Car buying after "cash for clunkers"

[wrigley]

How long do think it will be before auto manufacturers discount their new vehicles "big time" to entice new car sales again? Cash For Clunkers sold an estimated 690,000 new cars in a months time. I have to believe the auto industry is dreading the next few months ahead!

Mike

 

[Westernskies]

 

[wrigley]

I've been to that fine watering hole establishment in Key West!

Mike

 

[W2R]

I don't know how long it will take before outstandingly good deals are available on new cars again. I am going to wait at least six months.

But then, during the recession manufacturers must have planned to cut back on production. It only makes sense. If so, the results of that cutback should be showing up pretty soon, I would think. With little in the way of excesses to sell off, we may be out of luck in looking for an unusually good deal on a new car.

To make a long story short, my (completely wild) guess is next summer?

 

[wrigley]

I don't know how long it will take before outstandingly good deals are available on new cars again. I am going to wait at least six months.

But then, during the recession manufacturers must have planned to cut back on production. It only makes sense. If so, the results of that cutback should be showing up pretty soon, I would think. With little in the way of excesses to sell off, we may be out of luck in looking for an unusually good deal on a new car.

To make a long story short, my (completely wild) guess is next summer?

I made the mistake of going car shopping last weekend (not even realizing it was the last full weekend of "cash for clunkers") and I can honestly say I have never seen so many people in a car dealership. After about 30 mins of floundering around the lot (which was pretty scarce) I was approached by a salesman that told me straight out he had no idea what vehicles were still on the inventory!

I spoke to the sales manager who basically told me the same thing that you just mentioned. On the lot inventories are going to be reduced and you are going to find more and more people will actually be ordering vehicles rather than picking them out and driving them off the lots. That will also drive the price of the vehicles up and reduce most rebates as we know them.

Mike

 

[W2R]

I made the mistake of going car shopping last weekend (not even realizing it was the last full weekend of "cash for clunkers") and I can honestly say I have never seen so many people in a car dealership. After about 30 mins of floundering around the lot (which was pretty scarce) I was approached by a salesman that told me straight out he had no idea what vehicles were still on the inventory!

I spoke to the sales manager who basically told me the same thing that you just mentioned. On the lot inventories are going to be reduced and you are going to find more and more people will actually be ordering vehicles rather than picking them out and driving them off the lots. That will also drive the price of the vehicles up and reduce most rebates as we know them.

Mike

Good thing that my interest in a new car is based entirely on want, rather than need! I can (and logically should) wait until 2011 before I buy one. My 2000 Solara is just fine and hardly broken in, as little as I drive. It's just that I have the money, and love having a new car. Have been spending a lot of time at edmunds.com comparing models.

 

[audreyh1]

I spoke to the sales manager who basically told me the same thing that you just mentioned. On the lot inventories are going to be reduced and you are going to find more and more people will actually be ordering vehicles rather than picking them out and driving them off the lots. That will also drive the price of the vehicles up and reduce most rebates as we know them.

Mike

Personally, I think not having so many cars sitting on lots might bring the prices down! Certainly the "pipeline" will be more efficient, so why would prices go up? It's extremely expensive to finance inventory!! I never understood the (recently) current system of so many dealers and so much inventory sitting around on lots for so long.

In 2005 we got the same rebates/discounts (as buying off the lot) when we custom ordered our Jeep liberty, and they built it and delivered it in 6 weeks! Dealers still have to compete for your business even when you order a car.

Audrey

 

[wrigley]

Personally, I think not having so many cars sitting on lots might bring the prices down! Certainly the "pipeline" will be more efficient, so why would prices go up? It's extremely expensive to finance inventory!! I never understood the (recently) current system of so many dealers and so much inventory sitting around on lots for so long.

In 2005 we got the same rebates/discounts (as buying off the lot) when we custom ordered our Jeep liberty, and they built it and delivered it in 6 weeks! Dealers still have to compete for your business even when you order a car.

Audrey

I know.....it didn't make much sense to me either. All I can think of is that the manufacturers will totally stop any rebates and incentives and that will level the playing the field between dealerships. People won't be shopping for vehicles based on the rebates and incentives, they will be shopping for vehicles based on "need". If you "need" a car the price is not the big issue then!

Mike

 

[audreyh1]

I can't imagine why manufacturers are going to stop rebates and incentives. And why there will ever be a level playing field between dealerships? We see big differences between city dealers and rural dealers in pricing. We were always willing to drive an extra 50 to 75 miles to the dealership that would give us the best deal, and all of the "negotiation" was done by phone and email beforehand.

Of course we always new "exactly" what we wanted, and studied edmonds, etc. to figure out pricing and dealers were willing to transfer the matching car from anywhere in the state so physical location of the car didn't really matter.

So obviously our "method" for buying a new car was totally different from how most people bought them. Did two cars this way.

The last (third) one we bought we had to order because for some reason no dealers in the entire state of TX stocked the Jeep Liberty limited with 4-wheel drive (huh?) and none had the air-bag/ABS options either.

Audrey

 

[wrigley]

I can't imagine why manufacturers are going to stop rebates and incentives. And why there will ever be a level playing field between dealerships? We see big differences between city dealers and rural dealers in pricing. We were always willing to drive an extra 50 to 75 miles to the dealership that would give us the best deal, and all of the "negotiation" was done by phone and email beforehand.

Of course we always new "exactly" what we wanted, and studied edmonds, etc. to figure out pricing and dealers were willing to transfer the matching car from anywhere in the state so physical location of the car didn't really matter.

So obviously our "method" for buying a new car was totally different from how most people bought them. Did two cars this way.

The last (third) one we bought we had to order because for some reason no dealers in the entire state of TX stocked the Jeep Liberty limited with 4-wheel drive (huh?) and none had the air-bag/ABS options either.

Audrey

My understanding of rebates and incentives is so manufacturers could move vehicle inventories off of the dealerships lots. If the manufacturers reduce inventory to their dealerships, and people are ordering more cars directly, why would there be a need for rebates and incentives any longer?

Mike

 

[Texas Proud]

The model changed many years ago... back in the old days you planned your car purchase... and would go order what you wanted.. and waited for it to come...

IMO, Honda changed this to buy what we deliver... you got your choice of three basic trim levels (??, LX and EX)... and could have the dealer put on a few items for you to customize... so ordering was out...

Since then, a lot of brands have done the same... Chevy has base, LT1, LT2 and LTZ... I saw Hyundai has package 1 or 2 for a car, and if you went up a trim, 3 or 4 or 5... but if you bought 5 you usually got the 4 prior to that...

And even with cars you can order... the dealers order a standard package for their lots... not much choice...

SOOO, they want to sell to the shopper who might just be looking... but is willing to sign a deal and drive out with a new car... not the LBYM kind of person...

 

[audreyh1]

Well, if the car manufacturers are able to better match supply with demand, then things will probably work better for everyone in the long run. Car manufacturers still have to compete with each other! So I don't really see a huge threat of rising car prices in the future.

The thing is car manufacturers had been building too many cars these last few years and so they had to jump through all these hoops to move sitting inventory. What a waste! All the money spent financing the inventory too! Part of the problem was the auto industry had to build something like (13 million?) cars a year just to "break even".

One of the things this current downturn and bankruptcies has forced on the auto industry is enough shutting down of capacity, so that now car manufacturers only have to build (10 million?) cars a year to be profitable. This is a much more streamlined and sustainable situation for the car companies. More streamlined usually means less costs in the system.

Maybe if we didn't have all those foreign owned car companies this might be a threat to the end customer, but there is a lot of global competition in cars, so I doubt the retail customer is going to get fewer "deals" going forward, however the "deal" manifests itself - with rebates/incentives or not.

Audrey

? The numbers above are the best I recall as what the Autonation CEO stated on TV a couple of weeks ago.