The auto industry> is beginning to show some signs of improvement. Sales of cars and light trucks were up 5% in July, compared to a year earlier. Ford (F)
Although investors in the auto sector may welcome these developments, anyone in the market for a new car might be less enthusiastic.
Now, even with the model year-end approaching, shoppers may have a more difficult time finding the same value at the dealer they did a year ago.
Unlike the past two to three years, manufacturers and dealers just don t have to offer the kinds of crazy discounts and incentives they had in the past, a spokesman at AutoTrader.com says.
In 2009, dealerships were saddled with more inventory than they could unload, forcing myriad incentives and deals in an attempt to purge the glut from their lots. Since then, dealers have adjusted their expectations and reduced their inventory, leaving buyers with less negotiating power.
Chrysler, GM and Ford are already scaling back their incentives, says David Whiston, an equity analyst at Morningstar. That trend should continue into 2011, he says.
For now, the model year-end should still yield some bargains, as dealers look to make room for new models. For example, Chrysler is offering the option of 0% annual-percentage-rate financing or cash-back incentives on almost all of its 2010 models, and Chevrolet is offering similar deals for many of its traditional SUVs. Mazda is offering quite a few 0% APR deals on its crossovers and SUVs, as is Volkswagen on a variety of its 2010 models. Volvo lists low-APR financing on many of its 2010 models.
Here are six tips on making the most of the annual sales this year.
1. Start online
Although the number and quality of model year-end deals and incentives is expected to decline this year, savvy consumers can still find bargains from home. Visit car-buying sites like Edmunds.com and Cars.com, as well as the car manufacturer s site, to find and compare incentives and rebates. Consumer Reports offers a listing of its recommended cars being sold at a discount.
Before buyers enter the dealership, they should thoroughly research the car they want online, paying close attention to pricing. Buyers should also consider emailing nearby dealerships for price quotes, rather than asking a salesman in person at the lot.
2. Time the purchase right
Because dealerships have less inventory this year, they have narrower selection of vehicles, says Philip Reed, senior consumer advice editor at Edmunds.com. Consumers on the hunt for a specific car with a particular set of features should shop model year-end sales as early as possible.
Buyers may also want to call ahead to ask dealerships about the cars they have in stock. Salesmen at the dealership will try to push you to buy the car they have there, Reed says. A buyer aware of the dealer s inventory before arriving on the lot is less likely to be forced into compromising.
Buyers who are looking mainly for value and are less particular about the model and features may want to consider waiting to shop these sales until later in the season when dealers are more desperate to unload inventory.
3. Consider high-end cars
Industry analysts say dealers are offering more incentives on luxury cars.
Dave Thomas, senior editor at Cars.com, points to $4,000-$6,000 cash-back deals on the Infiniti FX and an offer for up to $12,000 cash back on the BMW 6 series.
Reed says Cadillac now offers several incentives on its luxury models.
Of course, buyers should refrain from buying a luxury car purely because of an incentive and make sure to buy only a model that fits into their budget.
4. Buy into low-interest financing deals
For many years now, automakers have relied on cash-back offers to entice consumers to buy their brand. Do not expect this trend to change, but do expect to see more low-interest financing offers advertised.
As car shoppers have gotten savvier, 0% deals have gotten more heavily advertised, Thomas says.
Many low-interest loans and financing options can save buyers more money in the long-run than cash-back offers, though consumers should read the fine print on the offers to ensure the terms are favorable. Use calculators like this car loan calculator to see potential savings.
5. Call ahead
During the auto industry s struggle to increase profitability, many dealerships were forced to make staffing cuts. In some cases, that could mean less personal attention on the lot. Concerned shoppers should call ahead to make an appointment at the dealership and consider shopping earlier in the week and avoiding holiday weekends.
6. Watch for upcoming redesigns
When a manufacturer redesigns or significantly changes a new model, it is more likely to offer deals on the older one. Thomas says buyers should watch for deals on the following 2010 models because their 2011 counterparts are getting big overhauls: the Chrysler Jeep Grand Cherokee (recent deals have offered $5,500 cash back), the Ford F-150 (recent deals have offered up to $7,500 cash back) and the Kia Sportage.
Buyers should look for current car ads in newspapers and magazines, on TV and online to stay up-to-date on future model redesigns. Most manufacturers advertise their model makeovers extensively.
7. Make the switch (or stay loyal)
Auto manufacturers are increasingly offering conquest rebates, in which they pay buyers to switch brands. For example, Chrysler might offer a cash-back reward to a buyer who trades in a Toyota (TM)