If you've been thinking about buying a new car, you may not want to wait much longer. Since the begining of 2010, with few exceptions, car makers have been spending less on incentives than they did in 2009. That year, automakers had more cars than they could sell, leading to some deep discounts for buyers. Now, car companies have gotten better at managing their inventories.
Since oversupply isn't as much of a problem, automakers have been spending less on incentives. Average incentives and discounts have been declining all year and most analysts see the trend continuing. If you anticipate needing a new car in the near future, putting off the purchase could mean that you'll end up paying more than if you bought today.
Prices Rising Soon
TrueCar studies the prices Americans pay for cars -- not what manufacturers print on the sticker, but the final transaction price consumers actually pay. The company has tracked a decline in transaction prices for virtually all segments of the market in 2009, but that trend is largely over. For much of 2010, Truecar reports that car makers are spending less on incentives than the did in 2009. That means that the prices buyers end up playing are higher than they were in 2009 -- and some analysts expect prices to continue to edge up as model-year clearance sales end this fall.
Editor's note: You can find TrueCar prices on this website. Use the Find a Car tool in the upper right of this page to go to a vehicle's homepage, then click on the Prices tab.
Too Many Cars...But Not For Long
Americans bought more than 16 million shiny new cars in 2007. In 2008, as the market sank, we bought just over 13 million. This year, industry analysts say, we may buy fewer than 11 million new cars.
The auto industry, however, simply built more cars in 2009 than recession-weary Americans have been prepared to buy. The sales frenzy triggered by the Cash for Clunkers program and long summer shutdowns at many factories have helped to correct the problem somewhat. But now, car companies have gotten better at managing inventories, keeping stock more in line with demand. That means higher prices.
Those interested in a large car, a truck or an SUV will find the best selection. But even buyers looking for a fuel-efficient small car might want to move quickly. While gas-sipping models have sold well in recent months, Toprak notes, manufacturers aren't likely to overbuild and end up with another glut of new cars anytime soon. Waiting won't do anything but send you in to negotiate with a dealership that doesn't need your business as badly as they do today. "They're learning lessons in how to optimize inventory," TrueCar's Toprak says. "They got themselves into trouble with oversupply," but "they're learning how to avoid that problem in the future."
[See the Best Car Deals available this month]
When you have too many cars to sell, and recession-battered consumers aren't buying, how do you lure them back into showrooms? With aggressive rebates and incentives. Virtually every automaker made it through 2009 by offering hefty cash-back rebates and interest-free financing. Several foreign automakers began offering aggressive lease deals. These are trends, Truecar says, that have largely ended.
Most of the attractive deals offered today are on 2010 models. But since cash-strapped automakers haven't done many significant redesigns, in many cases those 2010 cars are virtually identical to the more expensive 2011s that have begun arriving at local dealerships. But the 2010 models are more heavily discounted because dealerships need to move them to make room for the 2011s. Still, compared to the glut of 2009 models they had last year, car makers have fewer 2010s to get rid of -- which means incentives just aren't as good as they were last year, and they aren't likely to get any better.
Looking Beyond the Usual Suspects
You might also want to consider a car from a manufacturer you dismissed in earlier years. While buyers concerned about resale value might have gravitated toward Honda and Toyota dealerships in years past, Toprak notes, the improving reputations of some other automakers make that a less significant concern today. "We're going to see continued improvements in Ford and GM resale values," Toprak says. The companies "are sending fewer cars to fleet and rental sales, which has a huge impact on the resale value of domestic cars." Plus, with extensive recalls, Toyota's reputation has taken a beating in recent months.
Chrysler, he notes, still has yet to prove its long-term stability to many observers, and TrueCar doesn't project an improvement in the resale value of most Chrysler products anytime soon. Industry observers believe Hyundai has also made strides in improving its reputation during the recession, and could prove a better long-term value than in the past.
[If you're in the market for a new car, be sure to Get Price Quotes From Multiple Dealers Near You to make sure you get the best deal in your local area.]