Incentives are creeping higher, but the Alfa Romeo brand is an exception to the rule, analysts said.
Average incentive spending for new light vehicles hiked $383 per car in October versus September, reaching $3,104 — a $475 (or 18%) increase from October 2014, according to TrueCar data.
So far, the revived Alfa Romeo brand is doing without incentives on its only U.S. model, the Alfa Romeo 4C, but that’s likely to change when it introduces the Alfa Romeo Giulia, a midsize sedan due in the United States early next year. Alfa returned to the U.S. market in November 2014, after an absence of 20 years. U.S. sales for 2015 through August were 443 units, versus a total of 91 in November and December 2014. According to Edmunds.com, the average price is $56,695.
The Italian marque is selling the Alfa Romeo 4C Coupe and 4C Spider with “zero incentive offers — finance, lease or otherwise — due to the strong demand for the car,” said Reid Bigland, head of the Alfa Romeo brand for North America.
“Going forward, when the Alfa Romeo Giulia midsize sedan arrives in the market, we anticipate offering a full range of finance and lease offers on the Giulia, but have no details to discuss at this time,” he told Auto Finance News. Chrysler Capital is Alfa’s preferred lender in the United States, along with the other brands belonging to Fiat Chrysler Automobiles. Chrysler Capital provides private-label financing backed by Santander Consumer USA.
Alfa said at the Los Angeles Auto Show last year it expects to launch as many as eight new models by the 2018 model year, with a goal of 400,000 sales per year worldwide. With Alfa’s “passionate fanbase,” incentives aren’t necessary for the 4C model at this point, said Jeremy Acevedo, senior analyst at Edmunds.com.
“There won’t be any incentives on it in the foreseeable future,” he said. “As Alfa extends its lineup and volume in the U.S., it’s plausible that incentives will lift, but for now the Alfa Romeos are selling themselves,” he said.
“As Alfa extends its lineup and volume in the U.S., it’s plausible that incentives will lift, but for now the Alfa Romeos are selling themselves,” he said.
For the overall U.S. market, experts said total incentive growth will continue at a steady pace for the 2016 model year. “Factors that will create incentives will not only continue, but will get stronger, because the market is not going to keep growing at this speed,” said Jim Press, president of auto retail group RML Automotive, during a recent webinar. “A lot of companies are worried about their brand equity, but the competition now is different than it was before,” he said. “You have players like BMW and Mercedes that are now down-market, so the aggressive companies that are going after the market will spend their money the right way and make cars more affordable.” The increase in new, cheaper models for luxury brands will also require added incentives on older models, Press said.
For most new vehicles, incentives have not been “particularly aggressive,” said Tyler Corder, chief executive of Findlay Automotive Group. “They [manufacturers] are waiting to see if their new model is hot or not, before providing incentives,” he told AFN. In general, it has been a strong summer selling season, with little emphasis on interest rate-based incentives, Corder said. He added that inventories are “not out of control,” which helps keep incentives under control, too.
