s flagship Camry sedan. In response, Toyota Motor Sales USA has increased incentives by 38 percent compared to last year. Buyers are being offered low lease rates, 0 percent financing or a $1,750 rebate on the purchase of a new Camry.
Spak says that Toyota may be forced to curtail production of increase incentives if sales don’t pick up soon.
Toyota and Honda aren’t the only automakers being affected by the abnormally cold, wet start of the New Year. Sales of Ford’s Fusion mid-size sedan dropped nearly eight percent last month, leaving the automaker with a 97-day inventory sitting on dealer’s lots. Ford is offering rebates of up to $2,000 on the purchase of a new Fusion, as well as discounted financing and lease options, and Ford dealers are sweetening the deals even more. The average discount on a 2014 Fusion is reportedly 11 percent below sticker price.
Bargain shoppers may not have long to act, however. The average vehicle on U.S. roads is nearly 12-years-old so pent up demand will likely result in increased demand and decreased incentives in the near future.