Most pundits and financial experts were expecting the nation’s economic recovery to be in full swing by now. And sales in the auto industry were expected to follow. But it’s pretty clear that a rebound is here in a definitive way.
With a half-year of auto sales now in the rearview mirror and the latest sales results from June a disappointment, auto-industry executives — though they’re not directly saying it just yet — are gearing up for a “Plan B” for the rest of 2010.
That means, for one thing, pulling out the stops to get customers into the showrooms. If you’re preparing to buy a new vehicle, then the coming months are going to be more of a buyer’s market than 2010 has already been. The deals are going to start in earnest.
In early July, for example, Chrysler, which has been one of the heaviest discounters in recent months, sweetened an already sugary pie by saying it would make the first two months’ loan payments (up to $500 per payment) for buyers of almost every vehicle in the company’s lineup. That is in addition to 0-percent financing for 60 months on almost all 2010 models.
After a period when the car companies were reducing the supply of new models in order to wean buyers off the big incentives they’ve come to expect, it looks like 0-percent financing is going to come back in a big way: plenty of Toyota’s most-popular models (including, in some regions, the once incentive-proof Prius hybrid), offer 0-percent financing. Most other brands are ratcheting up the 0-percent deals, too.
Interest rates at banks ranging from major national outfits to your local credit union also are at remarkable lows — in many cases, less than 5 percent. Meanwhile, buyers with dinged credit may begin to find it easier to get a new-car loan.
Until now, some data were showing that despite broad efforts to “ease” credit to help the economy get moving, it still was difficult in the first few months of the year for buyers with anything but good credit to make a deal.
Chrysler and GM both are on a mission to get access to more money to loan to customers with sub-prime credit. Chrysler has teamed with a specialist in sub-prime lending and GM is looking for some type of similar deal. Others may also loosen their credit standards.
The reason for these ministrations is simple economics: there are fewer buyers than the industry was expecting, and as the year grinds on, many car companies are finding the competition for customers intense, particularly if their showrooms happen to have a lot of outdated or otherwise poor-selling models.
None of this was how the auto industry wanted 2010 to go, especially GM and Chrysler as they try to stabilize themselves after bankruptcy, or other brands that are having trouble connecting with customers in this frazzled economy. But if you’ve got the financial means — or don’t want to delay that new-vehicle purchase any longer — the rest of the year is shaping up to be a bonanza for buyers. — Bill Visnic, Motor Matters
Copyright, Motor Matters, 2010