Auto manufacturers are putting a lot of cash on the hood to move dated inventory
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.
If the lack of inventory spurred historically high prices, surpluses are now driving the year-end push to unload vehicles to make room for new models. A recent report from CarScoops in the U.S. is touting a 60% increase in incentives over the same time last year. If you’re in the car-buying market, here’s a comprehensive look at much of what is on offer in Canada, courtesy of the Automobile Protection Association (APA).
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After years of consumers facing full manufacturer-suggested retail pricing (MSRP), it’s a little jarring to see something like the 2024 Ram 1500 sporting a pre-tax discount of 15% plus a $2,500 pre-tax discount (excluding leases), and the 2024 Ram 1500 Classic (ending sales in Canada) offering back $10,000, according to current stats from the APA.
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Maybe it’s not surprising then, that Stellantis is leading the incentive pack. “A problem for Stellantis dealers is that many current Jeep and Ram customers are locked into very long loans with high negative equity and they will be giving up a lower interest rate negotiated before or during COVID to come back into the market early,” says George Iny, executive director of the Automobile Protection Association. While there are better interest rates to be had across a wide spectrum of the market, it’s the big vehicles throwing around the cash. Is the 2024 GMC Sierra on your list? Up to $8,500 cash purchase discount, depending on the model, paired with a 1.9% interest rate.
Are there cash incentives for the vehicles you want?
Cash incentives are noisy and appealing — if it’s the vehicle you want. Ross warns that big cash incentives like these are the worst thing to happen to future value — and that retained value is always a number consumers should be considering. It’s why from Toyotaland — a perennial retained value leader — there are only crickets. They’re selling nearly everything at full pop. Iny adds Hyundai and Subaru to the list of manufacturers who are moving product with little or no incentives.
Honda is putting up more modest cash ($1,500 to $3,000) and attractive interest rates on its biggest rides: 2025 models of the CR-V, Ridgeline, Odyssey, Pilot and Passport. A word of caution to those chasing lower interest rates: read the fine print and see how long the term is for. Getting 1.99% financing for 24 months means steep payments until you have to refinance at dramatically higher rates.
Iny also notes a little bait-and-switch going on that consumers should be wary of: a slide back to advertising the interest rate applicable to short 48- or 60-month loan terms, disclosed only in the fine print. Before COVID-19, the interest rates applicable to far longer advertised terms were the norm in new-car advertising, with some, like Kia, Jeep, and Ram, proudly strutting their rates for 84-month terms, which are more typical of how consumers actually finance their new vehicles. Nissan has lots on offer at 0.99% financing — for a 24-month term.
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.