Looking for a deal?
LOOKING FOR THE HOTTEST after-Christmas deals? They might just be at the car dealership down the street.
Detroit this year has rolled out wave after wave of promotions to keep sales going in a down economy. Now, faced with bloated inventories, a sputtering economy and end-of-year targets to hit, they are fattening the offers again, defying the industry tradition of trying to ratchet back on deals as the year draws to a close. As a result, cash rebates for many brands are higher in December than they have been all year, according to data from consultants J.D. Power & Associates.
Rebates in December are averaging $2,585 at Buick, the highest level this year. Cash-back offers at Ford, Pontiac and Hyundai are also at the highest levels so far this year, according to J.D. Power. Ford has added $1,000 "holiday bonus cash" rebates on trucks and SUVs.
Even luxury brands such as Mercedes and Lexus, which typically steer clear of the cash-on-the-hood pitch, have stepped up subsidized loan and lease rates. More than a third of the Mercedes sold in December with financing or leases went out at discounted rates, according to J.D. Power.
Driving all this is the fact that auto sales have been slowing over the past few months, after a surprisingly strong showing earlier in the year. Auto makers have been slow to cut production -- leaving many dealer lots heavy with unsold cars. The increase in inventory has been dramatic: As of the end of November, auto companies had a 76-day supply of vehicles in stock, up from 55 a year earlier, according to Autodata Corp. Ideally, the companies shoot for having about 60 days of stock on hand.
The result is unusually generous deals on a wide range of new models, including the Chevrolet Avalanche and the trendy Toyota Matrix. Many dealers are likely to get still more aggressive as they try to hit sales goals before the end of the year.
In the Northeast, Volvo dealers have a chance to win a February vacation to St. Thomas if they meet sales objectives. And in another sign of the auto makers' eagerness to juice year-end sales, dealers say General Motors is expanding the extra discounts it offers employees of many companies that do business with GM, such as ad agencies and consulting firms.
"I've never seen it like this. It is truly a buyers' market," says Ronald Thomas, a Cadillac sales manager in New Orleans. "The competition is very fierce."
There's a lot at stake. General Motors is pushing hard to make sure it delivers on a promise to at least hold its market share steady this year, while Toyota Motor's Lexus division and BMW Group are in a tight race for the top ranking in luxury sales. All the auto makers will be fighting it out in the last week of December, traditionally the biggest sales week of the year.
Lexus is offering discounted leases and low financing rates on most models. Dealers say customers can get 2.9% financing on the five-year loans on the popular $36,000 RX300 sport-utility vehicle and ES300 sedan, which starts at $31,000. Lexus had been offering rates couple of points higher. Auto consultants also say consumers can probably demand to pay $1,000 below the sticker price, even before incentives.
Other luxury deals can be found within the Ford Motor luxury-car stable of Jaguar, Land Rover and Volvo. Volvo has turned up the heat on dealers, who as a result are offering deals particularly on the slow-moving lineup of sedans, in order to get in the good graces of company executives.
Volvo dealers have a particularly powerful incentive to move cars: If they don't meet the head office's sales expectations, they have less chance of getting a generous allocation of the new XC90 sport-utility vehicle, which is expected to be a big seller. Dealers say they have been told to crank up sales of other vehicles if they want a healthy supply of the SUV. Don't expect deals on the XC90, though. Short supplies are likely to mean premiums for that vehicle, which is just starting to roll out.
But dealers say lease deals and low financing deals are available on the $30,000 Jaguar X-Type sedan and Land Rover's $28,000 Freelander SUV, which face tough competition in the luxury market. For instance, on the X-Type, Jaguar is offering 3.9% financing on five-year loans. As recently as a few months ago, the rate would have been between 5% and 6%.
GM's market-share drive has brought rebates of $3,000 or more across much of the line, as well as 0% financing on many models. Even the new Saab 9-3 sedan carries special lease offers, although unlike financing deals, lease terms can vary considerably from dealership to dealership. A Southern California dealership currently is offering a $349-a-month lease for 48 months with a $2,207 down payment. A few weeks ago the payment was $369, which adds up to a difference of nearly $1,000 over the life of the lease.
GM, blaring a "Something for Nothing" theme song in national ads, is also running sweepstakes for salesmen to help boost sales, and has upped the payouts in recent weeks to motivate its sales force. The discounts for employees of GM suppliers work this way: The buyer gets the car at very close to dealer cost. GM says it hasn't expanded the program, which affects roughly 7,000 companies, though dealers around the country are reporting heavier selling. The Web site, GMSupplierDiscount.com, has details of the program. Ford and DaimlerChrysler also offer similar plans.
Prospective car buyers can research prices for cars they are interested in at Web sites such as Edmunds.com, which also offers its own estimates of what others are paying for similar vehicles. Carsdirect.com also quotes prices over the Web.
With all of these deals going, Ashley Knapp of Autoadvisor.com, a car-buying service, counsels consumers not to waste their time with lots of haggling, and instead offer their best price up front. "The dealer wants a quick, clean deal," he says.
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A New Round of Deals
After a year of fierce discounts, car makers have rolled out yet
another round including deals on some trendy models such as the Lexus
RX 300:
Lexus RX 300*
Price: $35,000-$37,000
Deal: 2.9% financing on five-year loan
Old Deal: Rates in 5%-6% range
Toyota Matrix
Price: $16,000-$19,000
New Deal: 3.9% financing for five-year loan
Old Deal: Rates in 5%-6% range
Saab 9-3
Price: $26,000-$32,000
New Deal: 0% financing for three-year loan; 3.9% financing for
five-year loan
Old Deal: Rates in 5%-6% range
Chevrolet Avalanche
Price: $34,000
New Deal: $3,000 rebate or 0% for three-year loan; 3.9% for five-year
loan
Old Deal: $2,000 rebate
* All models are 2003.
Source: Edmunds.com; dealers
