2012 Acura TSX SE.Honda
Looking for a late-model used car? Good luck.
"Availability of younger used vehicles [less than five years old]is plummeting, so prices for these products are increasing rapidly," says auto analyst Dennis DesRosiers of DesRosiers Automotive Consultants in a note to clients.
Rising used car prices are easy to explain. This is a matter of supply and demand, and the supply of younger used vehicles is tight today.
"In 2008 and 2009, fleet sales were down substantially and leasing collapsed entirely," notes DesRosiers. "Two and now three years later, the supply of off-fleet and off-lease vehicles available for re-sale is therefore falling like a rock. So there is a serious shortage of supply, resulting in much higher used vehicle prices."
In fact, it's tougher to find a great deal on a nearly new ride than at any time in the last decade. This, in turn, "could push a lot of consumers over to the new vehicle side of the market, especially if the OEMs [original equipment manufacturers]have attractive financing packages available for their new vehicles."
And they do. Acura, for instance, has a 1.5 per cent finance rate for three years on the 2012 TSX, though at present, Honda's premium brand is not offering rich cash incentives on a car destined very soon to be replaced in the Acura showroom by the 2013 ILX – a car that will also supplant the old CSX.
Acura also has a 1.5 per cent lease rate for 24 months on the TSX, which, by the way, is the Honda Accord in Europe. Leasing is, in fact, making a strong comeback in Canada.
"Close to 50 per cent of Canadians leased their vehicle at the peak a few years ago, and this dropped to less than 10 per cent with the financial crisis in 2008," notes DesRosiers. "The issue wasn't the demand for leasing; it was the availability of leasing products."
That is, OEMs are once again able to bundle vehicles together and sell them as a derivative. Leasing collapsed a few years ago but it's coming back now that OEMs can "securitize a lease portfolio," as DesRosiers notes.
"Leasing accounted for close to 20 per cent of sales in 2011, and should account for mid- to high-20 per cent in 2012," he adds. "With very high used vehicle prices, a lot of consumers could embrace a new vehicle, especially if they are able to lease." DesRosiers also predicts the shortage of good, late-model used cars will persist for a number of years.
Deals of the Week is watching this development, looking for any impact on sales sweeteners. Good offers are out there, but they take a bit of digging. Demand is strong, after all; new vehicle sales were up an impressive 11.2 per cent last month, with passenger car sales alone up a whopping 17.1 per cent, compared to an increase of 7.0 per cent for light trucks.
One last trend: Honda and Toyota, in particular, are working hard to reclaim the 10 points of market share lost last year for a host of reasons. With their factories humming, Honda and Toyota have plenty of supply and they are juicing demand with some interesting offers.
Take the Honda Pilot. Honda Canada has a $1,500 factory-to-dealer incentive on cash purchases. Alternatively, take a 1.99 per cent rate on a 24-month lease or a financed purchase of up to 36 months. Meanwhile, Toyota Canada has up to $1,500 in factory-to-dealer incentives offer – $500 of which can be combined with a 0.9 per cent finance rate for up to 36 months, or a 1.9 per cent lease rate for 36 months.
Then there's the Volkswagen Passat, the TDI diesel version. Here we have the only mainstream midsize sedan sold in Canada with a diesel engine. The entire Passat is all-new for 2012, too. VW Canada has its Autobahn For All Sales Event in progress. For the Passat, VW will make the first monthly payment of up to $500 on a lease or finance deal of at least 24 months. A 2.9 per cent finance rate for 36 months is a decent offer, though the 3.9 per cent lease rate for up to 36 months is about average.
As usual, Deals of the Week obtained pricing information from www.carcostcanada.com, among other sources. Here are the numbers.
2012 Acura TSX V-6 Auto w/Tech Package:
- MSRP : $41,890
- Freight, dealer prep, air conditioning tax: $1,995
- Dealer discount (estimated): $1,350
- Taxable subtotal: $42,535
- Total price with 13% HST: $48,064.55
- 1.5% finance rate for 36 months or 1.5% lease rate for 24 months
2012 Honda Pilot EX-L AWD
- MSRP: $43,020
- Freight, dealer prep and air conditioning tax and Green Levy: $1,690
- Dealer discount (estimated): $1,750
- Factory discount: $1,500 (Non-stackable Cash Discount factory-to-dealer rebate for cash purchases)
- Taxable subtotal: $41,460
- Total price with 13% HST: $46,849.80
- Non-stackable 1.99% finance rate for 36 months, 1.99% lease rate for 24 months
2012 Toyota Sienna V-6 LE FWD
- MSRP: $32,720
- Freight, dealer prep, AC tax: $1,735
- Dealer discount (estimated): $1,000
- Taxable subtotal: $33,455
- Total price with 13% HST: $37,804.15
- Factory discount: $1,000 (Non-stackable cash discount factory-to-consumer rebate for cash purchases)
- Factory discount: $500 (Stackable consumer cash incentive factory-to-consumer rebate)
- Final price: $36,304.15
- $500 rebate can be combined with 0.9% retail finance rate or 1.9% lease rate for 36 months
2012 Volkswagen Passat 2.0 TDI Trendline
- MSRP: $27,475
- Freight, dealer prep, AC tax: $1,465
- Dealer discount (estimated): $1,000
- Taxable subtotal: $27,940
- Total price with 13% HST: $31,572.20
- Factory rebate: $750 (Graduate Program Offer factory-to-customer rebate)
- Final price: $30,822.20
- $750 rebate must be combined with lease or finance offers -- 3.9% finance rate for 48 months, 3.9% lease rate for 36 months
Pricing information source: carcostcanada.com. Calculations based on Ontario customers. Please note that while the information above is accurate at the time of publication, incentives are given at the discretion of individual dealers, and may be changed or discontinued at any time. Dealer discounts are negotiated with the customer on a case-by-case basis.