2010 Cars: Where the Deals Are

The 2010 model year brings with it a breath of fresh air. There is life yet in Detroit, and Ford in particular. The only carmaker among the big three to avoid bankruptcy is poised to lead U.S. automakers into a new decade of reduced production and (they hope) consistent profits. Redesigned models, including many hybrids and clean diesels, are gracing showroom floors and represent the best products ever in every segment, says Erich Merkle, president of Autoconomy, an automotive-analysis firm.

As for Toyota’s recall fiasco, Kiplinger’s believes once the safety fixes are in place and the media attention dies down, long-term resale values—a key component of our rankings—will rebound. In the meantime, prices have softened for Toyotas while the recalled vehicles are being repaired. That’s creating good bargains, in our view. For a full explanation, see "Should You Buy A Toyota?"

It’s a relief to be looking in the rearview mirror at one of the worst years ever in the auto industry. Sales hit their lowest level since 1970 -- when the U.S. had 70 million fewer people -- as the jobless rate soared, consumer confidence plummeted, and lenders became stingy. Not even the largest manufacturer incentives ever, an average of $3,165 per vehicle sold in March 2009, could lure buyers back.

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But as the year progressed, there were signs of hope on the horizon. The “cash for clunkers” program helped boost sales last summer. The stock market was up -- a leading indicator for new-car sales -- the recession was declared over, and buyers finally began reaching for their wallets.

If you’re in the market for a new car, our annual buyer’s guide gives you the tools to choose a vehicle and negotiate a fair price. We start by sorting the 2010 models by price and category; then we rank them for performance, value, safety, roominess and our driving impressions (see our guide for more details). In the tables, you’ll find the top 25 vehicles in each category, as well as our picks for Best New and Best in Class models. This year we also spotlight five vehicles in each category that score high enough to be in serious contention for our top accolades. We label them “worth a look” in the tables. Search and sort complete data on more than a thousand 2010 cars and SUVs.

Deal or no deal?

General Motors, Chrysler and Ford collectively offered the heftiest incentives in 2009. But in 2010 they and most other carmakers are trying to wean buyers off the incentive addiction. The Detroit Three are doing a better job of adjusting production to demand. If they don’t overbuild, they don’t need to offer such large incentives to spur sales.

The low-rate and 0% financing offers of the past few years won’t go away anytime soon. But carmakers are cutting back on cash rebates. Average transaction prices grew 5% in the last quarter of 2009 compared with the first quarter, a trend that will continue as dealers clear out the 2009 models and make way for the 2010s. As production adjusts to demand, prices will be less negotiable, says Jesse Toprak, of TrueCar, an automotive-data company that tracks transaction prices.

Nevertheless, if you haggle, there’s no reason you can’t come close to invoice. When we asked CarBargains, the buying service of the nonprofit Consumers’ Checkbook organization, to shop for our Best New Cars, they found two-thirds of our picks below invoice (the dealer cost). Most carmakers will be ramping up production in the first quarter, and if sales don’t match up, we could see the return of cash-back offers, says Jeff Schuster, of J.D. Power and Associates. His advice for deal hunters: Wait until the spring thaw to see whether incentives start flowing again.

More for your money

One heartening trend for the 2010 model year is reduced sticker prices on redesigned models. From the ninth-generation Mercedes-Benz E-class sedan to the Lexus RX and Chevrolet Equinox crossovers, manufacturers have added more standard features and reduced prices. Others are holding the line. For example, Ford’s redesigned 2010 Taurus has the same starting price as the 2009 model.

Technology and safety features have continued to trickle down from the luxury level to even the cheapest rides. Stability control is standard on 51% of vehicles in our Under-$20,000 category, up from only 18% last year (stability control must be standard on every vehicle by 2012). According to the Insurance Institute for Highway Safety (IIHS), for the 2010 model year, 85% of cars and 100% of SUVs have standard stability control.

The IIHS amped up its criteria for its Top Safety Pick awards this year, adding a rigorous roof-strength test. That makes this year’s list of picks the safest ever, but it trims last year’s record 94 models to just 27.

What’s more, quality has become a standard feature, even among Detroit’s products. “Today, you need to have world-class quality to be in the marketplace,” says Schuster. “It’s the price of entry.” According to J.D. Power’s 2009 Vehicle Dependability Study, which surveys owners of three-year-old models, the industry average of reported problems improved 17% over 2008, to 170 problems per 100 vehicles. For the first time in 15 years, a domestic brand ties for the top spot. Buick ties Jaguar, and Lexus, Toyota and Mercury round out the top five.

Five Toyota models get top honors in our rankings, which were prepared before the announcement of Toyota’s massive safety recalls. The vehicles we like are the Prius for Best New Model, as well as Most Fuel-Efficient and Best Resale Value; the Matrix in the category of Best Resale Value, the Yaris for Most Fuel-Efficient, and the Highlander and the Sienna, both for Best in Class in the SUV and minivan categories. All the 2010 Toyota models have been recalled, except for the Yaris and Sienna.

Reports that Toyota was aware of the problems and stayed mum, prompting a public apology from Toyota president Akio Toyoda, have shaken customer loyalty. But once any problems with these vehicles have been resolved, Kiplinger’s believes they will hold their traditionally strong resale value, and still merit a close look. For more, click here.

Should you buy domestic? GM and Chrysler had to dip into federal coffers, but the wake-up call resulted in leaner, more nimble companies. GM is selling its Hummer division and dropping underperformers Saturn, Pontiac and Saab. Chrysler’s merger with Fiat trimmed some fat and will bring a North American–built Fiat 500 to production next year. Ford maintained its sales numbers with bestsellers the F-150 and Fusion (joined by a hybrid version this year).

Quality among the domestics matched or exceeded foreign counterparts, with four Detroit brands in the top ten of J.D. Power’s survey. There’s little risk in buying from the big three -- even from a shuttered brand. GM will honor the warranties of Saturn, Pontiac and Saab and service them at other dealerships, and after-market companies will still manufacture parts. Deep discounts accompany the dying nameplates. For example, if you can still find a 2009 Saturn Aura, it topped TrueCar’s list of markdowns at 24% below sticker.

Leaner and greener

The 2010 model year brings the greenest cars yet. Later this year, Nissan will introduce the first all-electric mass-production vehicle, the Leaf. Two highly anticipated plug-in hybrids -- Chevrolet’s Volt and, from a promising start-up, the Fisker Karma sports sedan -- also make their debut. Six all-new hybrids, plus the next-generation Toyota Prius and Lexus RX 450h, bring the number of hybrids available in the U.S. to 25. Even the Germans hopped on board with BMW’s ActiveHybrid X6 and Mercedes-Benz’s S400 hybrid. Two more clean diesels were added to the mix, bringing their tally to a baker’s dozen. All told, there are nearly 40 green choices for 2010, and more than half of them qualify for tax incentives. (Hybrids from Honda and Toyota no longer qualify for a federal credit; Ford’s credits phase out on March 31.)

With a $1,700 tax credit on the way, Roger Carter of Raleigh, N.C., couldn’t be more pleased with his Ford Fusion hybrid. He and his wife, Leigh Anne, have owned four Fords, so trading in an aging BMW 7-series for the Fusion was an easy choice. He likes the size -- “not too big, not too small” -- plus the styling and fuel efficiency. Although he says he’s “not a tree hugger,” Carter wanted to do his part to help the environment but wanted a car he’d enjoy driving as well. “It’s quick to accelerate and very responsive,” he says.

While fuel-efficient compact cars enjoyed a brief boost during the “cash for clunkers” program, their share of the market declined throughout 2009 as gas prices stayed below $3 a gallon. Midsize sedans and crossovers were the market’s sweet spot, together capturing 40% of sales. Kiplinger forecasts that fuel prices in 2010 will remain in check, so buyers will likely continue this trend.

Best of the new sedans

Our tables list the best vehicles in ten categories based on Ki;inger's ranking system.

In the Under-$20,000 category, the redesigned Volkswagen Golf sweeps top honors, winning both Best New Car and Best in Class. Its zippy five-cylinder engine puts out 170 horsepower and the most torque in this class (but manages 30 mpg on the highway), and the Golf comes with all the safety features we look for standard. Plus, it’s an IIHS top safety pick.

VW continues its roll in the $20,000-to-$25,000 category, taking Best in Class with the Volkswagen Jetta TDI. New last year, the diesel Jetta continues to impress with classic German handling and good looks. It also boasts high resale value, low annual fuel cost and top safety pick honors. The Toyota Prius blows the competition away for Best New Car. The popular hybrid has been redesigned from top to bottom. It now gets even better mileage (50 mpg combined), and its cargo space has grown to a generous 21.6 cubic feet.

In the $25,000-to-$30,000 category, Best in Class honors go to the Honda Accord EX V6 for the third year in a row. Honda’s bestseller is renowned for reliability, and the V6 is powerful yet thrifty -- it puts out 271 horses but returns just under 30 mpg on the highway. The redesigned Subaru Legacy wins Best New Car. The Legacy features compelling design inside and out, plus Subaru’s always-standard all-wheel drive, and it’s a top safety pick.

In the entry-level-luxury segment, our $30,000-to-$45,000 category, the BMW 335d wins Best in Class, with BMW driving dynamics, power and diesel fuel efficiency. Best New Car goes to the Ford Taurus SHO. An elegant redesign gives the Taurus a spacious interior, comfy seating and smart handling. The SHO trim adds Ford’s new EcoBoost engine, which delivers 365 horsepower and 25 mpg on the highway. It’s also a top safety pick.

In $45,000 and Over, the Lexus LS 460 reigns as the Best in Class winner, with power, performance and loads of luxury at a value price. It also wins Best Resale plaudits. Best New Car goes to the Mercedes-Benz E550 sedan. It boasts improved fuel efficiency and safety with nine standard airbags and standard Attention Assist, which monitors driver behavior and gently reminds you when to take a break.

Best of the rest

Best in Class honors in Sports Cars goes to Porsche for a second year in a row -- but this year, the Porsche Cayman edges out the Carrera 911. Plenty of raw power mixes with surprisingly good mileage -- 29 mpg on the highway -- and a restrained price. Best New Car goes to the most highly anticipated car of the year, the Chevrolet Camaro SS. Retro design recalls the pony car’s roots, the growling V8 puts out 426 horses, and the car’s resale value is 62% after three years.

The Honda CR-V takes the Best in Class award for Small Crossovers for its efficient four-cylinder engine and high resale value. Best New Small Crossover goes to the Hyundai Tucson. Great handling, quality materials and a unique new look complement Hyundai’s bevy of standard safety features and ten-year warranty.

Among Large and Midsize Crossovers, the Toyota Highlander V6 wins Best in Class. It boasts a starting price under $30,000, plus a solid blend of reliability, safety and efficiency. The Lexus RX 350 receives a redesign and wins Best New Crossover this year. It features improved handling, better mileage and more cargo space.

The Toyota Sienna takes the Best in Class minivan designation, with low annual fuel costs and high resale values. A starting price that’s two grand less than the Honda Odyssey doesn’t hurt, either. In wagons, a bigger, bolder and better Subaru Outback wins both Best in Class and Best New Wagon plaudits. It boasts sharp new styling and more headroom, rear legroom and cargo space than the previous generation, plus crisp handling.

This is an updated version of the story that appears in the March 2010 issue of Kiplinger's Personal Finance magazine.