The New Car Deals Are Piling Up — But Do You Care?
BusinessWeek did a little math and discovered that if you lined up all the new financing deals, tax incentives and discounts — a new car might actually be cheaper than a late model used one. But do you care?
From BusinessWeek:
"This is a terrific time to buy a new vehicle," says Jack Nerad, executive market analyst at Kelley Blue Book. The market favors buyers so much that, with financing rates factored in, some new models are less expensive than year-old, used versions of the same car, according to an analysis by car-buying site Edmunds.com. A back-of-the envelope calculation finds that a Chevrolet Malibu with a $25,000 list price could effectively sell for about $10,000 less if all of the proposed incentives are put in place.
That's cheap, but is it cheap enough?
As Auto Deals Add Up, Will Buyers Bite? [BusinessWeek]
(Photo:mike-wise)
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Comments:
I'd love to buy a new car now, but I honestly don't want the stress of haggling. Most dealers aren't really throwing out deals that look that great, and I get the feeling you aren't going to get deals like 10k off of 25k unless you have a battle of the wills for 3 hours with the finance manager. Most deals I see now are more like "2k off of 18k or 2.9% financing for 60 months". Whoopdedoo.
here's a question that I posed to some folks, one of whom works in the automotive industry...
Where is the notion that you won't buy from a company in bankruptcy coming from, other than "well, that's just common sense"? Is there any precedent for this?
Fixing up my jacked-up mustang would still be thousands cheaper than buying a new car. If I need a new set of wheels,I'm gonna plunk down for a bicycle. Thanks but no thanks.
Unless I could get them to take what I owe on my car as a trade-in, and get a killer deal, no way. I like my car but *gasp* I really miss having an SUV. Try hauling around a bunch of musical equipment and 3 dogs in a couple...
@Oranges w/ Cheese: But does your friend live in a state that requires annual inspections? Because if he does, and his car really is "barely running," he might be much better off getting a new car and donating/selling the old one. A friend of mine had a car that was doing more than just barely running, but it couldn't pass state inspection without several thousand dollars in repairs, and it was more cost-effective to get a new car then to try to fix the old one. And, frankly, if he's looking at replacing the clunker sometime in the next couple of years, he might be better off buying now, when deals are awesome, than trying to wring more life out of the clunker.
If you don't have money or a job, you're not buying a new car.
Most people I know with jobs are seeing everyone else get laid off and they're postponing major purchases and saving their dough. I don't know anyone making any big moves right now.
But that's just the people I know...
I just bought a brand new car in October (my first one ever), and now seeing all the incentives and deals, I wish I had held out longer. My previous car needed over $2000 in engine repairs, so I figured it was as good a time an any to buy. Grr, always my luck :(
@dtmoore: Many dealerships will take a car with money owed as a trade-in... they'll just subtlety add the remaining balance onto that of your new loan.. so you're technically paying for two cars! Yay!
@raleel: I think the only one I can think of is the airlines. People didn't stop flying American or United whole-heartedly when they were in bankruptcy.
I haven't seen any new cars that are actually cheaper than the used cars I'm looking at.
@Oranges w/ Cheese: " is barely running"
What happens when "barely running" turns into "dead on the side of the road", though? I understand wanting to get as much use from a car as possible, but "barely running" to me means "will die soon and then I'll be screwed and it will cost me more in the long run."
No matter how Obama helps out GM and Chrysler I am still not a fan of "American" cars. They really do not compare to the rest of the world.
I can't afford a new or used car at the moment, so it doesn't hurt me. Though, I wouldn't mind being able to get a new car. My 1994 Sable is pissing me off and I want it gone. But, what can you do with two childre, a 2 year old and a 3 month old? Meh.
@raleel: precedent? As in, is there evidence that buying from a company entering bankruptcy or about to enter bankruptcy is a bad idea? Well, yes. Ask the folks who got Circuit City gift cards and then couldn't use them after the company went belly-up. That's kind of an apples-to-oranges comparison, but the idea is that, for some things, you need the company to keep existing in order to get full value from your purchase, and the concern with the auto companies is that warranties on new cars from GM and Chrysler will be worth $0 if they enter bankruptcy, which will negatively impact the consumer's total cost of ownership. But the feds are now talking about covering the warranties on new cars to mitigate that concern, so maybe it's moot.
My wife has been wanting a new car for quite some time now but it is difficult to justify when both of our employers keep announcing lower and lower customer demand each month. I don't want one of those "we will make your car payment if you get laid off schemes". I've been laid off before and it is stressful enough without trying to struggling against the fine print that must exist to cash in on one of those deals.
@raleel:
The reason people are reluctant to buy cars from companies in bankruptcy is because if the company ends up liquidating, then they don't have anyone to honor the warranty, and resale value is going to plummet if your car is an "orphan".
With airlines or other service industries, bankruptcy isn't as big a deal - as long as they are running the day you fly, it's not a big deal. With a manufacturer of durable goods like a car, it's important that they be around for the next few years.
Well, our ten year old Accord died last month (curse you, sodium chloride!), and we actually needed a new car. Since Toyota was offering $1200 rebates (it went up to $1250 this month) on new 2009 Corollas, we figured it was a better deal than a certified used car of the same model/year. So unless Fast Eddie is willing to part with said used 2009 Corolla for, oh, twelve grand (fat chance), I said we did the best thing.
It's gotta suck to be the used car guy at a new car dealership right now.
Yeah, but it's a Chevy Malibu, BusinessWeek.
I would care a lot more if I had a job...
And how about when state inspections time comes? Is it worth it to put $1-2k into fixing the car OR put that as a downpayment toward a new, incentive-full car? Things to consider
I really, really, really want a new 2010 Camaro 2SS with 6spd manual and 426HP!!!!!!!
Yellow with black racing stripes!!!!
I hope GM can hold out till this summer/fall when I plan on buying one.
@raleel:
I would be happy to buy from a bankrupt auto company. The extended warranties are most likely from a 3rd party and there will be plenty of parts available. Most likely there will be plenty of companies making aftermarket parts for years and when that business is done the parts will be available at the junkyard. The only problem I see is lower resale value but if you don't want to sell the car you will be fine.
I need a new car but just got a new job after about 6 months of unemployment. Getting a loan is near impossible even with a good chunk of money down. The used cars aren't much better.
@raleel: Well, there's resale value which for Oldsmobile did fall faster than similar models from other brands. Yet, those cars were still covered under warranty by GM. It's likely that GM isn't going to disappear completely even if bankruptcy happens. So a Saturn or Hummer will likely still be covered.
Madanthony is also wrong: The govt is now backing warranties from both companies so even if Chrysler liquidates you'll be able to get your new Challenger serviced under warranty. It might be a third party doing it, and it might be more of a pain in the arse, but it still should be covered no matter what.
I was planning on buying a used car in the next 12 months to replace my vehicle which is currently at 110K mileage.
Yes, I am now thinking of going new because of the incentives.
@serracloud: Paid off my pony car- 2000 Mustang, 6 cylinder. I could upgrade to leather seats or something, if I really felt the need. Maybe some bling wheels. It runs great, and I like it. Why jump into more payments? I'll probably just wash it and keep driving it.
Now, I did drop some coin on a new bike- Carbon Fiber Lapierre with a SRAM Force group. However, "now" is always a good time for a new bike!
@raleel: Well, the precedents are all *positive*. Lots of companies have gone bankrupt or pulled out of the market. Fiat the last time, for example. Or AMC. Renault.
@missi1226: Cheer up! As one of the earlier posters ("Saboth") said, don't believe what you read about the value of current deals actually being written.
In the end, you probably got as good a deal as anyone wanting that same car right now.
@serracloud: There's some dealer out of TX offering new 09 Mustangs for under $15,000. I would so jump on this if I had the cash :(
@nakedscience: Yeah there's a lot to account for when you need reliability. If I get stuck on the side of the highway during rush hour - no one's coming to get me out of that mess without sitting in an hour of rush hour traffic themselves. I'd rather feel safe that I'm in a reliable vehicle.
@Saboth: Outsource the haggling. Find a friend (a really good friend) who just has a way with people. You know the type. He/she will haggle well.
@LegoMan322: While they quoted the price of a Malibu, I think this is a general condition across the brands and not specific to American cars. A friend of mine got a smoking deal on new Hyundai Sonata (fully tricked out) yesterday. A little under $20k for a car that lists for about $28k.
Give me the bottom line in cash and I will buy. Enough of the financing deals and all the other debt pusher bullshit.
Mostly I don't want a new car because the car I want isn't in the North American market yet (Fiesta 4 door).
@Saboth: Haggle by e-mail. If you have lots of local dealerships, you'll find several willing to deal that way.
I have resolved that after I pay off my car I will never have a car payment again.
The goal is to save enough each month that when I do need a new car, I can buy it with cash.
Going to take several years to pull that off, but it will be well worth it.
@pecan 3.14159265: Exactly. No a/c? That's fine. But "barely running" to me means "time to get a new car" (if one can afford it, of course).
@pecan 3.14159265: A good friend of mine used to be a cars salesman. Guess who I'm callin' up when I need a good haggler? LOL
My car is 16 years old. If it dies (probably of rust if anything, as it only has 93,000 miles on it), I will seriously look at these new car incentives before I inevitably buy another $1500 beater off Craigslist and run it into the ground as well.
I'm happy with my Honda Civic hybrid, which is a good thing as I'm still paying for it. Even if I weren't, I can't handle another car payment and there are no American-made hybrids yet anyway. If it's not a hybrid, I'll pass for now.
Our other car is a Grand Caravan that is only used to haul our dogs (in crates) or groceries home from the store. Other than that, we don't drive it much anymore. We probably won't replace it when it finally dies.
These deals are pretty tempting, but right now I'm hunkering down until the financial storm passes. I'm simultaneously adding to an emergency fund, paying down credit cards, and trying to save enough to do some renovations to my house. I'd really like to capitalize on the "fire-sale" prices some of the contractors in my area are offering since they aren't building anything new right now.
I can keep my four-year-old car and eleven-year-old truck on the road just little longer...gotta take the long view...
@balthisar: I'm with you - the car I want hasn't appeared on the East coast yet. As soon as the gas/electric hybrid Aptera appears on the market in DC, I'm getting one.
Dealers are always pushing "savings" by comparing the sell price with the MSRP or list price. That's not really helpful IMO, since no one pays MSRP for a car these days anyway, right? The more important point is that the car's "value" is really only what someone is willing to pay for it.
@pecan 3.14159265: Yeah, I cheer on thrift until thrift results in a car breaking down on the center lane of the highway at 8:00am and makes me late for work. Thrift can die in a fire at that point.
I have a car, that I *just* paid off. And it works. Why buy a new one NOW?
Also, my friend has a car that doesn't have AC any more, is barely running - but since he isn't actively repairing anything on it, his operating cost is pretty much only gas and regular oil changes. So, even though his car is a piece of junk, will he be buying a new car any time soon? No.