GM Leases Are The Post-Recall Bargain
NEW YORK ( MainStreet) The saving grace for General Motors amid its recent recall debacle has been robust sales; the company sold 2,505,889 vehicles worldwide in the second quarter of 2014, with year-over-year sales in the United States up 7%.
Consumers' purchasing behavior may be unfazed by the safety concerns, but the true bargains for those at GM dealerships are to be found on leases.
Wantalease.com, the nation's first online car lease marketplace for new lease deals, says certain GM models saw the largest drop in prices in June, with new lease deals offered on the Buick Regal Premium going for $229 per month, down from $426.46 in May. The Buick Lacrosse was being offered for $249 per month, down from $425.21 in May, and GM's Chevrolet Cruze LT had a $159 new monthly lease price, down from $226 in May.
GM active lease pricing has undergone some turbulence this summer and into July for a few reasons, according to Scot Hall, executive vice president of Wantalease.com.
"First, through a natural course of short-term incentives and other promotional offers, lease pricing has a tendency to see noticeable swings over the course of the year, and we're seeing some of this with GM vehicles," Hall said.
There may also be "inventory control strategies in play," Hall said, whereby lower prices on particular models ensure the optimal number of cars is available at any one time. That said, Hall points to the recalls as a possible reason for dealerships to lower monthly rates to ensure that customers sign up for leases.
"In looking at the price changes on GM leases from a year ago, however, the recalls may in fact have an impact here," Hall said. "Last summer, while seasonal price swings were present, they were not as dramatic, which leads us to believe that the recall may be contributing to lower prices to maintain shopping and consideration interest from consumers."
The Regal only went from $248.16 to $297.31, from May to June during the summer of 2013. The Cruze also had a less drastic shift from $215.38 to $179.65, from May to June during the summer of 2013.
Steven R. Elliott, an LMC Automotive analyst in the North American Forecasts division, attributes the steep drop on certain GM lease prices this year to "an effort to clear inventory of those models," not the recalls.
As of July 1, inventory on the LaCrosse is at an 80 days' supply meaning it would take that long to sell all available inventory down from 111 the previous month. The Regal is at a 96 days' supply, up from 77. The ideal days' supply level is around 60 days, Elliott says, so GM is staring down these increased supplies and offering incentives to move inventory. Though GM is selling well in light of its PR challenges, it has failed to reached its own expectations.