As Car Sales Go Up, Deals Go Away
Sales won’t be the only thing up when September new car sales are reported today. (Keep an eye on TTAC.) “”Transaction prices in September are the highest in years,” said Jesse Toprak, research chief of TrueCar.com.
Transaction prices are going up because incentives are going down. On average, manufacturers put $2,468 on the hood of each car, down 6.7 percent from the $2,645 offered in September 2011. Most generous: Chrysler Group ($3,256) and GM ($3,008). Stingiest: Hyundai ($1,294) and Toyota ($1,930).
If you want deals, look for 2012 model year vehicles. Says Jessica Caldwell of Edmunds:
“This is the time of the year when inventories really start to see dramatic shifts in the proportion of vehicles from the upcoming model year. As demand builds for the new hot designs, car dealers don’t have to offer as much of a discount to move those vehicles off their lots. That’s why we recommend that car shoppers give extra consideration to some of the great deals on outgoing 2012 model year vehicles.”
Holy Model Change Allowance Batman!
Sometimes it's better to wait and let the new model sell a while and then get it. I bought a S10 Blazer back in 1987, it had the 2.8 v6 and the next year, they added the 4.3 and my Blazer took a dive off the friggin mountain of resale value. I had one dealer tell me the difference between the 2.8 and 4.3 was like chicken salid and chicken shit, well, he was right. I had to keep that boat anchor for 3 years before trading on an Acura Integra.
Let me take the contrarian view of this, just for fun. The presence of deals makes "price discovery" much more difficult, which is why sites like True Car and Edmunds exist. They try and help buyers discover the real price of the car, so they can better shop. So, if cars are selling closer to sticker price, that makes price discovery and comparison shopping a little easier . . . a good thing. For example, it would make it easier to compare the Prius V against the new Ford C-Max hybrid. No fooling around with "money on the hood" of either car available to those smart and aggressive enough to ask for it. The second point, as Junebug's post illustrates, is how much of a deal are these deals? For example, I'm sure Ford is heavily discounting the old Escape, which, in my opinion is no better than a 1984 Jeep Cherokee/Wagoneer, which it resembles (and which I owned for 8 years). So, after you drive your "deal" '12 Escape off the lot, a year from now, how does its price compare with a year old -- and much, much improved -- '13 Escape? At that point, I bet the "deal" won't look so hot. Admittedly, this isn't always the case. I got a deal on an '08 Honda Pilot, fully loaded, which I bought in October of '08. The car was scheduled for a redesign for '09. The redesign was generally considered to be a failure, as compared to my car. All Honda did was make the Pilot a little bigger and cheaped out the interior. Same slightly underperforming engine (as compared to the Highlander which was both more powerful and more fuel efficient), and same marginal brakes.