Does Your Tax-free FAVR Reimbursement Program Face Disruption in 2027?
Tax-free FAVR reimbursement programs based on these 2026 model year vehicles could be at risk.
As we prepare to build the database of 2027 model year vehicles, we review manufacturer’s announcements of their line-ups. Some new vehicles will enter production, while others will be retired from the line-up. In this post, we’ll point out some of the vehicles that won’t be part of FAVR program designs in 2027. If your program utilized one of these models, your drivers may experience some undesirable change. However, if you’re working with Driven Reimbursement, you’re protected from unanticipated change.
The Acura RDX is going away in 2027, but only for 1 year as Honda’s premium brand retools for the release of an all new 2028 model. The RDX is a very popular vehicle – strong performance, good fuel economy, low maintenance expectations, and not terribly expensive to insure. The base RDX was just over $46,000 MSRP.
While we couldn’t build FAVR programs around the 2026 Audi RS7 (MSRP $135,395), it will be removed from the line-up in 2027. Audi isn’t the only large luxury sedan maker to thin-out it’s offerings: BMW will be retiring the entire 8-Series line of vehicles. As you might have guessed, the least expensive BMW 8 Series sedan had an MSRP of $95,875, vastly exceeding the maximum value the IRS allows for FAVR programs. BMW is also axing the much unloved iX EV (base MSRP $76,600) from the North American market in 2027. BMW had one last delete for 2027: the Z4 convertible 2 seat sports coupe. While not a practical vehicle for daily business use, it’s $57,450 base MSRP kept it eligible for use as a 2026 plan vehicle. The Z4 (and it’s predecessor the Z3) have been in production at BMW for over 30 years.
Cadillac will be paring-down their lineup of sedans in 2027, and that’s unfortunate for some FAVR plans. The Cadillac CT4 and CT5 are both being retired in 2026. General Motors has suggested they’ll be re-entering the luxury sedan market at some point in the future, but until the appetite for crossover SUV’s wanes, we may not see replacements. In recent years, companies seeking to build generous reimbursement programs may have based their plans on these Cadillac sedans. Good substitutes are becoming hard to find.
The Ford Escape will be no more in 2027. Unlike large luxury sedans, the Ford Escape had been a mainstay of fleets and a very popular and versatile vehicle for employee drivers for many years. Ford made a strategic decision to produce more small SUVs and pickup trucks in the second half of this decade, and there was just not enough production capacity to support the diversity of vehicles. With no other alternatives in the portfolio, Escape owners will need to look to other manufacturers for satisfy their compact crossover desires. Oh, and if you were a fan on the Lincoln Corsair (we were as FAVR program designers), that’s gone too, since it was a very fancy Ford Escape underneath that premium window sticker.
Honda is stepping away from the Prologue permanently and the Ridgeline temporarily in 2027. The strategy around the Prologue changed, sales crashed, and so did the desire to build them in 2027. However, the Ridgeline has been a mainstay of the Honda lineup for years with a strong consumer following. It’s undergoing a significant re-tooling, will produced in Alabama and re-released in 2028. From an employee driver standpoint, these are fantastic vehicles to own and operate as a FAVR driver. However, because of their low rates of depreciation, low insurance and maintenance costs, and strong fuel economy, they make poor FAVR base program vehicles. Their loss from 2027 FAVR eligibility should affect nobody.
Hyundai is dropping the Ioniq 6 EV. Jaguar is ending the F-Pace (if it hasn’t already ended itself). Lexus is putting the top up on the LC and finally dropping the LS after 37 years. Large sedans are getting no love.
The Polestar 3 and 4 are gone. Not because the manufacturer Geely intended to do so, but because they have been banned from the American market. They will still be made in South Carolina and exported to other countries.
Perhaps the most significant end to a popular vehicle in 2027 will be the Tesla Model S and Model X. While Tesla isn’t strictly adherent to the “model year” concept as closely other manufacturers were, no new Model S‘s or X‘s will be produced. From a FAVR program or employee driver standpoint, this has effectively no impact.
Toyota isn’t making any significant changes to their product line-up in 2027 other than retiring the GR Supra. Volkswagen is ending the ID4 EV in North America. Volvo is dropping the EX30 SUV and the venerable V90 station wagon in North America as well.
Looking ahead, very few if any FAVR programs will be impacted by the retirement of these vehicles from the 2027 model year. In years past, retirements of FAVR and Fleet favorites like the Chevy Impala may have affected a lot of program year renewals. Customers of Driven Reimbursement can count on minimal year to year disruption of IRS-required program updates. Driven Reimbursement maintains the world’s largest database of eligible program vehicles and the most comprehensive product methodology available. We look forward to showing you why this matters. Give us a call for a short demonstration and take advantage of the industry’s oldest and most sophisticated FAVR reimbursement provider!
