Car dealerships are saying good riddance to 2009—which was a clunker of a year in more ways than one—by trying to get rid of as many vehicles as possible. As the year’s end approaches, there are tons of rebates available to car buyers, and sales managers are expected to be especially willing to negotiate in order to move inventory. Also, if you close the deal before January 1, there’s a bonus: You can deduct taxes and fees on your 2009 federal income tax return.
By year’s end, Americans will have purchased 10.4 million cars, per the the NY Times. That’s down sharply from 17.4 million in 2000 (an all-time high), and the 2009 tally includes the nearly 700,000 cars bought with the help of government subsidies in the Cash for Clunkers program.
To boost sales in a tough market, car dealers are discounting big time, bringing about an odd situation in which new cars are sometimes cheaper than slightly used counterparts (and yes, we’re talking about the same make, same model). Paying 20% to 25% off of the sticker price is now common on many models, according to Kiplinger’s Personal Finance. The rebates offered right now by American manufacturers tend to be the most generous:
Chrysler is offering up to $3,000 cash back or 0% financing on all Chrysler-brand vehicles, plus a no-cost service program for three years or 36,000 miles. Jeep is offering up to $4,500 or 0% financing, plus the free service program. Dodge offers $2,500 or 0% (but no service program).
Another option for a serious deal right now is the car brand that won’t around much longer:
GM is offering the biggest discounts on its dying Pontiac, Saturn and Saab brands. You can get up to $3,500 back or 0% financing on a Pontiac Vibe small wagon (the Toyota Matrix’s twin). The 2009 Saturn Aura, a midsize sedan built on the same platform as the Chevy Malibu, has a hefty $4,000 rebate. And Saab 9-3 and 9-5 models come with up to $7,000 cash back to customers, as dealers try to unload inventory in the wake of uncertainty about Saab’s future.
This brings up the question asked recently by the WSJ: “Should You Buy a Car That’s on Death Row?” I have a soft spot in my heart for Saturn, but I’m not so sure I’d want to buy one at the present time. (Actually, I haven’t wanted to buy one since Saturn transformed into just another brand a decade or so ago, but that’s a different discussion.)
Would-be car buyers are understandably concerned about the prospects of buying a car that won’t be made in the near future. Will warranties be valid even after the brand is discontinued? Will parts be available when repairs are necessary? Will it be easy to find a mechanic who knows how to fix the car? Will the resale or trade-in value of the car hold up?
The answers to those questions, respectively, are yes, probably yes, probably yes, and probably no.
The resale/trade-in value is what could be the deal breaker—then again, if you’re paying a price that’s dramatically marked down from the sticker, a lower resale value is not that big a deal. And if you plan on driving the car until it dies, you’re not worried about resale value.
The bigger question is: Even with hefty discounts, are any of the marked-down vehicles actually worth buying? In my Q&A with Edmunds editor Philip Reed, held this past summer on the occasion of Chrysler and GM’s closing of thousands of dealerships, Reed had this to say:
With Chrysler, there’s not much there I can get behind. Some of the Jeeps are solid. The Chrysler dealerships that are closing have already been picked over quite a bit. I imagine lots of unattractive colors, and models that aren’t at the tops of anyone’s list.
While circumstances are different, the situation for buyers remains largely the same: It could be slim pickings at the dealership, and some cars aren’t worth your money no matter what the price. Obviously, take advantage of the rebates and other discounts if the car in question is one that you like and trust will hold up over time. If not, pass, no matter how big the rebate.
One more question: Are the year-end deals really all that good compared to other times of year? Black Friday, for example, is thought of as a great day for getting a bargain on a car. Labor Day is another favorite.
There just so happens to be a debate on the topic at Helium. The main arguments against end-of-year as best-deal-time-of-year are that consumers are less likely to haggle when there are big rebates, and that the couple of months just after New Year’s—when rebates are often still offered and dealers still have many old-model cars they hope to get rid of—is an even better season for bargain hunters.
Either way, if you’re in the market for a car, you should think about making a move—and soon. Just remember that no matter what the manufacturer rebate or promotion, you can and should haggle down to the best price.