Disappeared since the COVID pandemic, some automakers are once again offering generous discounts on 2023 models, and this could be just the beginning.
Stoppage of production for several weeks, shortage of electronic parts, long delivery times, several factors combined to create a drop in stock in the dealers’ yards with the consequences of increased prices and cessation of purchase allowances.
But manufacturers, at least American ones, sometimes offer generous discounts on in-stock 2023 models.
Ram is offering up to $10,300 off its 1500 Classic, Ford is offering up to $5,500 off the F-150, while Chevrolet is playing the interest rate card by offering 2.99% for 84 months for your Silverado.
Also affected are SUVs like the Dodge Durango ($7,700), the Jeep Grand Cherokee ($8,200), its smaller siblings the Cherokee and Compass, and the Ford Escape, Bronco Sport, and Explorer (See table).
“I wouldn’t say there’s a huge build-up of vehicles in Quebec yards right now, but production is starting to pick up,” said Patrick Lalande, owner of the Vos car broker company. Performs between 700 and 1000 transactions per year.
“Inflation is on the carpet, the price of vehicles has increased over the last year and a half. Now it’s easy to make discounts. Manufacturers realize that the market is ending. The big issue is the ability of the average person or even business to pay for a vehicle. A $100,000 truck means payments of $2,000 a month. We didn’t have $100,000 trucks before,” he says.
George Iny of the Association for the Protection of Drivers (APA) notes that stocks are increasing “a little bit, just for certain models”.
“Ram started the discounts and the others followed. But many distributors continue to add extras to sell more than the suggested retail price”, laments Mr. Iny. He cites a recent Car Help Canada survey to back up his claim.
At the Corporation des Concessionaires Automobiles du Québec (CCAQ), we find that the situation is improving.
“Since the second quarter, we have seen a stabilization and improvement in the stocks of the concessionaires. New vehicle sales were up 20% in October compared to the same month last year. Therefore, we can say that we have reached or are close to reaching the desired cruising speed and return to normality”, believes Ian P. Sam Yue Chi, president of the CCAQ.
It pours into the United States
According to Patrick Lalande, the situation can also be explained by the context south of the border.
“Americans have a lot of vehicles in their backyards. Ford had too many. They diverted the F-150s here. Seven months ago, I couldn’t have one. Now, I wouldn’t say the courses are full, but there are a little choice”, he says.
This abundance comes mainly from the fact that manufacturers have favored the American market.
“Not long ago, a manufacturer whose name I will not mention told me that Canada was a third world country for money and that they would not prioritize us. But manufacturers can’t sell cars in the U.S. anymore, so all of a sudden we’re finer,” Mr. Lalande says.
“Subaru expected to have supply problems for another year and a half,” he continues. Still tough, but for a Crosstrek, they changed my arrival dates to Feb-March (3-4 months instead of 18). Let’s let go of the North American market, which vomits cars, and return to other markets”.
Patrick Lalande also notices two trends for used cars, depending on the value of the vehicle.
“The market for heavy vehicle users is declining,” he explains. The price of Cadillac Escalade and GMC Yukon melt like snow in the sun. But for the middle class, vehicles like a Hyundai Elantra or a Honda Civic, these prices are unfortunately still very high. And with interest rates of 7.9 or 9.9% (for new vehicles), it’s difficult.”
The electric car market is also experiencing disruption.
“Many customers have placed orders with two or three dealers for an electric vehicle. When the first one arrives, the other two are available”, explains Mr. Lalande.
“And now that the vehicles are starting to arrive, the price at the time of ordering that might be $800 a month for example, can be reduced to $1,000 because of the interest rate and the drop in residual value (for rentals). Often the client does not take it and falls back on a petrol vehicle or decides to pull his own”, specifies Mr. Lalande.
As for whether we’re slowly returning to pre-pandemic conditions, APA’s George Iny isn’t optimistic. “We’re still a long way from that, not until the end of 2025, probably never.”
For the CCAQ, the increase in stocks portends good news for buyers.
“Several banks such as JP Morgan had explained that a drop in prices should correlate with a return to normalcy in stocks. In recent weeks, we have seen the beginning of a response in certain markets for vehicles of occasion. It would be logical that the return to normality under way in the new vehicle also plays into this. I think the era of increases in the pandemic period is behind us,” opines Ian P. Sam Yue Chi.
Racer Patrick Lalande also sees better days for motorists.
“I already see rates coming down in the US market, even for electric vehicles. A Volkswagen ID4 is at 3.9% with an additional $2,000 discount,” he emphasizes.
“In 6 to 10 months, interest rates (on new vehicles) will drop substantially, there will be great transactions to be made. Expect the value of trade-in vehicles to drop as well. “It’s still not where we were in 2019, but manufacturers will not have an option to go back to this tangent, the recession is here,” says Patrick Lalande.
Examples of current discounts*
Model | discount
- Alfa Romeo Tonale: 2.99%/36 months
- Chevrolet Silverado: 2.99%/84 months
- Chrysler Pacifica: 2.99%/36 months
- Dodge Durango: Up to $7,700
- Ford F-150: Up to $5,500
- Ford Bronco Sport: Up to $4,250
- Ford Explorer: Up to $3,000
- Ford Escape: Up to $4,000
- Ford Edge**: Up to $5,000
- GMC Sierra**: 4.99%/84 months
- Jeep Grand Cherokee: Up to $8,200
- Jeep Wrangler: 1.99%/36 months
- Jeep Gladiator: $1500
- Jeep Cherokee: Up to $2000
- Jeep Compass: Up to $2400
- Jeep Wagoneer: Up to $2500
- Ram 1500 Classic: Up to $10,300
- Ram 1500: up to $9700
- Ram 2500/3500: 2.99%/36 months
*2023 vehicles in stock as of November 15
Sources: Manufacturer’s websites