Price Pressure Coming for Makers Lacking Fresh ProductBy Bill Visnic December 22, 2010
For automakers without fresh products in many competitive segments, the early months of 2011 will bring more intense price pressures, according to new data from Edmunds.com.
In their latest True Market Value (TMV) price alert, Edmunds.com analysts predict changes in the TMV - the proprietary metric that derives the average transaction price for any model - for each vehicle in every automaker's lineup. The most recent data indicate automakers without new or significantly refreshed product in the midsize sedan and SUV segments, in particular, will be faced with cutting prices as 2011 begins.
The TMV price alert indicates for consumers, with easy-to-understand "neutral," "up" or "down" symbols, the direction they can expect pricing to go in coming months for every vehicle sold in the U.S.
Edmunds.com Senior Analyst Jessica Caldwell said competition in the red-hot midsize sedan market will be intense in the coming months, largely due to the crash of two significant forces: a surging Hyundai Motor America aggressively leasing and discounting its all-new and well-reviewed Sonata - launched earlier this year as a 2010 model - and the fact that many models in the segment are deeply into their product cycles.
"Aging competitors in the segment will have to increase incentives and drop prices to compete (with Hyundai)," said Caldwell. "Models such as the 2011 Honda Accord, 2011 Toyota Camry, 2011 Nissan Altima, 2011 Chevrolet Malibu and 2011 Ford Fusion, all enter the 2011 calendar year in at least the fourth year of the model cycle, and we expect prices to go down for these vehicles."
Edmunds.com analysts also believe the midsize SUV and minivan segments will be other areas of fluid pricing conditions in the coming months.
Thanks to all-new or significantly refreshed models in the midsize SUV market, including this month's release of the totally redesigned 2011 Ford Explorer - as well as relatively recent refreshes of other segment leaders such as the Chevrolet Equinox and Toyota Highlander and 4Runner - the TMV metric projects prices to go down for the segment's longer-in-the-tooth competitors, such as the Nissan Pathfinder.
In the minivan segment, with the recent redesigns of both the Honda Odyssey and Toyota Sienna, the TMV metric predicts the Chrysler Group LLC will see increasing price pressure on its Chrysler- and Dodge-brand minivans, which are the segment's volume leaders.
Green Pressures At Both Ends
In the early portions of the New Year, price trends in segments for environmentally oriented hybrids and electric vehicles will be going in opposite directions, Edmunds.com analysts project.
A continuing small buyer base and unusually stable and low gasoline prices mean there will be downward price pressure for premium-brand hybrids such as Ford's 2011 Lincoln MKZ Hybrid and Toyota's 2011 Lexus HS 250h.
Meanwhile, as one might expect, the TMV metric indicates buyers shouldn't expect anything but firm pricing on the latest high-tech and high-profile environmentally friendly vehicles, the Nissan Leaf electric vehicle and GM's Chevrolet Volt plug-in hybrid.
"Both the Chevy Volt and Nissan Leaf are on dealer lots and it's hard to get one if you didn't order it months before," said Caldwell. "Any available inventory on dealer lots are going to go fast and dealers are going to easily get MSRP or more. Prices for these vehicles should trend upward due to the public demand."
Photos by manufacturers
1 - The new Hyundai Sonata is driving price pressures on other midsize sedan producers.
2 - The just-introduced Ford Explorer will put pressure on its aging SUV competitors.