Jonathan Banks Notes Shift in Incentive Spending


NADAguides - October 15, 2012

Indus­try watch­ers know exces­sive man­u­fac­turer sub­ven­tion of new vehi­cle prices was one of the most cor­ro­sive fac­tors affect­ing used vehi­cle prices dur­ing the last decade.

Jonathan Banks of NADA Used Car Guide observes changes.

Says Banks: Pro­duc­tion today is more in line with demand and the qual­ity and desir­abil­ity of new prod­uct has improved dra­mat­i­cally over the past few years. I’ve been in this indus­try for a long time now, and the depth and breadth of prod­uct for each man­u­fac­turer has never been bet­ter. It’s not even close.

Per Auto­data, since the end of the reces­sion in 2009 the aver­age amount spent per unit has fallen by some $300, or 10%. Mul­ti­ply that by the num­ber of units pro­duced each year and the sav­ings quickly add up. In large part, these sav­ings go right back into mak­ing bet­ter prod­uct. This allows new vehi­cle prices to increase and asso­ci­ated down­ward pres­sure on used prices is minimized.