The 2009 Cars: Deals Are Insane

Turmoil in the industry could mean a terrific bargain for you.

By Mark Solheim, Senior Editor

From Kiplinger's Personal Finance magazine, March 2009

Auto sales in 2008 were the worst in 16 years, and this year could be even grimmer. Dealers desperate to move inventory off clogged lots are entertaining the lowest of low-ball offers. Add in generous cash rebates and low-interest financing -- at least, for the most creditworthy customers -- and screaming bargains abound.

SPECIAL: 2009 CARS
	SLIDE SHOWS: Best Cars for 2009
	TOOL: Compare More Than 1,000 New Models
	PLUS: Green Machines Coming Our Way
	Behind Our 2009 Car Rankings
	MORE: Kiplinger's Car Buying Guide

Incentives recently averaged $2,900 per vehicle, or 18% higher than a year ago,according to Edmunds.com. No surprise that carmakers were most generous with gas guzzlers: Incentives for luxury cars averaged $6,600 per vehicle; trucks were also a steal, with $5,400 givebacks. Even the most coveted cars are selling at fire-sale prices. When we asked CarBargains, the buying service of the nonprofit Consumers' Checkbook organization, to shop for our 11 Best New Cars, they found nine of them for less than invoice (the dealer cost).

If you're in the market for new wheels, our annual buyer's guide gives you the tools to choose a vehicle and negotiate a fair price. We start by sorting the hundreds of 2009 models by price and category; then we rank them for performance, value, safety, roominess and our driving impressions.

BLOOD IN THE SHOWROOMS
Detroit is bearing the brunt of the slump, but things are tough all over. Toyota, the most bulletproof of carmakers, announced its first operating loss in 70 years. Sales of German and Asian luxury cars, which are linked to a strong stock market, have sunk along with the Dow.

But to paraphrase Baron Rothschild, the time to buy a new car is when there's blood in the showrooms. The average transaction price dropped throughout 2008, reports Power Information Network, ending the year at $26,690, or $810 less than a year ago. With the federal funds rate hovering near zero, money for auto loans is cheap. Banks are still charging more than 6%, but credit unions offer better deals. Plus, foreign carmakers have lots of money to lend, and zero-percent-interest offers are plentiful.

One argument for buying soon is that the best deals may go away later in the year. Carmakers are reducing production and dealers are slowly but surely reducing inventories, so by midyear there should be less of a glut.

IT'S ALL ABOUT MPG
When gas hit $4 a gallon last summer, Americans finally seemed to grasp the problem of unbridled use of fossil fuels. Those high prices changed the sales dynamic, and cars overtook trucks (which include not only pickups but also truck-based SUVs, crossovers and minivans).

While car sales skidded 11% in 2008, truck sales crashed by 25%. Compared with the bloodbath in large vehicles, subcompact- and compact-car sales stayed relatively strong: Subcompacts gained 21%, and compacts dropped just 4%. Plus, more buyers chose thrifty four-cylinder engines over six-cylinders.

Incentives and cut-rate financing are running more or less inverse to the fuel-efficiency of a vehicle. Last November, Kelley and Paul Newman of Indianapolis discovered that the dealer wouldn't budge on the sticker price of one of the hottest vehicles of the year, the Honda Fit.

The Fit, which gets 33 miles per gallon on the highway, is a utilitarian yet sporty subcompact (it wins Best New Car in our Under $20,000 category). The Newmans paid the manufacturer's suggested retail price, $17,780, for the Sport model, minus $1,000 for the trade-in of Paul's ten-year-old Honda Accord, which had 220,000 miles on it and needed a few repairs. "We're a Honda family," says Kelley, "and fuel-efficiency was high on our list."

But Bill Cormicle of Flint, Mich., got a sweet deal on his new Saturn Vue, a model that was piling up on dealer lots. Cormicle was replacing a GMC Sonoma pickup and needed enough space to carry five people plus haul stuff in the back. He had been eyeing the new Vue hybrid, but when GM delayed production of that model, he chose the 2008 four-cylinder Vue (sticker price, $22,380; highway mileage, 26 mpg).

Because Cormicle's dad worked for GM, he qualified for the employee discount, which knocked 10% off the sticker price. "But dealers were giving that discount to everyone," says Cormicle. "So my dealer took another $500 off the price." The final cost: $20,028.

1 |
• 2
|
• 3
• NEXT >

• Print
• Comments
• Email
• RSS

Reader Comments (14)