UPDATE MARCH 20 – Volvo closes US, Sweden plants
Although Volvo hasn’t rolled out a new discount program in the face of Covid-19, that doesn’t mean they won’t, and it doesn’t mean now isn’t a good time to buy a new Volvo.
Carmakers are rolling out programs to entice sales and support buyers who may have trouble making their car payments. With increasing calls for social distancing, dealers may face increasing restrictions about when and if they can keep their doors open. Events are unfolding at a rapid pace, as automakers announce plant closures to protect their employees and respond to slackening demand.https://cars.usnews.com/cars-trucks/coronavirus-and-cars
But Volvo isn’t one of them. At least not yet. This doesn’t mean you can’t get a good deal on a Volvo during this Covid-19 pandemic. (Did I really just write that? Strange days.)
Is now the time to buy a new Volvo?
To answer that question, we should look at the fundamentals. We have to opposing forces at work: supply of Volvos vs. dealers wanting to sell cars now.
The supply of new Volvos might dry up with business shutting down and auto manufacturing workers staying home. That’s the supply. It’s not infinite, like we might think looking back on the 7 decades since WWII, the last time we faced car shortages in the U.S.
That, given no other variables, would push prices up. Basic supply vs. demand there.
… vs. “Move em Out!”
Dealer panic however pushes the scale down in the other direction. Dealers have inventory, and they don’t want to get caught with a government-mandated dealer lot shutdown. Dealers are not in the business of holding onto cars. They’re in the business of moving cars. Volume, sell, get them out the door. Move cars.
That, given no other variables, would push prices down. Again, supply vs. demand.
Dealers Want to Avoid Storing Cars
Dealers are scared they’re going to get stuck essentially storing cars they can’t sell. “Inventory” in business language. Why don’t they just hold on? Because they’ve bought and paid for the cars, and are today, right now, paying interest on those huge buys.
Generally, dealers don’t pay for the hundreds (or thousands) of cars they buy out of their pocket (“cash”). They have a credit line with a bank and arrange for a million, ten million, or 50-million dollar loan to buy inventory. Then the clock starts ticking. The sooner they move the cars, the more money they make because it means they pay off the loan sooner.
Imagine the interest payments on a $10-million loan. Yea.
So they want to move cars. Example: GM rolled out 0% financing for 7 years, delayed payments three days ago. That’s bananas.
What Has Volvo Itself Done?
Not much. No huge incentives, surprisingly. Let’s take a look:
Sampling just the XC90, XC60 and XC40 models, here’s a pre-Covid-19 (in the U.S.) and post-Covid-19 snapshot of Volvo’s Offers page… December 2019 vs. March 19, 2020:
The XC90 has actually gotten more expensive:
- Lease March 19, 2020 $499 / 36 months, $4,899 due at signing… vs…
- Lease December 30, 2019 $489 / 36 months, $4,400 cash due at signing.
- Buy 2.99% financing is the same, but there is now up to $3,500 in allowances vs. up to $3000 in allowances in December 2019.
Among the XC60 and XC40 deals, the price differences don’t change as much as XC90, except for the XC40, which the lease offer drops from $385 a month to $329 a month. Not bad.
But that is just the official Volvo offer sheet. So don’t look to Volvo for discounts yet.
But Dealers are As Scared As You
- Effective immediately we have stepped up our cleaning schedules to include hourly wiping down all doors and handles and all top surfaces where customers and employees interact.
- Wiping down EPA certificated disinfectants our loaners and demos fleets before customers and employees use.
- Wiping down your car before and after servicing.
- Technicians and porters are using gloves during servicing and road tests and check-in procedures.
- Sending home any employees that show any signs of illness.
That’s a Volvo Cars Princeton email from six days ago. Do they sound worried? You bet. Almost a week later you can bet that worry is much higher. They go on:
If you would prefer to stay home during this time we offer “Volvo Valet” for servicing . By appointment we will pickup your car. Leave you a new Volvo loaner car, then bring your car back to you ones done. There is no charge for this extra service.March 13, 2020 Volvo Cars Princeton email
Ok, So What Do I Do?
Your local dealer can and probably will be willing to abandon those prices. They’re only a starting point anyway, unless you buy online from Volvo itself.
If you wait for Volvo itself to sweeten the pot, you (and Volvo) might get caught with your pants down by a shutdown.
Our advice is to go now and haggle like a banshee if you were ready to pull the trigger. Volvo dealer lots could get shut down any day. They’ll deal.
If you were not ready to pull the trigger, we advise you to stay financially safe and not extend yourself. Nobody knows how coronavirus will affect Volvo sales in the short term, and society in the long term. It’s a scary time.
Good luck out there, and drop us a line if you do score a new Volvo!