Honda reduces Fit EV lease

by Ernie Hernandez on May 31, 2013

2013_Honda_Fit_EV

New lease rate hoping to improve interest

Honda, recognizing that their Fit EV is not even close to appealing to their customer base, has done what auto manufacturers have done since the automobile’s first days – throw money at it. And not only for new customers, but existing customers also, which is unique. It sounds to us as if there is a bit of panic going on in a corner office or two. Based on early lease volume, it is not difficult to understand why.

Fit EV was introduced into the California and Oregon markets on July 20, 2012 with a 36 month lease only option (no purchases allowed) with a $389 payment each month. Keep in mind this was before the LEAF was produced in Tennessee, had no S model yet, and offered only a slightly lower lease payment. Honda leased seven cars in July of last year. Meantime their gasoline powered Fit sold 4,608 during the same month. Granted the gas car had all month to do it, and is available in every state, so we can understand the difference. Fast forward to today.

April 2013 sales (the latest full month for which numbers are available) for the gasoline powered Fit totalled 4,286, or down about seven percent from July of last year. Fit EV sales on the other hand improved over 300 percent – Fit EV leased 22 units in April, with 68 leased year to date. Early this year Honda saw the need to offer the Fit EV in a broader market. In February Honda announced the availability of the Fit EV in Massachusetts, Connecticut, Maryland, New York, and New Jersey. Available in five more states Honda likely expected a significant uptick in sales. Based on year to date numbers – not so much.

Thus yesterday’s announcement. Honda’s new lease payment is $259 per month (which existing lessees will also see effective in June), with no down payment (just the first payment due at drive off). But – as they say on late night TV – there’s more. In addition, there is no mileage restriction on the lease. Honda is throwing in a free Leviton 240-volt home charging station (but the lessee must pay for installation). Not enough? How about free collision coverage. One would still need to carry their own liability policy, but that’s pretty inexpensive by comparison. And just to show how much Honda likes you, they’ll let you keep the charging station when you turn the car in. Again – can anyone say panic?

The real issue here is not that the Fit EV is a bad car. Nor is the Chevrolet Spark. The challenge to both Honda and Chevy is that these electric vehicles (EVs) are based on gasoline counterparts. The gas Fit starts at about $16,000 and tops out at just over $20,000. The Manufacturer Suggested Retail Price on the Fit EV is $36,625. Can you blame a guy for taking a pass? If you walk into the Honda store, these cars look almost identical, but that one over there is 15 to 20 grand less? I imagine it’s kind of difficult to get them to even listen to the part where it’s not really for sale, and it has this killer lease deal. The Spark EV that we just wrote about suffers from the same problem. The gas Spark starts out even less than the Fit – about $13,000 including freight. Load it up and you can get it all the way up to about $17,000. Then you have the Spark EV sitting next to it priced at twenty seven and a half. You’d have to drink a lot of Honda or Chevy kool-aid to really want their EVs.

There has been significant discussion about the style of the LEAF. There has been all kinds of talk about how it is similar to the Versa hatchback (which it is not based on by the way. The LEAF is LEAF platform from the ground up). The advantage that Nissan (and Tesla) has is that the LEAF is only available as an electric car. The RAV4 EV starts at almost $51,000. The gas RAV4? $24,000. How can anyone not compare it to another car that looks just like it for waaaaaaay less money. Even if I were a Honda, or Chevy, or Toyota loyalist, I would have a hard time making that decision. Don’t get me wrong. I’m glad that some people are buying these cars. I’m just not sure that I understand the reasoning behind it. Rav4 EV was introduced in California in mid-September of 2012.Last month Toyota sold 133 RAV4 EVs after putting an additional $10,000 rebate on the car in February. When you see that they only sold 54 in February, you can see why they too are throwing money at the car.

But even Nissan cannot totally avoid the money free-for-all. The $199 per month 36 month lease on the LEAF S is also a subsidized lease, as are their lease programs on the SV and the SL. But when there is no gasoline version sitting next to it on the showroom floor, the customer is more focused on the car than on some price differential. LEAF sales numbers prove that – 1,937 in April. The lesson for other carmakers? Develop unique EV platforms. Then we may see some real uptake in EV sales.

 

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