Sunday, October 9, 2016

Nissan Strategy Shift

Huge incentives are allowing 2016's to fly out of the dealerships so whether buying or leasing, it is a really good time to get a LEAF on the cheap. But what does this really mean?



Year end closeout specials are common in the industry so this is not that far out of character but the incentives are huge.  This ad from an Oregon Dealership also mentions discounted lease terms as well so clearing the lot is the obvious goals here.

This does represent a shift in Nissan's planning.  Earlier in the year, their big push was converting leases into sales. Many took advantage seeing a greater than 50% discount off their residuals. Some even had several months lease payments waived as a reward for pulling the buy trigger early.  But those incentives have dried up....at least for now.  Expect that to change especially if dealer stock is depleted before the 2017's are ready.

All this points to the 2017 Model year introducing something exciting. We already know the 2017 S Trim will have the 30 kwh pack available AND we already know Nissan's sister company Renault will have a 41 kwh pack for its EV for 2017 so wondering if that pack will be coming to the 2017 SV/SL at a price that would stop 2016 sales in their tracks (or drop the value to the current incentive level?)

Exciting times are ahead whether you want a small bump in range (30 kwh) for less than your current 24 kwh LEAF or perhaps paying a teeny bit more for a much larger bump in range?

Its all speculation and its obvious Nissan is manipulating the market for some reason so incentives above run out Dec 15th which likely means the 2017's will probably hit the lot first week of January.

But I get a lot of people in my situation who don't know what they want to do and that is in a lease that ends in less than 3 months.  Well let me break down my thought process.

First off; we all want longer range but at what cost?  Waaaay back when I leased my 2013 I thought there would be two likely scenario's.  1) LEAF II would be on the streets or near it or 2) I would have to extend 4-6 months to get it.  All this seems to be on track.

I also thought that there would be several longer range options out there in case I wanted to jump ship and that has not happened.  I don't anticipate the Bolt getting here before Mid February and that is a bit too much time not to mention the Bolt is a bit too much money with much less attractive lease terms likely.

But my options as I see it would be

1) Buy out the LEAF, drive it another 6-8 months until LEAF II arrives
2) Turn in LEAF, drive Corolla for 6-8 months until LEAF II or something else arrives
3) Extend lease month to month until....
4) Turn in LEAF and get best deal I can anywhere

Now there are pro's and con's to every choice.  so....

1) Buy out the LEAF, drive it another 6-8 months until LEAF II arrives;

Pros; no more waiting for the longer range to come out!

Cons; I would be buying a car that has likely over 45,000 miles on it that would be less and less convenient for me. I could easily add another 10,000 miles in 6 months making the car much less valuable.  I would also have to get tires ($500-600) tabs ($280) and deal with trying to sell it in a very depressed market.

Result; least likely scenario unless they bring back the huge buy incentives.

2) Turn in LEAF, drive Corolla for 6-8 months until LEAF II or something else arrives

Pros; pretty much the same as above. cheaper expenses while waiting. one car, less insurance, etc...

Cons; Have to pay lease termination fees and well GASOLINE!!

Result; To be honest with ya, not sure I could go with gas only transportation for that long of a period.

3) Extend lease month to month until....

Pros; This allows me to really check out the market deals. Granted no where near as cheap as a 2016 LEAF but the range is likely to be enough for me to go from Leaser to Purchaser...

Cons; All the #1 list plus more if I decide to go with something other than Nissan.

4) Turn in LEAF and get best deal I can anywhere

Pros; Probably the best kwh/dollar deal I can get. a 30 kwh LEAF would leave me as a Leaser but then again; I now have time to see how the EV market develops. Avoiding the initial factory output of  unknowns is probably not a bad idea. A few years of Bolt and T3 user feedbacks, etc. would be a valuable tool in 3 years.   Also going from LEAF to LEAF means $500 forgiveness on damage/excessive mileage (guessing I will be max'ing that out) waiving the lease termination fees, and possible loyalty discounts on top of all that with the dealer incentives.   Granted if I decide to go with the only other real choice here (the Soul) then those go away but the Soul is not really getting the good deals. I pretty much have to lease and I have to have 15,000 miles and when that gets thrown in there, the price is merely "good."

All that pretty much makes a great deal a near no brainer.

Cons;  range. There is no real downside other than the 30 kwh. But it would still be more than what I had 3 years ago and quite a bit more than what I have now.  Add to that a LEAF gets me 2 years of NCTC (likely anyway) which allows more wanton driving. so umm, yeah this is the "con" section...

So uhh, well. I guess time will tell. What is not showing in the graphic above is the disclaimer that the deals could change significantly before the Dec 15th deadline. (Obviously you can't sell what you don't have)  So time will tell and that time is running short.

A Final Word to address another category of Leasers that I am not a part of and that is the one who has modest range needs and is considering keeping their current LEAF long term

Don't. There is so many reasons against keeping it and the biggest one is that you can get a better LEAF with a possible upgrade in range on the year end deals but remember; the 30 kwh pack has a longer degradation warranty.  I see this a lot where people are happy with the range until it starts to not work for them.  When that happens, there is an extreme change of habit that must occur and that is a greater reliance on the 2nd car and public charging.  I find that people who read about us charging publicly do not realize just how much they won't enjoy it. It doesn't bother me that much because I almost always have other things that need to get done anyway so its never a waste of time to me.

For you; that may not be the case.   So don't judge your buying decision on how well the LEAF covers your needs today. Judge it on how well it covers you when your payments are done in 3-5 years.

If you do decide to buy again don't do it unless you get a significant discount from your residual and I mean several thousand... not a few.

13 comments:

  1. That is some impressive discounting.

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    1. Yes it is and this does not happen unless there is a reason. Now we can choose to think that Nissan is looking out for us and this is their way of insuring no cars sit on the lot for extended periods which plays havoc for the batteries but I think its because their pending announcement at Christmas is going to create a huge drop in the market for existing LEAF models. This tells me something big is coming.

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    2. The facelifted Nissan Leaf with a 41 kWh battery should be unveiled at the Los Angeles Auto Show next month.


      Nice blog :)

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    3. That would completely change my strategy but again, don't think it will hit the streets in time. Nissan will likely hold the 2017's at port until the supply of 2016's is sufficiently dwindled which I believe was done previously with the 2014's

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  2. David, I was just reading that Bolts were to be hitting California and Oregon dealers any day, and Maryland is not far behind. 238mile range!!!

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  3. David, I was just reading that Bolts were to be hitting California and Oregon dealers any day, and Maryland is not far behind. 238mile range!!!

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    1. Well that would be a shocker and still quite a bit more than I think I want to pay. I predicted Bolts in WA no earlier than Feb and have seen nothing lately to change my mind on that. Do you have a link?

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  4. David, you have a tough decision here but I would probably opt for #3. This way you can comfortably wait for Leaf II while still getting damage/miles forgiveness as you mentioned when you trade up. Also, as we get closer to December you could still take advantage of one of these 2016 deals should you decide life at 30 KWH would still work. Good Luck!

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    1. Well have to say I saved the best for last here. With the information available today, I am leaning towards leasing a 2016 SV. The 30 kwh battery is bigger, more reliable and charges faster so it will be very much an upgrade and my guess as to when the T3 will be widely available is only a few months off the end of what will be a 3 year lease so the timing is good. But we still have 2 months of press releases before my decision needs to be made.

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    2. AND... did you hear the latest? 30 Kwh in 2016 S Trim? just released to dealers a few weeks ago?

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  5. I like reading about this lease vs buy stuff, but my eyes start to cross when all these if this/than that's start to dance around. For me what makes sense is a list of expenses adding up.
    Initial cost
    + monthly payment*number of months
    + close out lease fee
    = new Leaf owner

    Vs
    The obvious benefits of monthly payments getting a new Leaf, then another new Leaf after 3-5 years

    Vs
    Used Leaf for, say $9k, which equals $250/36 months or $150/60 months (5 years)

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    1. Well part of the issue we are seeing a lot of is that residuals are seeing unbelievable cuts to encourage people to buy out there leases. My residual on my 2013 was about $12,150 or so and I was offered a buy out price of $5803 which I thought was too good to be true but now there are people getting bigger (much bigger!) discounts. I know one who got OVER $10,000 off her residual!

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    2. I get that - but how much were you into your vehicle before you were given the option to buy it out? That amount, plus the $5803 would be what you paid for the car. Love discounts, but when the mark up is already super high, the discount is not as big of a deal.

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