Dealerships' loud, fast-talking "everything-must-go" sales have been a long time coming this year. Now that they're here, shoppers will find deals on some models will be sweeter than others.
In some years, dealerships start trying to clear out current models as early as Memorial Day, but such sales have been slow in coming this year. In late July, Ford -- whose early incentives focused largely on cash-back for recent college grads and financing deals for those with great credit -- tacked on sales worth $500 to $2,000 on many models. On Tuesday, offers went into effect for an extra $2,000 to $10,000 of many BMW 2011 models, and Cadillac beefed up the cash-back on some cars by $1,000.
It's a late start, says Jessica Caldwell, a senior analyst for auto pricing site Edmunds.com, because dealerships nationwide are only now making room for the latest model year. The March earthquake in Japan and a run on fuel-efficient cars had many automakers racing to get cars onto their lots, not off them -- leading to a supply shift that has pushed back the sales timeline and dampened deals. "There's almost no inventory, which means no need for those big sales," says Caldwell. The average car has cash-back incentives worth almost $2,400, a 14% drop from July 2010 offers, reports Edmunds.com. General Motors' average offer fell almost 24%, from about $4,200 to just under $3,200.
But car experts say there are still deals. The sales offers are more targeted than in past years, with automakers singling out certain models that aren't selling well in a particular zip code or even a specific dealership, says Jesse Toprak, the vice president of industry trends and insights for TrueCar.com. That means it's important for prospective buyers to compare prices across dealerships in their region to find the best deal and to consider different configurations of the same model, which may trigger different incentives.
Right now, most sales are for larger sedans, SUVs and trucks, which have sold poorly as gas prices have drawn close to $4 per gallon. Ford, for example, is offering up to $1,500 on the $36,000 2011 Expedition, while smaller models have far smaller incentives limited to special groups. Another surprisingly ripe market: luxury cars, whose discerning buyers need a bigger push to buy that "old" 2011, Caldwell says. A $54,000 2011 Chevrolet Corvette has a $3,000 dealer incentive right now, and BMW is offering a $10,000 discount on one of its 7 Series sedans. Buyers in either the large or luxury vehicle market shouldn't wait later than September to buy, Toprak says. Deals are likely to get better in those categories over the next few months, but supply is limited enough that there won't be much left by October.
Consumers on the hunt for a small, fuel-efficient vehicle, on the other hand, probably shouldn't start looking until October, says Alec Gutierrez, the manager of vehicle valuation for Kelley Blue Book. Many popular models, including the Ford Focus and Toyota Prius, are in such short supply that consumers are currently stuck paying the full sticker price. Analysts expect that Japanese automakers will be back to 100% production capacity in September and could offer some big sales at that time to regain market share. (In July, Honda, Nissan and Toyota increased their incentives by 37%, 20% and 26%, respectively, but primarily on their less-desirable vehicles.) At the very least, dealerships facing a steadier supply chain will be more willing to negotiate, he says.
But if you're waiting that long, be sure to compare prices against the new 2012 models, which may be only slightly more expensive, Toprak says. If the price difference is less than 10%, or you plan to keep the car for fewer than five years, the newer model is generally the better value, he says. The $35,600 2012 Acura TL, for example, already has a $1,000 incentive on it, making it just $800 more expensive than the less fuel-efficient 2011. Bargain hunters might also look for used cars coming off a three-year lease, a rarer find this year because the lease market bottomed out in 2008. But prices on used cars of recent model years have increased as much as 13% in that time, so potential buyers face a seller's market, he says.