Lease Offers Abound As Dealers Peddle Metal
BOSTON — Face it, new cars get more expensive every year.
Or do they?
With new lease wars breaking out among carmakers, many popular midsize cars have suddenly become affordable.
And look for price incentives to start cropping up on minivans in the next few months, says Lincoln Merrihew, analyst at DRI/McGraw-Hill in Lexington, Mass.
Since most consumers focus on monthly payments rather than the price of a new car, that's what carmakers have been working to lower. Competition is heating up, with most deals offered regionally.
Here are a few leases from this week:
*Toyota's best-selling Camry - a $23,000 mid-size car - for $169 a month with $1,500 down.
*A "limited edition" Honda Accord, the Camry's archrival, for $153 a month for 24 months with $1,997 down.
*A Nissan Quest minivan for $229 a month for three years, no money down.
Even hot-selling sport-utility vehicles are getting in on the action. Chevrolet will lease its mid-size Blazer for $279 a month for 12 months with no money down.
And Jeep has slapped incentives on its long-lasting Cherokee models, which have a new look and dual air bags for 1997. And some regions have special offers on six-cylinder Grand Cherokee models.
Why all the deals? The auto market has softened, especially for mid-size cars and minivans. And prices have come down on many models.
Toyota's 1997 Camry - $700 cheaper than the '96 and better equipped - is the best known. But other examples abound: Lincoln cut $4,000 off all its '97 models. Toyota took $4,000 off is super-fast Supra. Other carmakers introduced new models that were cheaper than the ones they replaced. That makes this a good year for buying new cars.
Good times to shop come at the end of every quarter and the end of every month, when dealers are trying to meet sales quotas, says Josh de la Cuesta, of Intellichoice, a research firm in Campbell, Calif.
The war among best-selling mid-size sedans is well established: Ford revamped its Taurus in 1995, then saw sales drop when Toyota introduced a new Camry this year. The new Camry undercut the Taurus's price. Ford responded with a $2,500 cheaper Taurus base model. Honda plans to launch a new Accord next year, so the firm is willing to deal on the current model.
Leasing is losing some of its stigma with consumer advocates, who have long recommended purchase or financing instead.
In its annual auto issue this month, Consumer Reports magazine published a chart comparing new-car leasing and financing costs. In that example, the overall cost of leasing comes out $1,039 less than financing, mostly because of the leased car's residual value, says Consumer's Union's Jed Schneider, who did the calculations.
Residual value is the predetermined value of a car at the end of a lease. When manufacturers subsidize leases, they have done so by guaranteeing a higher residual. Many have now sworn off this practice.