America's Love for Luxury SUVs Is Screwing With Off-lease Sedan Sales

Matt Posky
by Matt Posky
america s love for luxury suvs is screwing with off lease sedan sales

North America’s love affair with SUVs and crossovers arose so suddenly and with such passion that manufacturers were left scrambling to meet demand. Luxury brands certainly aren’t exempt from this but, unlike mainstream marquis, the sudden shift in product demand has thrown those marques a bit of a curveball.

Since prestige brands tend to possess substantially higher leasing rates than their more-affordable contemporaries, luxury automakers are getting stuck with off-lease sedans that nobody seems to want. While that’s terrible news for corporate accountants, it’s good news for anyone looking for a good deal on a used Lexus ES or Audi A4.

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

While there are exceptions to the trend (Acura’s RDX, for example) most carmakers have watched crossovers and SUV demand usurp sedan sales. So, when those once-popular four-doors return to dealer lots, fewer people are waiting to scoop them up. SUVs and crossovers now have a majority stake in the luxury market. Three years ago the segment composed 42 percent of the United States’ total volume — now it’s closer to 56 percent.

That leaves a substantial number of off-lease sedans with nobody around to buy them. It’s a sad story but one you can take advantage of. Because, when demand is low, so are prices.

If the crossover craze continues to surge ahead, we might even see artificially suppressed pricing of new cars and bloated SUV price tags soon. Some would argue we already have. Bloomberg notes that Audi’s discounts on car models have risen by about $314 per vehicle this year (to $4,696) while SUV incentives have remained stagnant at $1,986 per unit.

However, Audi is on the low side. Passenger car incentives for Mercedes-Benz, Lexus, and BMW were all significantly higher, with Benz peaking at $6,732 per car sold. Only BMW bothered to shrink incentive spending on sedans this year.

[Image: Audi]

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  • Mmreeses Mmreeses on Nov 03, 2017

    So i guess that the comments over EV tax credits got so nasty the whole thread needed to be locked. I'm curious what was nasty enough to trigger many comments did hit take before someone brought up Hitler? :)

    • See 2 previous
    • Ray Davies Ray Davies on Nov 15, 2017

      @tnk479 The counties that voted for Hillary contribute 70% of the GDP. The red states are low wage and use more Federal tax dollar then they give.

  • Ray Davies Ray Davies on Nov 15, 2017

    Wait until the next war and 5 dollar gas. Might not be long. Back to the days of people putting 100 bucks into their trucks and driving to work by themselves as they blame the gas station owner.

  • Carlson Fan I think it is pretty cool & grew up with a '75 Ford window van so I can attest to their utility. $60K is a lot for any vehicle and I'm not convinced EV's are ready for prime time for a number of reasons. It would make an awesome 2nd or 3rd vehicle in a multi-car household but again the price would keep most from considering it.I agree with the other comments that those who have to have it will buy it and then sales will drop off. Offer a panel version for the commercial market, that could have possibilities.
  • Wjtinfwb Panther Black? or Black Panther? Shaped like a decade old Ford detectives sedan? Seems like an odd way to send out your marquee car...
  • Kwik_Shift Instead of blacked, how about chromed? Don't follow the herd.
  • Carlson Fan Nicest looking dash/gage cluster ever put in any PU truck. After all these years it still looks so good.
  • Wheatridger Correct me if I'm wrong, but has the widescreen digital dash usurped the space formerly occupied in every other car by an HVAC vent? I see one prominent vent well right of center, where there should be two. I rely on twin driver's side vents to warm my hands on cold mornings, and I wouldn't give that up for more screen area.