The U.S. auto industry is back. Production lines are humming, a slew of new and redesigned models grace showrooms, and sales of new vehicles are up for the third straight year. Carmakers are competing hard for your business, and that translates into opportunities for you to get a great car at a good price. Vehicles in all price categories are equipped with standard features and technology once reserved for luxury nameplates. Many carmakers also offer cash incentives for buyers new to the brand. And super-low-rate financing is ubiquitous. "Competition results in consumers winning. The selection of vehicles is by far the best they have had," says Jesse Toprak, senior analyst for TrueCar, an automotive data firm.
But with so many options, it's easy to be overwhelmed. That's where Kiplinger's buyer's guide can help. We sorted the 2013 models by price and category and ranked them for value, performance and safety. In our annual rankings, you'll find the top models in ten categories, including our picks for Best in Class and Best New Models. We highlight five additional vehicles in each category as Worth a Look; they scored high enough to be in contention for the top awards. Read on to find out what you need to know before you hit the dealership.
Leaner and Greener
Tough new government standards for fuel economy mean manufacturers must find ways to boost mileage while offering plenty of affordable full-size sedans and small SUVs. So, carmakers need to produce lighter vehicles without compromising safety. They need to tweak internal-combustion engines without losing the power that drivers love. And they have to persuade more consumers to switch to electrified vehicles.
A California law that large automakers must have zero-emissions options in their fleets has helped increase the number of fully electric vehicles. The Fiat 500e and Honda Fit EV join the ranks for the 2013 model year, and the Chevrolet Spark EV debuts this summer. But consumers haven't embraced electrics the way automakers had hoped. High prices, range anxiety (the fear that the battery will die) and a lack of public charging stations are holding down demand. Even the $7,500 federal tax credit doesn't seem to sway many potential buyers. If you're in the market for an EV, you'll likely find dealers willing to haggle.
Plug-in hybrids -- gas-engine and electric-motor combos with a battery you can recharge at home -- are a more palatable choice. Bill Visnic, senior editor of Edmunds.com, calls them the sensible green option. The newest models get about 20 miles of electric range and then operate as traditional hybrids, using the electric motor to assist the gas engine and regenerative braking to recharge the battery. They offer better fuel economy than past hybrids: the equivalent of 100 miles per gallon in electric mode, and combined economy in the mid 40s in hybrid mode, without limited range.
Ford will offer two plug-in models in 2013: the Fusion Energi ($39,495) and the C-Max Energi ($33,745). The C-Max is available in 19 markets and will be sold in all 50 states by next year; the Fusion debuts soon. Honda is adding a plug-in model to the Accord lineup ($40,570), but initially it will be sold only in California and New York. All will qualify for tax credits based on their battery size. Ford plug-in buyers are eligible for a credit of $3,751, and Honda Accord buyers can get a credit of $3,334.
It wasn't high gas prices that prompted Warren Fletcher to trade in his Toyota Prius for a C-Max Energi plug-in. He simply wanted the convenience of "filling up" at home. Fletcher's daily drives in Tampa rarely take him farther than 20 miles. At home, he plugs the car into a charger he installed in his garage. The self-proclaimed techie loves the brake coaching feature, which tells him how much energy he recaptures each time he comes to a stop. He's driven more than 1,600 miles and filled up only twice.
The C-Max plug-in is one of a new breed of small, energy-efficient wagons with seating for five and versatile cargo space. It also comes as a traditional hybrid ($25,995). The Prius v hybrid ($27,445) and Volkswagen Jetta SportWagen diesel ($26,335) are other models that offer an alternative to small crossovers. Traditional hybrids and diesels of all sizes will help the automakers' fuel-economy cause, and more models are coming -- more than 40 new hybrids are slated to arrive by 2015. But vehicles with internal-combustion engines will still represent the biggest slice of sales, and automakers are borrowing technology from hybrids and diesels to boost fuel economy.
Automakers are continuing to make strides in quality and safety. J.D. Power found the most improvement in three years in its 2012 Initial Quality Survey. Models from Lexus, Jaguar, Porsche, Cadillac and Honda topped the charts.
Safety is also improving with each new model year. Virtually every vehicle has six airbags standard (front, front-side and head); we award extra points to those that add rear-side and front-knee airbags as standard or optional equipment. Extra points also go to vehicles that earn an overall five-star rating in government crash tests or a Top Safety Pick designation from the Insurance Institute for Highway Safety. The list of IIHS Top Safety Picks grew from 115 last year to 130 this year. IIHS added a new "small overlap" test to simulate a crash into a tree or telephone pole. Only midsize models were subjected to this new test; the ones that scored well were awarded the designation of Top Safety Pick Plus. The list of honorees includes the redesigned Ford Fusion, Honda Accord and Nissan Altima sedans.
Active safety features, such as forward collision warning, which measures the distance between your vehicle and the vehicle ahead of you and warns you if you're closing the gap too quickly, have been shown to reduce crashes and are trickling down from luxury cars to more large-volume models. Rearview cameras are standard on half of the 2013 models, according to Edmunds.
Striking a Deal
Average transaction prices hit a record high of $31,228 at year-end-up $542 from the previous year. Some of the increase can be traced to pricey options, such as infotainment systems, and some is due to carmakers' retreat from cash rebates in a robust sales environment. (Notable exceptions are large trucks and SUVs, which still come with $3,000 cash back.)
Credit is cheap, however, so you'll find plenty of financing deals. Bankrate.com pegs the average rate for 60-month loans at 4.24% at banks and 4.06% at credit unions. Automakers are offering 0% on many models, and rates of 2% to 3% on others. In November, 60-month auto loans averaged 2.53% from all sources, according to Edmunds.com.
Leases aren't just for luxury cars anymore. Leasing is expected to account for nearly 30% of new-car transactions in 2013, and mainstream automakers, such as Honda and Toyota, are offering stellar deals on models at all prices. Even costly EVs, such as the Nissan Leaf and the Chevrolet Volt, are quietly being leased for less. Check for deals at www.edmunds.com/car-incentives.
Before you set foot on a dealer's lot, do your research on how much others are paying, and don't forget to factor in your trade. At TrueCar.com, which supplies data for our tables, you can compare new-car pricing and incentives, and a price report will show the vehicle's current average transaction price, as well as a target price and how it compares with the sticker price. To find average transaction prices for your trade-in, go to Edmunds.com and use the Appraise Your Car tool. Used cars are still in short supply, so values are high and dealers are eager to get their hands on recent models. "You have more bargaining power than ever before," says Rebecca Lindland, of IHS Automotive, a forecasting and analytics consultancy.
If you find negotiating with a dealer as appealing as getting a colonoscopy, try a buying service. TrueCar offers no-haggle prices through dealer partners on its Web site. But you'll likely end up with a better deal using CarBargains, the service of nonprofit Consumers' Checkbook. For $200, CarBargains will haggle for you, and you'll receive bids from five local dealers.