2016 Cadillac ELR Gets $10,000 Price Cut, But Is It Really a Better Deal?

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Senior Pricing Analyst

As CarsDirect’s resident pricing analyst, Alex offers must-know analysis of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured in publications such as Car and Driver, Motor Trend, Automobile Magazine and Autoblog.

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, Senior Pricing Analyst - April 23, 2015

Cadillac caused a bit of a stir by cutting the starting price for the ELR plug-in hybrid by $10,000. But will a price cut make the ELR a better deal? The answer may not be as obvious as you might think because unadvertised incentives have been pushing current prices down by as much as $20,000 already. Here's what you need to know.

Lower price

If you thought the ELR was too-expensive, you may be pleased to hear it will soon be slightly less too-expensive. Base pricing will fall from $75,995 including destination to $65,995, a $10,000 cut. Meanwhile, the closely-related 2015 Chevrolet Volt rings in at $35,170.

While it's certainly debatable whether or not the ELR is a compelling choice over the Volt, we find Cadillac's decision interesting. We're more interested in understanding just how different the price you pay will end up being.

The reason is that unadvertised discounts on the 2014 model worth over 26% off MSRP make us question how tantalizing the price cut ends up being. What will happen if Cadillac chooses not to extend similar discounts to the 2016 model?

Cadillac ELR vehicle overview>>

Buoyed by unadvertised incentives

While Cadillac has been reinventing their name as an exclusive performance brand, the ELR has been somewhat of an outlier. It offers the chance to be greener while still enjoying the Cadillac experience. However, while the Chevy Volt can be leased for $249 and only $500 due at signing, the ELR is on a completely different level in terms of price.

Sales figures showing 1,310 units sold last year are telling. As a result, Cadillac has been using unadvertised dealer cash discounts to make the ELR more appealing to shoppers.

The discounts amount to payouts that enable dealers to lower prices at their discretion. They aren't being advertised because they don't fit the brand's image. The amounts aren't small- incentives worth up to $15,000 increased to $20,000 earlier this year and continue through April 30.

Read our buying analysis for the Cadillac ELR>>

How a price cut can mean a price increase

It's counter-intuitive that a price cut could result in a price increase, but that might end up happening. If a dealer chooses to pass along the entire amount of $20,000, a 2014 model could potentially be sold for $55,995 today.

With no incentives, the 2016 model will ring in at $65,995. If Cadillac doesn't use the same type of discount on the 2016 model, a shopper could end up with a higher price on the 2016 model rather than a real-world price cut.

The story doesn't end there. The difference between the MSRP and invoice values is being reduced from $3,375 to $2,925, a $450 cut that lessens a dealer's profit margin. It's conceivable that real-world discounts to consumers will shrink in a similar manner.

Side-by-side: Cadillac ELR vs. Chevrolet Volt>>

Our take

We're excited that Cadillac is bringing base pricing for the ELR more toward the realm of reason with the 2016 model. However, a lot has been going on behind the scenes and we're curious about the bigger picture and what real-world pricing will end up like. It's too soon to know for certain, so we'll be watching how this develops and report anything unusual.

Get a customized quote on the Cadillac ELR>>

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, Senior Pricing Analyst

As CarsDirect’s resident pricing analyst, Alex offers must-know analysis of pricing & incentives to those looking to buy or lease a car. His consumer-oriented coverage of the latest trends and breaking news has been featured in publications such as Car and Driver, Motor Trend, Automobile Magazine and Autoblog.

Follow On: Twitter | Website

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