NADA: Consumers Can Look Forward to Sweet Mid-Size Car Deals in May

Competition from other segments driving up incentive spending for mid-size cars.

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May 08, 2014, 04:29 ET

McLEAN, Va., May 8, 2014 /PRNewswire-USNewswire/ -- Consumers looking to buy a new car this spring are in luck: slowing sales and extreme competition in the mid-size car segment have prompted manufacturers to dramatically increase incentive spending for many models.

"What is traditionally a good month to buy new vehicles across all segments will be even more so for consumers looking at mid-size cars this May," said Larry Dixon, senior automotive analyst of NADA Used Car Guide.

NADA Used Car Guide Logo (PRNewsFoto/NADA Used Car Guide) (PRNewsFoto/NADA Used Car Guide)

From 2001–2013, incentives increased by an average of nearly 3% in May compared to April. (PRNewsFoto/NADA Used Car Guide)

Incentive spending for the mid-size car segment rose by 28% through April, which is a figure exceeded by just three other segments. (PRNewsFoto/NADA Used Car Guide)

Since 2000, May has been the second strongest for new vehicle sales, coming in just behind March and slightly ahead of August. (PRNewsFoto/NADA Used Car Guide)

Long the preferred choice for consumers, sales for the segment have fallen by 11% over the first four months of the year – the most of any vehicle segment. The drop is primarily due to competition from other segments: today's compact car is big enough to comfortably accommodate small families, has amenities comparable to its larger cousin and comes with a price tag thousands of dollars less.

An even bigger problem for mid-size cars has been the consumer appetite for more versatile crossover utility vehicles. According to WardsAuto.com, sales for the middle crossover utility segment are up 14% year-to-date and the share of total new sales currently stands at 17.3%. The roles were reversed through April 2013, with lower mid-size cars responsible for 17.8% of new sales and mid-size utilities 15.6%.

"The falloff in mid-size car sales is especially notable considering many of the segment's top nameplates, like the Nissan Altima, Chevy Malibu, Ford Fusion and Honda Accord, were heavily revised for the 2013 model year," said Dixon. "This means shoppers won't have to sacrifice the latest in style, efficiency and technology for price."

Autodata shows that incentive spending for the mid-size car segment rose by 28% through April, which is a figure exceeded by just three other segments. YTD spending on the Volkswagen Passat, Nissan Altima and Kia Optima is averaging $3,018 to $3,235 per unit (for annual increases of 42%-58%, in that order), well above the segment average of $2,800.

Given that days' supply is well above the 60-day threshold considered optimum for the majority of these models and the smaller slice of pie they're all vying for, it stands to reason that manufacturers will continue to dial up incentive spending over the next few months.

"Even more reason to buy in May, trade-in values remain near all-time highs, annual Memorial Day holiday deals can be expected and the month's proximity to the summer driving season already make it one of the biggest promotional and top selling months of the year," Dixon added.

About NADA Used Car Guide

Since 1933, NADA Used Car Guide has earned its reputation as the leading provider of vehicle valuation products, services and information to businesses throughout the United States and worldwide. NADA's editorial team collects and analyzes over one million combined automotive and truck wholesale and retail transactions per month. Its guidebooks, auction data, analysis, and data solutions offer automotive/truck, finance, insurance and government professionals the timely information and reliable solutions they need to make better business decisions. Visit nada.com/b2b to learn more.

About NADA

NADA represents nearly 16,000 new-car and -truck dealerships with more than 32,000 domestic and international franchises. For more information, visit www.nada.org.

Contact

Allyson Toolan
Manager, Public Relations
NADA Used Car Guide
(703) 821-7165
[email protected]

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SOURCE NADA Used Car Guide