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As car sales jump, deals disappear

Car makers are less likely to offer the big discounts of the past couple years during the 2011 year-end car sale season, experts say.

By MSN Money Partner Nov 3, 2011 11:21AM

This post comes from Annamaria Andriotis at partner site SmartMoney.

 

SmartMoney on MSN MoneyAmericans are once again driving new cars off the lots. But buyers shouldn't expect the blowout discounts of recent years.

 

October car sales rose to an annualized rate of 13.2 million vehicles, adjusted for seasonality, according to researcher Edmunds.com. That's well shy of the 16.3 million rate in 2006 before the recession, but it's up 9% from a year ago.

 

Unfortunately, that uptick means potential car buyers who have been waiting on the sidelines for better incentives or promotions may have missed out, says Jesse Toprak, vice president of industry trends at TrueCar.com. "Automakers are becoming much more selective as to where they offer incentives," he says.

 

Traditionally, car manufacturers roll out their best deals during the year-end car sales season, which starts mid-October and peaks in December. That's when they're eager to move remaining current-year models off the lots in order to make room for next year's versions. But this year car lots don't have much excess inventory. Post continues below.

Fewer cars to pick from

That's in part due to production slowdowns in tsunami-stricken Japan and floods in Thailand, which is a major hub for Japanese car parts production. With fewer Japanese cars to choose from, many consumers bought American models, lowering inventory levels for U.S. manufacturers as well, says Jeremy Anwyl, CEO of Edmunds.com.

 

Incentives are down too. On average, car makers spent $2,158 on car incentives per car sold last month, down 11.5% from a year ago, according to Edmunds.com. Toyota cars saw the largest drop in incentives in October, which fell 22.5% from a year ago; Ford's incentives fell 13% and Honda's dropped by 10.1%.

 

For November, the incentives available are even less generous. Up until last month, the most generous rebates slashed up to 10% off the price of gas guzzlers, like SUVs and pickup trucks. Now the best deals available include up to $2,000 cash back on the 2011 Lincoln Navigator or on the 2011 GMC Yukon, which amounts to a roughly 3% and 5% discount, respectively, off the manufacturers' suggested retail price.

 

Those deals aren't better than what's being offered on some smaller, more fuel-efficient 2011 models like the Hyundai Elantra and the Nissan Cube which are offering up to a $500 rebate, about a 4% and 2% discount, respectively.

 

It's not all bad news for car buyers. Consumers looking for auto loans may find good offers. Audi buyers, for example, can get 0.9% financing through the manufacturer. That's cheaper than the average car loan rate of about 4.1% for new cars, according to Bankrate.com. On a $20,000, three-year car loan, you'll save about $1,000. (See the

most and least expensive cars to insure.)

 

As with any sales season, getting the most for your money has a lot to do with timing. Car shoppers who aren't in a rush and aren't too picky should consider waiting until the middle of December, experts say. Shoppers may not have as many colors and other features to choose from but that's when the best deals will be rolled out, says Alec Gutierrez, manager of vehicle valuation at Kelley Blue Book.

 

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