With the COVID-19 pandemic pretty much paralyzing much of the business, automakers are looking for ways to stir up some sales. Many manufacturers have unleashed some pretty sweet deals by offering 0% financing or no payments up to 90 days. Audi, Hyundai, Ford, and Subaru are just examples of some manufacturers offering the 0% financing for a select few of their models.
Honestly, it all seems a bit unreal to me. Sometimes I sit back and can’t believe this is all really happening, and that this is currently real life. We are seeing so many manufacturers out there throwing these incentives in hopes of boosting up sales. And that’s not all, some are also offering additional rebates on several of their models to further bring down the price. It seems this could be the ideal time (of course if you are in a position to) to get that crazy low lease deal or to take advantage of thousands of dollars off of MSRP and low, low-interest rates. As we all know, everyone wants a good deal, the best price, the best bang for their buck. Well, here it is.
Keep in mind, most of these incentives only apply if the consumer goes with the manufacturer’s captive lender. Tyson Jominy, who is J.D. Power’s vice president of PIN operations, says this allows the captives to grab market share in what is already a competitive market, and that the current 77% captive ratio “is the highest level in recent history.” I get it. Lenders and manufacturers are working together to try to recoup all that lost business.
As dealers, I think these incentives could help capture that customer who was on the fence about getting that new vehicle. Or maybe that someone who is looking to lower their monthly payment. Or the person who has always wanted that certain car, but it was just slightly higher than what they wanted to pay. Most importantly, getting these people to commit to you also hopefully opens up Finance Managers to capture additional products. This gives the box an additional avenue of opportunity that perhaps wasn’t there before. Possibly the person who could not afford Tire and Wheel or a Vehicle Service Contract previously, now can fit it into their monthly budget. Picking up an extra product from your repeat customer that only used to buy maintenance, can now get Lease-End Wear and Tear; or someone who was never able to afford Paint and Fabric, now can. The opportunity is there. Even if it’s just one or two more. That one or two can go a long way during this time.
One thing I am wondering, if the deals are good now, should we expect to see even more incentives in the coming months? Many dealers still have last year’s models in stock along with the current 2020 models. Will we see massive rebates over the summer? Or is this enough? What else can manufacturers do to engage and entice buyers to commit now? Or what if the opposite happens? As businesses start opening back up and sales pick up again, will manufacturers and lenders cut back on some of these incentives? What are your thoughts?
With one’s health and safety in mind during this pandemic, people have shied away from public transportation (rideshares, buses, trains) and are seeking the comfort of being in their own vehicle. Although we may not be going out as often, when we do leave the house, we want the peace of mind of being in our own cars. Another thing to take into consideration, those who do not own a vehicle currently, maybe in the market for one now. Even if car sales have dropped dramatically in our area, it is not dead (silver lining). People still want cars.
All in all, we all hope to open up soon and get back to some sort of normal. Stay positive and let’s hope that all these incentives manufacturers are throwing out there, will help dealers boost auto sales to make up for the last several weeks. Only time will tell. In the meantime, stay healthy.