Mitsubishi Fuels Price War
The Age
Thursday May 28, 1998
Mitsubishi has joined the car discount war by offering $3600 worth of additional features on the Magna Executive at no additional cost.
This limited-edition deal represents the biggest discount yet offered on the current Magna.
Badged as the Magna Solara, the car comes with air-conditioning, cruise control, alloy wheels, brighter interior trim, seat back pockets, front and rear mudflats, and a body-colored grille, mirrors and side mouldings.
Sedan versions are priced at $28,150 for the manual and $29,800 for the automatic. The wagon prices are $29,950 for the manual and $31,600 for the auto.
The car is available to private and fleet buyers. Mitsubishi plans to build 5000 Solaras, which should see it in dealerships over the next few months.
Mitsubishi has introduced Solara just a week after Ford introduced its long-awaited two-for-one lease deal. Private and company fleets can lease a present model Falcon, Futura, Fairmont and Fairmont Ghia and then swap into a new model in 12 months time. The lease period runs for 48 months, during which the car remains under warranty.
This deal has been introduced to reignite sales interest in the Falcon, which has been struggling since the VT Commodore was introduced last year.
The Magna Solara should help protect the Magna from any sales fallout from the Falcon deal.
It will also help to ensure Magna sales stay buoyant as the car gets closer to its first facelift. Revised versions of the Magna are due to go on sale about April next year.
Toyota and Holden are currently relying on dealers to provide any additional incentives to get buyers into their cars and have no plans at this stage to join the discount war.
In the small-car market, it seems every car maker is offering drive-away deals or free air-conditioning, or a combination of both.
The discounting is even more ferocious in the sub-$15,000 market, with Hyundai offering a $2000 cash-back deal on the Excel, making the base-model Sprint an $11,990 drive-away proposition.
A day after that deal was announced, Ford countered the move by offering a $1000 cash-back deal on its Festiva, which in entry-level Trio trim is priced at $13,990 drive away, with air-conditioning a standard feature. Ford had already announced that it would offer a six-stack CD player across the Festiva range.
Both Hyundai and Ford were forced to introduce these discounts as they struggle to maintain market share.
All this activity is good news for new-car buyers but the affect on used-car values will be swift and painful, with dealers suggesting that used car prices have already fallen by about $2000 in the sub-$20,000 bracket since the discounting from Ford and Hyundai began last week.
Hyundai, which is said to be losing about $1500 on every Sprint it sells with the cash-back offer, has reported its Excel sales rate has tripled to 600 a week in Victoria since the deal was announced, and that's before the car maker's television ads started to run.
Even Honda, which is not a company to publicly push heavy discounts, sold more than 1000 cars nationally last Saturday, with buyers taking advantage of free registration, third-party insurance and a five-year factory warranty.
All this discounting is expected to produce one of the best May sales months on record. June, which will benefit from a full month of discounts, is tipped to reach record levels.
Most car makers have pushed up sales projections for the year, with a record market of between 750,000 and 760,000 vehicles now expected.
However, the fall-out from the Asian economic crisis may set back sales late this year, and a Federal election would also curb sales for a few months. The biggest impact on sales could come from the threat of a GST, which, if levied at the same rate as other goods, would cut the cost of cars. If a GST is signalled well before it is introduced, then sales would stall.
© 1998 The Age