Carmakers dangle spiffs to clear out 2012 stock
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Auto marketers are stepping up efforts to clear out remaining 2012 models to make way for the 2013s -- and to regain or hold on to market share.
General Motors and Ford Motor Co. have lost share this year as Japanese automakers' sales have surged from year-earlier levels that were artificially depressed by a lack of vehicles following the March 2011 earthquake and tsunami in Japan. Chrysler Group has gained share this year, with a frequent diet of incentives.
But so far, the battle over market share hasn't escalated into a full-bore incentives war, for several reasons:
-- Automakers have largely kept production in line with sales, so that industrywide, there was a manageable 58-day supply of vehicles as of July 1, according to the Automotive News Data Center. None of the six largest companies in the United States are sitting on more than a 76-day supply. That's far short of the levels which launched last decade's incentive wars.
-- Carmakers are devoting their efforts primarily to sweeping out the 2012s and aren't extending the juiciest offers to the 2013s.
-- For the most part, marketers are finding ways to move the metal without resorting to cash on the hood.
Take Chevrolet. It wants to reverse a slide in its market share and to sell off the mid-sized 2012 Malibu sedan, now that the redesigned 2013 is starting to show up in dealerships.
Last week, Chevy launched a 60-day, no-questions-asked return policy across its lineup, as well as no-haggle prices set below sticker prices for all remaining 2012s. The promotion runs through Sept. 4.
After gaining U.S. market share the past two years, Chevy has slipped thus far in 2012. In the first half, Chevy's sales rose 6 percent in a market that rose 15 percent. General Motors' sales overall rose 4 percent.
Get buyers in the door
Chevy's promotion, dubbed Total Confidence Pricing, aims to get potential buyers into dealerships. The prospect of a stress-free buying process and a set price will be a large motivator for many consumers, even if the set price is higher than a customer might have negotiated, TrueCar.com analyst Jesse Toprak said.
Chevrolet is "not saying that these are the best prices," he said. "They're saying that you don't have to haggle for them." Despite the come-on of lower prices, the marketing push "is really going to be on the product and not the prices."
Indeed, Chevy's promotional materials give top billing to its "Love it or Return it" offer and mention the lower prices on 2012s secondarily.
"I really think that that's going to be the new trend in incentive spending, more around the products and the experience of owning the products versus simply giving money away," Toprak said.
James Thorpe, general manager of Quirk Chevrolet in suburban Boston, said a local TV news report on the promotions has piqued interest among local buyers, prompting a "bunch of calls" inquiring about the incentives, Thorpe said. He said foot traffic hasn't dramatically increased yet, but he expects that to change.
His dealership has about 400 2012 vehicles still in stock and has received about 250 2013s, mainly the Malibu and Camaro.
Chevy isn't alone in trying to goose its sales.
Beginning in March and running through August, American Honda has offered stair-step incentives, which pay dealers escalating bonuses as sales targets are achieved, on the 2012 Accord. A redesigned 2013 Accord arrives this fall.
Dealer incentives in general -- and stair-step programs in particular because they are opaque to consumers -- offer a below-the-radar way to boost sales without customer discounts, which can hurt residual values and ultimately damage a brand's image.
Toyota: More 0% offers
Toyota currently offers 0 percent financing for some Toyota-brand models and 1.9 percent for others. Bob Carter, Toyota Division general manager, said during a conference call discussing June sales that Toyota will be adding more 0 percent offers in July.
In addition, Carter said, "Thanks to strong residuals, great lease rates are available on Camry, Corolla and just about every model in our lineup." Toyota's best lease deals are on models that are late in their lifecycle, Carter said, citing the Toyota Corolla and RAV4. Newer models don't get subvented lease deals, he said.
Nissan has engaged in an aggressive sell-off of the 2012 Altima, ahead of the arrival of the redesigned 2013 Altima. Nissan expects to clear out its remaining 2012 Altimas in July.
Chrysler began offering a deferred payments program this month, allowing consumers in most parts of the United States who purchase 2012 model vehicles through Ally Financial to hold off on payments for 90 days.
Larry P. Vellequette, Bradford Wernle and Jim Henry contributed to this report
You can reach Joseph Lichterman at jlichterman@crain.com.
