New-Car Inventories Grow, but Finance Deals Fail to Materialize | Edmunds

New-Car Inventories Grow, but Finance Deals Fail to Materialize

Even though new cars are sitting on dealership lots longer than at any time since 2009, anticipated low-interest finance deals have failed to materialize, according to the latest analysis from Edmunds.

Particularly hard to find in August were the tempting zero-percent interest loans that automakers were expected to offer to help clear the backlog of vehicle inventories. Although that new cars sat on dealership lots in August for an average of 77 days — two days more than in July — only 10 percent of auto loans in August had zero-percent APRs, compared to 15 percent a year ago. And manufacturer incentives were essentially flat compared to July.

Labor Day weekend usually brings in nearly a third more buyers than the typical first weekend of the month, so this is a "critical opportunity" for dealers to make a dent in inventory, said Jessica Caldwell, executive director of industry analysis for Edmunds. "Given the state of the market, we would usually expect automakers to pull out all the stops to get shoppers into their showrooms, but based on what we saw in August, it's not a sure thing."

Interestingly, the Edmunds analysis also shows that inventories of 2017 model-year vehicles were particularly high in August, even though outgoing models usually begin selling especially well in late summer as cars from the next model year start arriving at dealerships. Edmunds estimates that only 8 percent of new vehicles sold in August were 2018 models, while in August of 2016, 17 percent of vehicles sold were from the incoming model year.

"Car shoppers now are savvy enough to know that you can get the best deals on outgoing model-year vehicles," Caldwell said. "In many ways, it's a buyer's market, and they're not going to purchase if they think there's a chance a better offer could come along in the near future."

Edmunds analysts found that the average amount financed for a new vehicle in August was $30,473, up 0.2 percent from the same time last year and a 15.5 percent increase from five years ago. The average APR last month was 4.8 percent, an increase of 10.9 percent from August 2016 and a jump of 17.8 percent from 2012. Down payments averaged $3,667, and the average monthly payment was $507. The average loan term was 69.3 months.

More insight into recent auto industry trends can be found in the Edmunds Industry Center.

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