Dealers pocketed more of the deal in March?

Related Stories
Related Topics

NASHVILLE -- In a mystery of missing money, it looks like auto dealers held onto more of the funds that poured through the retail industry in March.

The evidence?

Incentive spending was up across the U.S. auto industry in March, and yet average new-vehicle transaction prices were also up.

The implication: Manufacturers offered more money to reel in consumers in March, but all of those incentives were not reaching buyers, says Larry Dominique, president of ALG Inc., the market-tracking firm that sets vehicle residual values.

“Sales will be up only about 2 percent for March,” Dominique predicted prior to the industry’s release of final sales data on Tuesday. “And incentives were up by 8 percent, year over year.”

ALG reports that incentives rose to an average of $2,773 per vehicle across the industry in March, an increase of $71 per vehicle from February.

“So transaction prices should be lower -- not higher,” Dominique reasoned. “But the average industry transaction price increased $360.

“That tells me that the dealers are holding onto more money in the deals they’re making. Even though the incentives are really good, the consumer isn’t seeing the whole benefit.”

According to ALG data, Chrysler transaction prices rose 4 percent in March, Honda increased by 7 percent and Hyundai’s increased by 4 percent. Dominique estimates that Nissan and Ford both saw a 2.8 percent decline in transaction prices, while Volkswagen’s decreased by 5.5 percent.

Dominique observes that, as of the end of March, the industry is still not selling at an annualized volume of 16 million vehicles. Automakers and analysts widely forecasted sales of more than 16 million for 2014, some of them predicting volumes as high as 16.5 million.

“It looks like March will put us in the range of about 15.7 million,” Dominique says. “At this point, it’s going to need to be quite a summer to get us up to 16.5 million sales.”

You can reach Lindsay Chappell at lchappell@crain.com.


advertising
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

Or submit an online comment below. (Terms and Conditions)


Newsletters & Alerts
Latest Headlines