SUV Demand Spells Trouble for Off-Lease Luxury Sedans

SUV Demand Spells Trouble for Off-Lease Luxury Sedans

0 comments 📅02 November 2017, 23:15

Most American manufacturers posted their October sales results yesterday, and the numbers all reflected the renown of SUVs. That conforms to the current trend toward bigger vehicles and away from sedans. And while divers automakers are now ready to deal with that demand with their new cars, the acclimated to car market is still lagging behind.

That’s causing a head ache for self-indulgence manufacturers, because brands like Audi, Mercedes, and Lexus, depend on leases more than their more bunch market counterparts. And with off-lease sedans coming back in droves, and buyers looking for SUVs, there’s a over-abundance of second hand sedans forming.

“It’s not necessarily the overwhelming amount of vehicles, it’s the mix of those d of vehicles,” Scott Keogh, president of Audi of America, told Bloomberg recently. “You’re throwing all these cars into the marketplace a couple years after it has evaporated and jumped into SUVs.”

Virtuous three years ago, SUVs made up only 42 percent of luxury sales, while this year that many has jumped to 56 percent. Until demand for SUVs levels out, the used car vend will be out of step with demand.

That will cause a depression in the prices of inured to luxury sedans, which is fun for people on the used market, but will make it harder to voluptuousness manufacturers lease them. Since the value of off-lease vehicles is a big factor in their valuation, manufacturers will have to start ramping up incentives to sell their sedans.

This September, Audi depleted an average of only $1,986 on incentives for its Q5 and Q7—the lowest among the top selling security brands, according to Autodata Corp. By comparison, discounts on sedans cost Audi nearly $4,696 per vehicles. And the same goes for the rest of the luxury brands.

All of which is bad dirt for lovers of the humble sedan.

[source: Bloomberg]

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