To the Editor:
Incentives are like cocaine.
The makers continue to show very little imagination in marketing their products and trying to enhance the perceived value.
They continue to denigrate the value of their vehicles by reducing the actual selling prices and buying future business. Long-term repayment contracts with little or even negative equity exacerbate the situation.
The market reflects that in residual values, depressing not only values of late models but earlier ones, too. Ironically, the manufacturers' finance companies are all too keen to complain about residual values.
The transaction price gap continues to grow in spite of the rebates, cash-backs and employee discounts. Used vehicle values get pushed further down by the very efforts to spawn new business.
There may be a way to break this spiral and get customers back to normal trading cycles: a new vehicle or late-model used vehicle every three years with a trade-in contributing equity.
Perhaps the manufacturers could add $4,000 or more to trades. The whole business would start to reassess the value of used cars and their role in making worthwhile transactions.
Customers would be able to get out of an upside-down deal. The fleet and leasing markets would be able to get back to some better residuals. The auctions would echo that sentiment around the marketplace in a matter of days, and the whole tempo of the car market could be lifted.
The used-car market is constipated and needs to get healthy again. The new-vehicle market would finally stagnate without the underlying support of a good used-vehicle market.
Flying Lion Dealer Services LLC
Mount Juliet, Tenn.