Dealers Gone Wild
The Wall Street Journal reports that (suprise!) transaction prices on new vehicles have fallen over the last six months. The average transaction price for a new vehicle is now $27,941. Why so slumptastic? With American consumers perceived to be in value shopping mode and the automobile industry in disarray, incentives are starting to pile up on new cars. And it’s not just OEMs offering factory cash. Dealer incentives are up as well. The WSJ cites TrueCar data showing that a full quarter of all 2009-model vehicles are being sold below dealer cost. And those aren’t all coming from troubled Chrysler dealers.
TrueCar data shows discount transactions clearing on relatively new hotness like Hyundai’s Genesis ($2,500 off sticker) and Honda’s Insight ($500 off). The Prius is the poster child, having attracted $3-$4K premiums nine months ago and now averaging less than $100 over invoice. High inventory levels plague nearly every dealer and OEM; 100+ day supplys have nearly become industry standard. The verdict: it’s a great time to buy (duh). But don’t jump too quickly. With massive dealer cuts due any day now from Chrysler and GM, the squeeze is just starting to be felt.
27K plus? OMG! I paid a little pocket change over 12K for my lease buy-back Civic, which trumps any other car out there in build quality, reliability and gas milage (non-hybrid). I got $2500 for my trade-in and put $2K down, so my loan is just south of $7500 for a car with less than 36K miles. Do I sound like I'm bragging? I'm sorry.
I'm not sure any loyal TTAC reader is your average consumer. Some of them are in the car business (dwford, Mr. Lang). Some are very wealthy. Some are neither, just ridiculously in love with cars, like me, and average buying one per year over the last 10 years, until the driveway and garage are full (or something else pops up), or the insurance bills just get plain ridiculous. If I'm in love with a car, though...watch out (I'm looking at *you*, Mr. 1970 Chevelle - I see you every day parked at that retirement development...your owner can't last forever). I don't even care that you're ugly green vinyl on green with a 307 - I just want that sweet, rust free metal wrapped around it. Or it is very, VERY tough not to try and get in on a fire sale Pontiac G8 GXP after getting in one this weekend (the wife thinks it's a practical car, too!). But I'm hoping that the downward trend continues, and a lightly used one about 18-36 months from now is even a better deal. So being shocked about the average transaction doesn't go far here, I'd imagine. Not sure how many average car buyers are here...
TrueCar has a blog post in the same topic on The Truth http://blog.truecar.com/?p=107