Paul A. Eisenstein: Carmakers ramping up incentives
With the spring selling season upon us and competition heating up in the car market, makers are coming up with the most lavish rebates and incentives we’ve seen in more than a year.
If a low price is your bottom line, check out the four brands General Motors is selling or closing down: Pontiac, Saturn, Saab and Hummer. They’re offering the biggest cash giveaways available right now in a bid to clear out their lots – on some models more than $10,000, nearly half the sticker price.
Even makers who traditionally disdain profit-eating incentives are lining up to put some cash on the hood, including Toyota. In years past, its offerings were in such high demand its dealers could command a premium. But in the wake of the maker’s safety problems, sales plunged during the first two months of 2010, leading Toyota to roll out record rebates and low-interest loan packages, which can save a buyer as much as $3,500 on select vehicles.
Honda, another maker long loath to load up on incentives, has been offering a “triple-zero” campaign: no money down, no fees, no first-month payment.
And the list goes on, with makers ramping up their givebacks every month.
How long that will continue is unclear. In 2009, the industry bit the proverbial bullet, closing plants rather than giving products away well below cost. With fewer factories, they’re in a better position, for now, to pull back on these givebacks the more the U.S. economy improves.
The big uncertainty is Toyota, says Bob Lutz, the soon-to-retire vice chairman of General Motors. As long as it plays hardball, the rest of the industry "can't sit idly by and watch that happen,” and will have to match the givebacks, he says.
Paul A. Eisenstein is an award-winning journalist who has spent more than 30 years covering the global auto industry. His work appears in a wide range of publications worldwide, and he is a frequent broadcast commentator on subjects automotive.
- Not all rebates are the same. Some have strict rules that may limit their availability or require you to meet specific guidelines. They may require unusually short loan periods or demand large down payments, for example.
- Often, big givebacks require you to use the carmaker’s so-called “captive finance subsidiary,” like Ford Motor Credit or GMAC. But it’s worth checking to see if your bank or another outside lender has a similar deal.
- Some of the biggest deals are targeted at retaining loyalty, which may mean an extra $1,000 if you own one of that maker’s products.
- On the flipside, some manufacturers are offering extra incentives to attract nervous Toyota owners willing to trade for another brand.
- Experts suggest that you do not discuss incentives with the dealer salesperson until after you negotiate a price to your liking. It’s easy to get distracted by a big rebate and not bargain as well as you would some other time.
- There are a number of online sites, like Edmunds.com and TrueCar.com, that will provide reviews, pricing and incentive information to get you well-prepared to do battle.