Sales Dip, But So Do Incentives
Overall, sales of new vehicles has been in decline at the beginning of 2018 and automakers are following suit by offering less incentives for new car buyers, In February of 2018 there were $65 less spent on incentives by automakers than the same period in 2017, according to J.D. Power. Sales of new vehicles were down 2.3% during this period compared to just 12 months ago.
During the last auto sales down turn automakers did the just opposite: they offered more incentives as sales declined which led to more inventory and resulted in weak profits for the companies. It appears that automakers have learned their lesson this times around, changing their tune. Mark LaNeve, a VP at Ford Motor says that, “This is really a change from…the last three years,” when automakers boosted discounts.
Sales were not down across the board as Toyota reported an increase in fleet sales due to the redesigned Camry. Also, Lexus has lifted incentives higher to keep up with the competition. AutoTrader speculates that companies are instead targeting their incentives rather than incentives across the board.
The spring selling season starts later this month so it will be interesting how consumers will act toward the lack of incentives and if automakers will reverse the trend. January and February are typically the weakest months for sales anyway so automakers are not fretting the dip in sales. They are optimistic that this economic downturn is unlike the last couple of downturns and they expect that overall sales will be higher for the entire year.