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Luxury automakers have been taking full advantage of the high-demand for SUVs and crossovers and raking in the dough. But as Neuton's third law of physics tells us, "for every action, there is an equal and opposite reaction." In the case of luxury automakers, they have a number of sedans and coupes from lease turn-ins that they cannot sell. “It’s not necessarily the overwhelming amount of vehicles, it’s the mix of those flood of vehicles. You’re throwing all these cars into the marketplace a couple years after it has evaporated and jumped into SUVs,” said Scott Keogh, president of Audi of America to Bloomberg. This puts a lot of strain on luxury automakers as there is too much supply and not much demand, causing the value on used cars to fall. In turn, automakers have to raise the prices on leases to make up for the amount of depreciation over the term of the lease. It will cause consumers to be priced out of marketplace or automakers to offer generous incentives on leases. For luxury automakers, this is a big problem as they rely on leasing more than mainstream brands. According to Autodata, most luxury brands have increased incentives on their cars through the first nine months of the year. Audi: $4,696 (up $314) Lexus: $5,323 (up $296) Mercedes-Benz: $6,732 (up $289) So if you find yourself wanting a luxury sedan or coupe, now might be the best time to score a really good deal. Source: Bloomberg -
Luxury automakers have been taking full advantage of the high-demand for SUVs and crossovers and raking in the dough. But as Neuton's third law of physics tells us, "for every action, there is an equal and opposite reaction." In the case of luxury automakers, they have a number of sedans and coupes from lease turn-ins that they cannot sell. “It’s not necessarily the overwhelming amount of vehicles, it’s the mix of those flood of vehicles. You’re throwing all these cars into the marketplace a couple years after it has evaporated and jumped into SUVs,” said Scott Keogh, president of Audi of America to Bloomberg. This puts a lot of strain on luxury automakers as there is too much supply and not much demand, causing the value on used cars to fall. In turn, automakers have to raise the prices on leases to make up for the amount of depreciation over the term of the lease. It will cause consumers to be priced out of marketplace or automakers to offer generous incentives on leases. For luxury automakers, this is a big problem as they rely on leasing more than mainstream brands. According to Autodata, most luxury brands have increased incentives on their cars through the first nine months of the year. Audi: $4,696 (up $314) Lexus: $5,323 (up $296) Mercedes-Benz: $6,732 (up $289) So if you find yourself wanting a luxury sedan or coupe, now might be the best time to score a really good deal. Source: Bloomberg View full article
