Some automakers have resumed offering generous discounts on 2023 models since the COVID pandemic, and this could be just the beginning.
Production standstills lasting several weeks, a lack of electronic parts, long delivery times – various factors led to a decline in stocks on dealers’ farms, with the consequences of a price increase and the loss of purchase premiums.
But the manufacturers – at least the Americans – are sometimes offering generous discounts on the models in stock in 2023.
Ram is offering up to $10,300 off its 1500 Classic, Ford is offering up to $5,500 off the F-150, while Chevrolet is playing the interest card and offering 2.99% over 84 months on its Silverado.
Also affected are SUVs such as the Dodge Durango ($7,700), the Jeep Grand Cherokee ($8,200), its little brothers Cherokee and Compass, as well as the Escape, Bronco Sport and Explorer at Ford (see table).
Hearty climb
“I wouldn’t say there are huge volumes of vehicles accumulating in shipyards in Quebec right now, but production is starting to take over,” said Patrick Lalande, owner of Vos Automotive Broker. Between 700 and 1000 transactions are carried out every year.
“Inflation is in the background; vehicle prices have risen over the last year and a half. It’s now easy to give discounts. Manufacturers realize that the market is running out of steam. The big issue is the ability of the average person or even a company to pay for a vehicle. A $100,000 truck means payments of $2,000 per month. “We didn’t have $100,000 trucks before,” he analyzes.
In-stock 2023 Ram 1500s are offered rebates of up to $9,700. For a Ram Classic, the discount can be up to $10,300. Free photo
George Iny of the Association for the Protection of Motorists (APA) notes that stocks are “increasing a little bit, just for certain models.”
“Ram started the discounts and the others followed him. But many dealers continue to add extras to sell more than the recommended retail price,” laments Mr. Iny. He cites a recent Car Help Canada survey to support his claim.
At the Corporation des Concessionaires Automobiles du Québec (CCAQ), we see that the situation is improving.
“Since the second quarter, we have observed a stabilization and improvement in dealer inventories. New car sales rose 20% in October compared to the same month last year. We can therefore say that we have arrived or are close to reaching the cruising speed and the desired return to normality,” estimates Ian P. Sam Yue Chi, President of the CCAQ.
It’s spilling over into the United States
According to Patrick Lalande, the situation can also be explained by the context south of the border.
“Americans have a lot of vehicles on their farms. Ford had too many. They diverted F-150s here. Seven months ago I couldn’t get one. I wouldn’t say the courses are fully booked, but there is some choice,” he says.
This abundance is due in particular to the fact that manufacturers have preferred the American market.
“Not long ago a manufacturer, who I won’t name, told me that Canada was a third world country when it came to money and that they wouldn’t give us priority. But manufacturers can’t sell cars in the U.S. anymore, so suddenly we’re getting better,” says Mr. Lalande.
“Subaru expects there will be supply problems for another year and a half,” he continues. It’s still difficult, but for a Crosstrek they pushed my arrival dates to February-March (3 or 4 months instead of 18). We are letting go of the US market that produces cars and going back to other markets.”
In general, vehicle inventories at dealers are increasing. Photo Stevens LeBlanc
Patrick Lalande also notices two trends in used cars, depending on the value of the vehicle.
“The market for large vehicle users is declining,” he explains. The price of Cadillac Escalade and GMC Yukon is melting like snow in the sun. But for mid-range vehicles like a Hyundai Elantra or a Honda Civic, these prices are unfortunately still very high. And that at interest rates of 7.9 or 9.9% [pour des véhicules neufs]it is difficult.”
Also electric
The market for electric cars is also experiencing upheavals.
“Many customers have ordered an electric vehicle from two or three dealers. When the first one arrives, the other two become available,” explains Mr. Lalande.
“And now that the vehicles are arriving, the price at order, which could be $800 per month, for example, can be reduced to $1,000 because of the interest rate and the reduced residual value (for rentals). Often the customer does not accept it and resorts to a petrol vehicle or decides to extend his own car,” specifies Mr. Lalande.
A break?
George Iny from the APA is not optimistic about whether we will slowly return to the situation before the pandemic. “We are still a long way from that, not until the end of 2025, probably never.”
For the CCAQ, the increase in inventory bodes good news for buyers.
“Several banks such as JP Morgan had stated that a fall in prices should be accompanied by a return to normality in stocks. In recent weeks we have seen an initial reaction to used vehicles in certain markets. It would be logical that the return to normality in the new vehicle would also play in this direction. I think the era of rising pandemics is behind us,” says Ian P. Sam Yue Chi.
Realtor Patrick Lalande also sees better days for drivers.
“I already see prices falling in the US market, even for electric vehicles. For a Volkswagen ID4 there is 3.9% with an additional discount of $2,000,” he points out.
“Interest rates in 6 to 10 months [sur les véhicules neufs] will decrease significantly, there will be some nice transactions. Expect the value of trade-in vehicles to also decline. “We are not yet where we were in 2019, but manufacturers will have no choice to return to this trend, the recession is here,” says Patrick Lalande.
Examples of current discounts*
Model | Discount
- Alfa Romeo Tonale: 2.99%/36 months
- Chevrolet Silverado: 2.99%/84 months
- Chrysler Pacifica: 2.99%/36 months
- Dodge Durango: up to $7,700
- Ford F-150: up to $5,500
- Ford Bronco Sport: up to $4,250
- Ford Explorer: up to $3,000
- Ford Escape: up to $4,000
- Ford Edge**: up to $5,000
- GMC Sierra**: 4.99%/84 months
- Jeep Grand Cherokee: up to $8,200
- Jeep Wrangler: 1.99%/36 months
- Jeep Gladiator: $1500
- Jeep Cherokee: up to $2000
- Jeep Compass: up to $2,400
- Jeep Wagoneer: up to $2,500
- Ram 1500 Classic: up to $10,300
- Ram 1500: up to $9700
- Ram 2500/3500: 2.99%/36 months
*2023 vehicles in stock as of November 15th
**2024
Sources: Manufacturer websites
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Originally posted 2023-11-21 08:20:46.