Cars
The Best of the 2007 Cars
Which of the almost 500 models is perfect for you?
By Mark Solheim, Senior Editor
From Kiplinger's Personal Finance magazine, December 2006
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What's hot, what's not? As the 2007 models roll into dealers' showrooms, it's a mixed bag. Carmakers are hedging their bets, trying to appeal to as many niches as possible, with the more than 60 new or redesigned models for 2007 spread all over the size, shape and power spectrum. In this market, says Jeff Schuster, executive director of global forecasting for J.D. Power and Associates, "there aren't really any significant standouts."
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Kiplinger's 2007 Auto Buyer's Guide | ||
That's where our annual buyer's guide comes in. Featured in the December issue of Kiplinger's Personal Finance, it helps you zero in on the vehicle for you. We evaluated nearly 500 new models and selected winners in various price categories. We pulled together our top picks into an ONLINE GALLERY. You'll find sticker and dealer prices, projected resale values, plus what you'll pay to insure and service each of our favorite vehicles.
You'll also find Kelley Blue Book's new-car transaction price and estimated fuel costs. Our prediction for the year ahead -- barring a global catastrophe -- is based on an average of $2.40 a gallon for regular and $2.60 for premium.
Sizing up the market
Car prices are higher this year than last. A year ago the average transaction price for a new vehicle -- what you pay after rebates and haggling -- was $26,140. This year it's $26,930, reports Power Information Network. The $800 hike is a result of more Asian vehicles being sold without incentives and more sales of higher-priced vehicles, such as the Cadillac Escalade and Mercedes-Benz S-Class. It also reflects Detroit automakers' efforts to stop throwing cash rebates at customers to clear inventory. GM, in particular, has promoted "value pricing," reducing the sticker prices of many models so they're closer to the transaction prices.
Even so, as end-of-model-year inventory piled up, incentives grew. In the latest tally, the average cash rebate offered by Detroit carmakers topped $2,600. For European vehicles, it was $2,100, and for Asian vehicles, less than $1,800. Detroit was offering up to $6,000 cash back on 2006 large SUVs and pickups. The most popular incentive as the '07 models roll in is 0% financing, being offered mostly on Detroit vehicles that have been slow to leave showrooms. That's been an effective come-on in a year when car-loan rates are stuck around 7%.
One other bit of good news: Don't worry about prices going up as the model year continues. For most high-volume models, carmakers are facing too much competition to be able to sneak in midyear price increases, says Tom Libby, director of industry analysis at Power Information Network.
So the hot spot for bargain hunters is Detroit. Yes, Motor City is downsizing, but don't be scared off by the headlines. And don't be quick to dismiss Detroit automakers because you have the impression that they churn out lower-quality vehicles than European and Asian carmakers. Domestic vehicle quality isn't so bad anymore. In J.D. Power's latest three-year dependability study, Lexus tops the list (as usual), but Mercury, Buick and Cadillac are close behind, and Lincoln and Ford rank above the industry average.
The real problem with domestic cars is the ho-hum factor. Says Erich Merkle, director of forecasting for IRN, an automotive-industry consulting firm: "People want to be seen in their car. A car is conspicuously consumed, and there's an entertainment value." Ford is saddled with gas-guzzling trucks and plain-vanilla cars, such as the Five Hundred. Chrysler and Dodge are also truck-heavy, and their big hits, the 300 and the Charger, are now dated. Plus, the domestic carmakers have been slow to join the crossover parade.
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HIRE A HAGGLER | |||
Hassle-free buyingHate playing games at the dealer? Why not let a professional car shopper strike a deal for you? Kiplinger's Personal Finance has teamed up with CarBargains, the buying service of the nonprofit Consumers' Checkbook organization, to make it easier for you to take advantage of the service. You tell us the make, model and style of the car you want and CarBargains will solicit bids from at least five dealers in your area. You'll receive a copy of each bid and the name of a contact at the dealership. The service costs $190. A similar service for leasing, called LeaseWise, costs $335. For more information, plus how to find out about the latest incentives, visit kiplinger.com/links/carbargains or call 800-475-7283. | |||
Few would have guessed it six months ago, but GM is Detroit's bright spot. America's largest carmaker scored with its big new SUVs. It sells two sexy, value-priced roadsters (Pontiac Solstice and Saturn Sky). And its Saturn division is once again kicking tailpipe: The Saturn Aura wins a Kiplinger's Best New Car plaudit. Saturn's new large crossover, the Outlook, is at dealers, and large crossovers from GMC and Buick are also on the way. To boost consumer confidence, GM recently took a page from the Korean carmakers' playbook, extending its powertrain warranty to five years or 100,000 miles. Ford also extended its powertrain warranty to five years or 60,000 miles.
Nevertheless, the ascendancy of Toyota and other Asian carmakers can't be denied. They've done a better job at predicting buyers' preferences, so they offer more vehicles that people want to buy than domestic carmakers do. Toyota, along with its Lexus and Scion nameplates, may soon overtake GM as the world's biggest carmaker. Toyota also has more Kiplinger's winners than any of its competitors.
No matter which continent's cars you're shopping, as the year draws to a close, expect more deals. They will come in a trifecta of cash rebates, low-interest financing and leasing offers. For example, to move inventory by New Year's Day, Asian and European carmakers often offer subsidized leases as well as dealer cash. That's money from the carmakers that dealers can -- but don't have to -- pass on to you. (CarBargains offers a list of incentives as well as a vehicle-shopping service; see the box at right.)