Auto manufacturers are putting a lot of cash on the hood to move dated inventory
They’re baaaaaack…
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We’ve spent much of the past four years watching auto manufacturers face shortages—and use the excuse of shortages—to establish eye-watering high costs for new and, subsequently, used vehicles. Prices in both sectors have started to settle, but the return of incentives truly heralds a return to business as usual. Sort of.
Car-buying incentives in Canada
Daniel Ross is the senior manager of industry insights for Canadian Black Book. He says the U.S. numbers are definitely a reflection of what is taking place in Canada, too. “The last quarter of the year is traditionally quieter than the summer, but now dealers are trying to hit annual sales targets,” he explains.
Are there cash incentives for the vehicles you want?
Lexus is offering decent interest rates and cash discounts ranging from $2,000 to $4,000 on the 2024 ES, LC and LS – cars showing weaker demand than some of its SUVs, though there are similar incentives offered on the NX 250 and 350. Hybrids remain untouched.
Incentives with an additional purchase
End-of-year incentives
Daniel Ross sees the return of incentives, and what they’re on, as an indication of where the industry is headed. “Hybrids and plug-in hybrids are moving. Consumers are offsetting the total cost of ownership now. We’ve lost cheap money when interest rates were low and are now tying that to residual rates that have soured,” he says. Is there desperation in the air for those sitting on dated inventory? “Absolutely,” says Ross.
Final tips from Ross: take the cash if it’s the vehicle you want. Conversely, he also says to buy the car you need for 90% of your life. He says that the third row is often unused, and consumers need to find their way back to vehicles that are a better fit. Manufacturers blame consumers for the gigantic rigs on our roads, but I also credit really good marketing departments and ad campaigns that convinced them for decades that’s what they needed.
The electric vehicle market is still sorting itself out, with some jurisdictions set to let government subsidies run out at year-end. Some of us have been saying for a couple of years now that hybrids and plug-in hybrids would be the bridge between technologies, and that appears to be the case.
Incentives are terrific if they show up where you want to be. If they’re pulling you too far off course, hesitate.