By on November 2, 2017

2018 Audi Q5 - Image: Audi

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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48 Comments on “America’s Love for Luxury SUVs Is Screwing With Off-lease Sedan Sales...”


  • avatar
    spookiness

    My needs/wants have changed and I just want a “nice” quiet comfortable car. No cares about status at all, and I’m kinda cheap. In two years I see the sedanapocalypse, quickening baby boomer death spiral, and typical US car resale values all converging in my favor! Hello slightly used, one (senior) owner, Lacrosse or MKZ, preferably bought from an estate for cash.

    • 0 avatar
      gtem

      I’m dreaming of a clean used, heavily depreciated Lincoln Continental Black Label with the “Rhapsody” blue interior.

    • 0 avatar
      55_wrench

      @ spookiness,
      Boomer here, and I’m not dead yet.

      3 years ago that’s how we picked up a very gently used LS 430. Grandma bought it new and had to turn in the keys 68000 miles later. The spare has never been on the ground.

      It’s been a great car, rock solid reliable and everything works on it.

      Point is, if you look carefully, “that car” is out there now. No need to wait for us to kick off.

    • 0 avatar
      Detroit-Iron

      I am smelling what you are cooking. We’ll have to wave at each other like motorcyclists when we are the only people in 2020 still rolling a Lacrosse.

    • 0 avatar
      Lorenzo

      The peak of boomer births was 1956 through 1961. They’re age 56 to 61, and their actuarial life expectancy is 21 years for males age 61 and 25 years for age 56. For females, add 3 years.

      You’ll have to be patient, the phenomenon you describe won’t happen until midway through the second decade in some areas of the country, and the full 21-25 years in other areas.

      Old people hang onto their mobility and independence (same thing) as long as possible, especially in areas without mass transit.By the time their cars are available, the models you mention will no longer be on the road.

  • avatar
    ClutchCarGo

    “it’s good news for anyone looking for a good deal on a used Lexus ES or Audi A4.”

    There can be good news about a used Audi A4?

    • 0 avatar
      volvo

      Exactly.

      An another point is that the A4 is basically a Passat and the Lexus ES is a Camry. Both sold with appropriate amounts of makeup and couture to justify their higher price.

      • 0 avatar
        JohnTaurus

        That criticism only applies to domestic brands. A car can share 15 inches of floor pan with a lesser model, and “its just a tarted up Ford/Chevy/whatever”.

      • 0 avatar
        dal20402

        The A4 hasn’t had anything to do with the Passat since the introduction of the B8 in 2010.

      • 0 avatar
        Davekaybsc

        Apparently everybody stopped paying attention to Audi in 1998. The A4 is *NOT* a Passat! How do people still not know this? VW engines sit sideways. Audi engines sit longways. The Passat and A4 are on completely different platforms.

        A few of Audi’s least expensive cars like the A3 and Q3 are based on the Golf, as is the TT. The A4 on up, and the Q5 on up are all unique Audi platforms.

      • 0 avatar
        qfrog

        The A4 is not a Passat, to be exact.

        The two may share a few parts and pieces like electrical connectors, lines of code in modules and some bolts, nuts and hardware but the two as they are presently produced and have been produced for over ten years are completely and wholly separate vehicles. They might be similar in size but they are in no way basically one and the same like you suggested. This is not a case of platform sharing as these cars do not share a platform. These two are mechanically very different machines. For over ten years now the Passat has been built on a version of the Golf platform. The engine mounted sideways the front calipers on the front end of the front suspension. The AWD, haldex based. Front suspension strut based. The A4 shares none of those attributes and it never has from introduction as a nameplate in 1995 to today. The A4 is longitudinal mount engine, Torsen based AWD and multi-link front suspension. The front calipers live on the aft side of the front axle line.

        At one point ~1998 the Passat was based on the B5/C5 platforms using similar if not identical front suspension geometry, brakes, engines, gearboxes, all wheel drive components and so forth. That Passat ended in 2005. At that point the Golf V platform was stretched out and made to work.

      • 0 avatar
        jalop1991

        OK, let’s get this straight once and for all:

        starting in MY2013, the Lexus ES moved over to being a gussied up Toyota Avalon.

        The Lexus ES is no longer a Camry.

      • 0 avatar
        volvo

        In respones

        I was wrong about the current A4 it has not shared platforms with the Passat for may years.

        As for the Toyota ES350

        “Despite the fact that the redesigned ES and the Toyota Camry (XV50) still share the same platform, the two vehicles are somewhat less mechanically related, as the ES is now more closely related to the Toyota Avalon (XX40) which also uses a 2,800 mm (111 in) wheelbase.”

        My read on this is that the Avalon is a Camry on somewhat longer wheelbase and the ES is based on the Avalon. Not that this is a bad thing since all 3 cars have been mechanically reliable and I suspect (but I am no going to do the exercise) that comparably equipped the prices are not that different. Not too long ago I did look at similarly equipped Camry vs Avalon and price difference not that great.

      • 0 avatar
        dantes_inferno

        >An another point is that the A4 is basically a Passat

        That tells me you know absolutely squat about automobiles other than what you’ve read.

        School is in session.

        Passat has a transverse engine layout – like the Audi A3

        A4 has a longitudinal engine layout.

        Class dismissed.

    • 0 avatar
      JMII

      Use the $ saved on the purchase to get the extended warranty for the Audi, then it starts making sense. Actually many of these CPO deals include some really nice warranties. And if the dealer is trying to get rid of these off-lease suddenly lame-o rides you should have some bargaining power.

      • 0 avatar
        I_like_stuff

        Depends which CPO. Some have better warranties than others. The best one IMO is MB, which just extends the original manufacturer bumper to bumper warranty. It comes standard with 1 year (unlimited miles) and you can purchase up to 3 years extra.

        But others have a “comprehensive” warranty that looks good on paper, with a long list of items covered, but excludes a pretty long list of items as well.

        • 0 avatar
          EX35

          The problem with MB is it only extends it for 1 year. And buying more years of protection is ridiculously expensive.

          Cadillac seems to offer the best CPO warranty — 6 years from in service date with few exclusions.

          • 0 avatar
            Davekaybsc

            Good thing, because you’re sure going to need it. Way to go 27th place Cadillac!

          • 0 avatar
            EX35

            Isn’t much of the rating based on minor issues such as infotainment? I’m pretty confident the power train and various electrical components on the caddy will be more reliable than the Audi, if for no other reason than the fact that it is less complicated.

          • 0 avatar
            ajla

            “I’m pretty confident the power train and various electrical components on the caddy will be more reliable than the Audi”

            Maybe if you’re buying a 2014 Escalade.

    • 0 avatar
      Davekaybsc

      Audi is currently ranked 4th out of 27 in CR’s brand reliability chart, and has been in the top 5 for quite awhile. Meanwhile, reliability stalwart Acura came in 19th. But whatever, Audi 5000 or something.

      • 0 avatar
        EX35

        And yet Audi forums are filled with ppls horror stories of late model audi’s needing terribly expensive repairs (i.e. Engine rebuilds at less than 100k). It seems the Germans can’t make a car that lasts over 75k miles without some catastrophic failure.

      • 0 avatar
        Ray Davies

        I don’t buy that at all though. They rank 2018 models for reliability?

        I don’t know many Audi owners that have not had more than their share of problems.

        Did they count having a slow infotainment system the same as having a bad engine or something?

    • 0 avatar
      NormSV650

      Acura didn’t sell TLX and RLX three years ago?

  • avatar
    pmirp1

    God, I have a craving For a Tahoe. Screw German sedans

  • avatar
    JohnTaurus

    Simple solution: put ’em on a slow boat to China. Except the OEMs would hate you for it.

    Would be an excellent opportunity for an independent used luxury car dealer. Get these sedans cheap at the auction, put them on the lot for a month or so, after that, its bon voyage.

  • avatar
    sensiblebuyer

    Keep seeing posts about the SUV craze, it’s clearly apparent in majority of North America, but my area is still favoring sedans it seems. There are considerably more new Lexus, Audi, and Acura sedans in driveways over the SUV variants, but thats not to say they’re also not popular. Not only luxury vehicles either.. more Camry’s than RAV4’s and Malibu’s than Equinox’s. My region may have single handedly pushed Honda’s Accord sales past the CR-V’s last month lol.

    Might have to do with the amount of baby boomers/seniors in the area. (I know some people have been saying seniors are starting to favor small crossovers, but that trend has yet to make its way here)

  • avatar
    dal20402

    Time to start sniffing around off-lease stick shift B8 S4s?

  • avatar
    Davekaybsc

    All of this is fantastic news for me. I have absolutely zero interest in driving a tiny luxury school bus. I was more than happy to pay less than half MSRP for my two year old MKZ though. Keep buying those soccer mobiles, and keep making off lease sedans affordable for me!

  • avatar
    DrSandman

    Proud owner of a New (to me) CPO BMW 328ix GT. Factory warranty extended 2 years/ unlimited miles. Cost less than a 2018 Camry XSE. Compared/ cross-shopped AWD versions of a Jag XJ, Caddy CTS and 3GT — all off short-term leases with low miles, all less than $35k.

    It truly is a great time to be a car-nut!

    Been averaging 29mpg in my sucky DC commute, and loving it. We’ll talk again after my electric water pump needs to be replaced. ;-)

    • 0 avatar
      EX35

      I’m in the same boat, although i’m considering an F10. What did you think of the CTS in comparison?

      FYI, the CPO is not an extended BMW B2B warranty, although it is decent.

      • 0 avatar
        DrSandman

        Yup, I simplified to the point of being wrong. My bad. CPO is the extended warranty, not factory. It covered enough (and there is still 15 months of factory B2B left) that I judged the 2yr extension was ok.

        CTS. wow. It was fantastic; it was both more compliant over bumpy roads and more nimble in off-camber corners than the 328GT that I got. The fatal flaw is that I am a very lanky 6’4″, and my older pre-teen child is already 5’4″. And the lovely DrWife has longer legs than me. (Yes, I am that lucky bastard with that wife.)

        I frankly didn’t physically fit into the CTS. To keep my hair off the headliner, I had to recline the driver’s seat until it almost touched the back seat.

        In my new 328GT, I can sit behind myself — and cross my legs.

        The CTS infotainment was maddening to tune while driving. iDrive — forget the reviews — is great after a 1 day learning curve.

        Try the F34 (long wheelbase version). I do admit that the F10 is a better looking car. And maybe a little faster. ;-)

  • avatar
    Stumpaster

    Off lease cars are great. They were disregarded during the lease, the tires have 5000 miles left, most fluids are up for replacement, and the brakes probably about shot. Plus pu sign up for a higher interest rate. Those other suckers sniffing that new car smell.

    • 0 avatar
      EX35

      how much disregard w/r/t to maintenance can a 2 year old car with under 20K miles have? Assuming service records show maintenance done at required intervals, what other concerns are there? I believe CPO cars have to meet certain minimum thresholds for brakes/tires. In fact, most CPO cars i’ve looked at had new tires/brakes/fluids.

    • 0 avatar
      Davekaybsc

      Yes. The guy who bought my car for $52K is a sucker. I paid $24. It has yet to need new fluids or brakes, or tires. Did I mention I saved $28,000 buying a two year old car? I don’t suppose new brakes (which I don’t need) and a fluid flush (which I don’t need) and a new set of tires cost $28K do they?

  • avatar
    mmreeses

    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 it…..how many comments did hit take before someone brought up Hitler? :)

    • 0 avatar
      tnk479

      I am sure it didn’t take long. Rich liberals get pretty upset when you threaten to take away their government subsidies for utopian dreams. On the one hand they say that the wealthy should be taxed more, but, they have this fantasy that there are millions upon millions of billionaires who should fund their utopian green energy and universal health care fantasies. It never occurred to them that they are in fact, rich, by both global and national standards. As the most recent example, look at the kerfluffle over the proposed elimination of the State and Local Tax (SALT) deduction, which principally affects very high income families in San Fransisco, New York, and Washington DC.

      By the way, I am all for utopian dreams and I think electric cars are pretty cool, but, the wealthy can pay for them. Thanks for reading.

      • 0 avatar
        28-Cars-Later

        FYI it will eventually affect you too through inflation.

        Limits/deductions are frequently set to a figure.

        Taxes/bracket and inflation are percentages.

        Wages post 1971 continue to stagnate vs cost of living.

        Funny how all that works.

        Bad plan. Stealth tax hike to keep the game going without actually fixing anything. #winning. #iliveinreality. #twitterisstupid.

      • 0 avatar
        Ray Davies

        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.

  • avatar
    Ray Davies

    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.


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