In these strange times, some dealerships are closing all but their service bays as communities go into lockdown mode. But others are trying valiantly to continue business as usual. To entice buyers in this period of hunkering down, some crazy deals for new vehicles are emerging. And we suspect this is just the beginning.
When people start shopping again, there will be pent-up demand, but a lot of would-be buyers will also be under financial stress, especially if they lost income and are need to readjust their budgets. Forecasters are already predicting 2020 sales will be below 2019 levels, with some saying the percentage drop could reach double digits. But for those able and willing to do so, now could be a good time to buy a car.
Plenty of Cars Despite Plant Shutdowns
There might be limited supply of some popular vehicles but many dealerships are well stocked and should be able to weather short-term plant shutdowns being implemented by most automakers. Ford has a 96-day supply of vehicles, while the Lincoln brand has a 94-day supply, according to Edmunds. Dealers who sell General Motors brands were still building their inventories after a lengthy UAW strike last fall year, but stocks are healthy enough that dealers should be in good shape for a couple weeks, said GM spokesman Jim Cain. They were enjoying a strong start to the year and there are still vehicles in transit to dealer lots.
Deals are out there. On the national level, many companies are offering strong incentives such as low financing rates or deferred payments for as long as six months on a new vehicle.
“Zero percent interest for 84 months from GM is a bit crazy,” said Jessica Caldwell, executive director of insights at Edmunds. GM is also deferring the first payment for four months. The deal is reminiscent of the period after 9/11 in 2001 when GM introduced its Keep America Rolling program that offered 0 percent financing to help stimulate the economy. But even then, it was only for five years which pales in comparison to the current seven-year deal.
Everybody Is Deferring Payments
Many automakers are offering deferred payments. Ford just announced its new Built to Lend a Hand program where Ford Credit covers the first 90 days of payments and then defers the next three months for a six-month reprieve on all 2019 models, as well as 2020 models with the exception of Super Duty pickups.
In addition to national programs, there are regional deals at any given time, and dealers can offer their own discounts, which often vary by region and model, but they are not allowed to sell a vehicle below the manufactured suggested retail price. Many customers come in with a monthly budget in mind and work with dealers to layer different programs, incentives, lease rates, cash-back offers and down payments to reach a deal. Some dealers are more aggressive than others.
Chevrolet Silverado for $53 a Month
For example, a Chevrolet dealer in Lancaster, California, has some astounding offers in place until March 31. For $61 a month you can get a two-year lease on a 2020 Trax LS with $999 down. Or lease a 2020 Chevrolet Equinox for $74 a month for two years with $1,995 down. Need a pickup? A 2020 Chevrolet Silverado with the less popular Custom Double Cab is available for $53 a month for 24 months with a $3,995 down payment. To get the more popular Crew Cab, it is $96 a month with $3,995 down.
There are caveats. These are strict two-year leases with 10,000-mile annual allowances. Buyers need a top credit rating, and some offers require they already own 2015 or newer GM product.
Some vehicles, like the Trax, have national incentives programs in place, as does the 2019 Silverado Double Cab, says Cain. GM has ongoing programs that offer deals to employees, those who already own a late-model GM product, and, occasionally, those who may be coming to GM from a competitor. Cain said none of the current deals are overly crazy from the corporate side. “There is not a fire sale going on. We see ultra-low deals [from dealers] all the time.”
Everyone has a different definition of a good deal. The Detroit Three automakers have a history of frequent and creative incentives, and Nissan and Mitsubishi have become more reliant on deals and fleet sales. Honda and Toyota have a reputation for not dealing or haggling. “You want it? Here’s the price,” those brands seem to say.
Prior to the current crisis, there were Nissan deals. You could get a 2019 Rogue Sport lease for as low as $209 a month, or it could be financed at 0 percent for 60 months and you could get as much as $4,000 cash back.
Some Deals More Conservative
Conversely, this is a fire sale of sorts for Toyota: a dealership in Clinton, Tennessee, has a sale through the end of March on select models. You can get deals on certain trim levels of the 2020 Camry, Tacoma, and Corolla, and 2020 or 2019 RAV4. The Camry deal offers a choice of 2.9 percent financing for 60 months or $1,250 in customer cash. The Camry LE has a lease offer of $239 per month for 36 months with $2,999 due at signing. A Tacoma TRD Pro can be had for 1.9 percent financing for 60 months or with $1,500 cash back. The SR 4×4 Double Cab can be leased for $199 per month for 36 months with $2,999 down.
Honda is another company that eschews incentives. It was among the last of the automakers to announce new actions during the crisis. Honda is offering $500 toward the purchase or lease of an Acura through its Loyalty Purchase Assistance Cash program and $1,000 towards the purchase or lease of a new Honda model, with some exclusions. The first payment is deferred for 90 days in all states but Florida.
Caldwell said incentive programs tend to be introduced at the start of the month or quarter, not usually mid-month. She expects more deals to surface in the weeks or months ahead when lockdowns and quarantines are lifted and people are free to move around again and the economy roars back. There will be those who need to return their leased vehicles and consumers could have government stimulus money in their pockets to put towards a new car. Caldwell would not be surprised to see the government encourage stimulus deals, much as it relied on GM and the rest of the industry during the Keep America Rolling program in 2001 to kickstart the economy. It worked in 2001: By October, the annual selling rate in the U.S. had soared to 21 million.
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