Saturday, May 26, 2012

Automakers rein in incentives as sales increase

One unfortunate byproduct of strong sales in the new-car market is that automakers’ are able to rein in their incentive spending. According to Edmunds.com, incentives — including cash rebates and cut-rate financing — are at their lowest levels in nearly seven years.

New-car sales incentives averaged $2,071 in April, which is down 2.2 percent from March and 1.8 percent less than last April’s figures. “This is the clearest indication yet that consumer motivation is high and that automakers feel little pressure to rely on incentives in order to keep sales churning,” says Edmunds.com senior analyst Jessica Caldwell. “We’ll likely see incentives linger at these low levels until auto sales ease off the torrid pace we’ve seen so far in 2012.”

Still, we culled through car makers’ websites and other sources to find a robust assortment of top-dollar deals in effect through the end of May, particularly among larger cars and trucks, which we’re highlighting in the accompanying slide show. Among them is an unbelievable $100,000 direct-to-dealer rebate on the Maybach Type 57 and Type 62 ultra-luxury sedans. That’s more than 25 percent off MSRP on the $376,300 Type 57 model, which is a staggering discount in a market segment where price is rarely a consideration.

Given the cost of gasoline and other economic factors you won’t find many great deals among the smallest and most fuel-efficient models these days, which (with the exception of a few industry laggards) are selling well enough on their own. Edmunds.com says that subcompacts were discounted by only an average 2.2 percent last month, with compacts being sold at 4.5 percent below their sticker prices. By comparison, models in the large car segment boasted the deepest discounts last month, selling at an average 13.2 percent off MSRP. The full-size Chevrolet Impala sedan is being offered with as much as $5,500 in incentives depending on the model this month, which is one of the richest among all vehicles this side of the aforementioned Maybach land yachts.

As always, we’re highlighting direct-to-consumer cash rebates, discounted financing promotions and so-called marketing-support incentives, which we call additional dealer discounts. Typically favored by luxury automakers, the latter are cash allowances given to dealers to lower the prices on select models without seeming to cheapen the brand by offering cash rebates. The only catch is that a dealer may or may not automatically pass them on without some hard-nosed negotiations.

Though we aren’t documenting them here, some of the best deals out there are available to those who prefer to lease, rather than buy a car outright. Those who don’t mind making a perpetual car payment will be able to avail themselves of some sweet deals throughout 2012 because of record high resale values and ultra-low interest rates. For example, the midsize Honda Accord sedan is being offered at just $250/month for 35 months with zero due at signing. Going further upscale, a Jaguar XF luxury sedan is leasing at $599/month for 36 months, with a Land Rover Range Rover Sport luxury SUV going for $799/month for 36 months, both with $3,995 due at signing.

The fine print
Additional incentives may apply, such as those often offered to recent college graduates and members of the military and/or owners or lessees trading in same-brand or competing models. Offers may vary by region and are subject to subsequent modification or termination by the manufacturer; cited financing rates are typically open only to qualified buyers with top credit ratings and may vary based on eligibility.

And no matter how great a rebate deal you may be offered, keep in mind that the final transaction price is always open to negotiation. We expect dealer discounts on any of these vehicles will be substantial for hard-nosed hagglers. Be sure to aim for the so-called invoice price as a target, and that’s before deducting any applicable rebate or additional dealer discount.

© 2012 Forbes.com

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