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Car bargains harder to find

Automakers scale back deals and incentives on new cars, but there are still ways to save.

By MSN Money Partner Jul 9, 2012 11:08AM

This post comes from Kelli B. Grant at partner site SmartMoney.

 

SmartMoney on MSN MoneyStrong sales have put automakers in the driver's seat this summer, which means consumers likely will see sparser deals than the lot-emptying clearances of previous years.

 

Image: Couple shopping for car (© Medio Images/Getty Images)The Big Three automakers reported higher sales in June, continuing their streak of year-over-year increases. Chrysler Group reported a sales increase of 20%, while General Motors' and Ford Motor's sales were up 16% and 7%, respectively.

 

Industrywide, sales are up 15% compared with last year, according to MotorIntelligence.com, an industry research firm.

 

Consumer demand for new vehicles means automakers have less incentive to cut prices than they did in previous years, says Jessica Caldwell, a senior analyst at car-shopping website Edmunds.com. "You would normally see some holiday sales, some summer sales now," she says. "But that hasn't started."

 

And experts say it might not. Automakers have been increasing production after the cutbacks of recent years -- but slowly, which means rising sales are keeping pace with what dealerships have on hand, says Lincoln Merrihew, a vice president of transportation at Compete Inc., a market research firm. Car inventory in June was at roughly a 43-day supply, well below the standard 60-day level, according to J.D. Power & Associates and automotive forecaster LMC Automotive.

 

There aren't enough vehicles lingering on lots to warrant fire sales, Merrihew says. (Post continues below.)

Still, there are a few bright spots for buyers. Cheap and more widely available credit has led to favorable financing deals, and high vehicle-resale values have helped dealerships push cheap leases. Plus, there are still a few cash deals. 

 

Shoppers' big adjustment this year seems to be that they will actually need to shop around. "It's not that there are no deals," Caldwell says. "It's just that things are different than the big sales of 2009."

 

Here is where drivers in the market for a new car can still find bargains:

 

Leases. "Right now, we're seeing the most attractive leases across the board that we've seen in a number of years," says Alec Gutierrez, a senior market analyst at auto-pricing publisher Kelley Blue Book. Leasing payments often factor in a vehicle's expected resale price, and used-car values have been rising, he says. That encourages manufacturers to drop lease prices, even to the point where they beat financing deals for buyers.

 

Consider: A 2012 Honda Accord is as low as $199 a month for 36 months, with $1,800 down. In comparison, someone making that same upfront payment to take advantage of a 0.9%, 36-month financing offer would pay $380 a month.

 

Low-rate financing. Consumers who want to hang on to a vehicle for more than a few years may find that financing is still the better deal, Caldwell says. "There are lots of 0% offers, because credit is cheap," she says.

 

Current Ford Escape, Chevrolet Malibu, Volkswagen Jetta and Toyota RAV4 models, among others, all can be had for 0% for up to 60 months in many markets. But a redesign can sharply affect deals, Gutierrez says. The Ford Focus, which got a new look for model year 2012, commands a starting rate of 4.9% for 60 months, for example.

 

Big vehicles. Larger SUVs and trucks typically have the biggest cash rebates, and this year is no exception, says Jesse Toprak, the vice president of market intelligence at TrueCar, an auto-pricing website. Those categories don't typically do well when gasoline prices are high and face increased competition from new crossovers that mix size and efficiency, he says.

 

Bigger vehicles account for the bulk of autos with cash incentives of $1,500 or more right now: The Ford F-450 offers up to $3,000, the Chevrolet Avalanche, $5,000, and the Jeep Liberty, $3,500.

Model redesigns. If price is more important to you than style, look for a car that is set to be redesigned in its next model year, Merrihew says. Incentives typically are better than on recently redesigned models because the look isn't as fresh. There often is more room to negotiate, too. "The downside is, it will look like yesterday's news pretty quickly," he says.

 

The soon-to-be-redone Chevrolet Malibu and Impala, for example, offer as much as $3,000 and $3,500 cash back on 2012 models, respectively -- deals comparable to those on the brand's trucks and SUVs. Other Chevy sedans currently offer at most $500, and many have no cash-back deal at all.

 

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2Comments
Jul 9, 2012 7:15PM
avatar

sales are up? up over low depressed sales from the last few years. nobody is selling close to what peak sales numbers were in 05-06. gm sales are still over 1/3 less than 07 which was a depressed year for sales.

 

the goverenment is doing a great job of telling us things are better!!!!!! some actually believe it.

Jul 14, 2012 5:59PM
avatar
In 20 years, I've always driven Chevy, but will NEVER own a GM again! Avoid GM and especially Global Auto Mall! GM and their dealers, especially Global Auto Mall in North Plainfield, NJ are crooked! Long story short, when I refuse $2700 in out of pocket suggestions from Global, my 1.8 hr mandatory steering system safety recall took 3 days. Days later the steering was inoperable, I returned to Global only to have their Service Mgr repeatedly tell me that they didn't damage my hoses as the steering hoses aren't attached to the steering system. I kid you not! He also tried to claim it was a slow leak that built up over a year despite their technicians missing it while making $2700 suggestions. GM themselves directly refused to help since Global wouldn't return there calls and I had to have the repairs to Global Auto Mall's screw up repaired at a private shop at great cost to me personally. Forget GM!! NEVER AGAIN!
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