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Who would have thought that in an era where the government is mandating increasingly stringent fuel consumption guidelines, used SUVs would be a hot commodity.
Believe it or not, that’s the case, or at least it probably will be very soon. The number of three-year-old SUVs being returned from lease has dwindled from about 2,500 per month last year to a tiny 200 per month in 2011 according to the National Automotive Dealers Association. The trouble is, in 2008 almost nobody was lining up to buy a new SUV, and those who would have couldn’t get loans because every major financial institution was suffering.
Fast-forward to the end of 2011 and we’re starting to see the residual effects of that purchasing lull. There wasn’t really anybody leasing new SUVs, so now nobody is returning them, meaning dealers are scrambling to stock up for the winter season.
“I think we will feel the impact of this in late January due to the time it takes to process, sell and market the lease turn-ins,” Jake Moore, general manager of Country Chevrolet, in Warrenton, Va. said to MSNBC.
While the short supply is a bad sign for someone looking to buy an ’08, the lucky few who have them can probably broker a nie deal for a brand new model.
With fewer and fewer quality, low-mileage used cars on the market (thanks to slowed production output and reduced sales over the past few years), those who are looking towards saving some money are finding that buying a new car is costing roughly the same as buying a used one. In fact, in many cases, a new car is actually cheaper.
According to Edmunds.com, buying a new BMW M3 costs just $34 a month more than buying a one year old example. It gets even better if you’re looking for a Chevrolet Corvette, as a new model is about $12/month less than a used model.
These are just two examples in an industry that is filled with them. According to chief economist Paul Ballew, as much as 500,000 new cars would be sold to people who would have bought used.
Ballew said: “There’s a substitution effect going on between new and used. When you get those price gaps closing, you get people that are willing to shop new that wouldn’t have before.”
All this is good news for the auto industry, which has taken quite a tumble in the post recession era. Although some companies are still trying to recover, luxury car manufacturer BMW has risen 13% and Mercedes-Benz has also sold 7.3% more cars this year, compared to last. Even the sportscar market has seen a upswing, with a 2.9% growth.
So with car companies putting more effort into shifting new products, if you’re in the market for a car, surprisingly, you might get a better deal on a new one.
Fiat has returned to the U.S after a nearly three-decade absence, and the Italian automaker is eager to make a positive impression on the American consumer. So far, dealers are happy with the initial sales of the 500 but see the need for more ad support to sustain long-term growth of the brand.
As part of the campaign, Fiat is offering a $199 a month lease and cut-rate financing on the Fiat 500 coupe. The lease term is 39 months with $1,999 due at signing. Customers interested in buying the coupe can choose three different financing packages including 1.9 percent financing for 36 months. The $199 lease is being offered on the entry-level Pop model which comes with a five-speed manual transmission, which starts at $15,995, including shipping. Fiat has planned to open 130 dealerships by the end of 2011 and so far has 93 up and running.
[Source: Automotive News]
The Automotive Leasing Guide is what the auto industry uses to determine residual values for leased vehicles. It’s a pretty important guideline, and when the ALG speaks, people listen. So the ALG’s prediction of gasoline at $4.13 a gallon by 2013 has some pretty big ramifications for consumers and their vehicle choices.
Naturally, the ALG is predicting an increase in residuals for compact and hybrid cars. While compacts and hybrids should see a residual jump of nearly 10%, the big losers will be full-size SUVs, which should take a 7.4% hit in residual value. The same price fluctuations apply to wholesale values as well, with compacts and hybrids expected to bring 30% more at auction, while the same big trucks will go for 20% less.
Before anyone panics, let’s not forget that Canada has endured prices very close to $4/gallon for a few years now, and their vehicle makeup, while similar to the United States, skews more towards compact cars. While the best selling cars in America in 2009 were the Toyota Camry and Honda Accord, Canada’s favorites were the Honda Civic, Toyota Corolla and Mazda3 respectively. Bet that Civic Hybrid is looking like a good buy now, isn’t it?
[Source: Autoblog Green]
Inside Line put in a few calls to Toyota, and discovered that by some kind of numerical wizardry that rivals Enron accounting practices, there are still cars for sale, specifically in the United States.
“As a result of additional allocation being dedicated to the U.S. market, some production spots still remain for the LF-A supercar’s 500-unit global build. Prospective buyers may register their inquiries directly with any Lexus dealer or call (866) LFA-4794 or (866) 532-4794,” the unidentified Lexus rep told Inside Line.
The erroneous reports of a sold-out production run came after trade journal Automotive News reported another Toyota official as saying “customer response has exceeded the number of available cars [and] it is possible that not all customers who expressed interest will have an opportunity to order [an LFA].”
[Source: Inside Line]