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Rebates Increasing To Move Glut of SUVs

Once-Hot Segment Slowing Down

Feb 17, 2017
Sport-utility vehicles may not be the menaces to society now that they were a decade ago, thanks to the proliferation of smaller, more fuel-efficient crossovers. With a prolonged period of relatively low fuel prices and a wider selection of models than ever before, customers are snapping them up in every shape and size. However, auto manufacturers may have gotten a little ahead of themselves trying to build to demand. According to a Bloomberg report, manufacturers are offering generous rebates, incentives, and lease offers to help ease the glut of inventories at dealerships.
Among the deals to be had are no-interest 72-month loans on the Chevrolet Tahoe and Suburban and as much as $5,000 off MSRP. Smaller crossovers are also getting cash on the hood, with discounts on the Toyota RAV4 up to $1,000. Part of the issue is manufacturers’ response to unexpectedly high demand in the fourth quarter of 2016, causing them to increase production. Now that demand has cooled off, dealerships are stuck with the excess production.
Although SUV demand may be seasonal, the overall trend in favor of SUVs over conventional passenger cars isn’t changing. Industry research firm LMC Automotive predicts that SUVs will comprise as much as 43 percent of the overall auto market by 2024. Sales of SUVs were 30.7 percent of the market in 2012. Some believe SUVs could ultimately comprise as much as 50 percent of auto sales.
Source: Bloomberg

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