January 21, 2009

Unsold Cars Piling Up at Ports

December sales were absolutely horrible for all car manufacturers, with overall sales down more than 30% compared to a year ago. Unsold new cars are piling up at the ports at such a fast rate that manufacturers are worried about running out of room to store them all. With demand dropping like a rock, many are stopping production in hopes that inventory drops to a manageable level.

All of this leads to one thing: Better deals for car buyers as the year unfolds. We don't see any short-term end to the supply and demand problem. There are still 2008 models on dealer lots. Liquidation sales later in the year when 2010 models come out should be incredible.

Toyota Does the Unthinkable: Offers Cash Rebates

After seeing its December sales plunge 37%, Toyota wants to make sure January doesn't turn out as bad. Toyota is now offering cash rebates to both car buyers and dealers. (Dealers will probably pass on their incentives to the consumer in order to get the sale). Even top sellers like the Camry, Corolla, and Prius are included.

Toyota tried 0% financing over the last 3 months (remember the annoying "Saved by Zero" commercials?), but that obviously didn't work. The incentives will run through February 2nd. Here is a list of the rebates being offered:

2009 Corolla (base, LE)$1,500 cash rebate
2009 Corolla (S, XRS, XLE)$1,250 cash rebate
2009 Camry Sedan$1,000 cash rebate plus $500 dealer incentive
2009 Prius$750 cash rebate
2009 Tundra$2,000 dealer incentive
2008 Tundra$4,000 cash rebate

Chrysler Offers 0% Financing

Effective Saturday, January 17th, Chrysler began offering 0% financing for up to 60 months on many 2009 and 2008 models. This was made possible by a $1.5 billion government bailout loan.

You'll still need a credit score of 620 or higher to qualify (check your credit score here) Qualifying cars include Chrysler Town & Country, 300 and 300C, Jeep Grand Cherokee, Commander, Wrangler, Dodge Grand Caravan, Charger, Magnum, Challenger, Ram Pickup and Ram Heavy Duty

Used Car Prices: Going Up or Down?

Historically, used vehicle sales have risen when new car sales go down. And with new car sales down by 30-40% compared to last year, you'd expect used car sales to be way up, but that hasn't been the case. Used car sales were down over 11% in 2008.

Along with sales, prices have gone down as well. Some analysts predict used car sales and prices will go up in 2009 because of pent up demand from owners who need to upgrade but can't afford a new car. However, others feel used car prices will plummet as consumers decide to save and make due with what they currently have.

In addition, since prices went down last year, many businesses put off selling their used fleet inventory in hopes they could get a better price in the future. That doesn't look likely and so there will probably be a flood of used vehicles coming onto the market, causing prices to plummet. Whether you're a new or used car buyer, 2009 is looking to be a great year to make deals.

Bailout Hasn't Helped GM Car Buyers Much

Although GM's financing arm, GMAC, received a $5 billion federal bailout recently, that hasn't really helped consumers get loans more easily. GMAC did lower the minimum credit score a needed to qualify for a loan, however, car buyers must still provide a down payment in order to get the loan, which is a big problem.

Many GM buyers owe more than what their trade-in is worth (being upside-down on a loan), thus they are not able to get loans even if they have good credit. Some dealers are complaining that GMAC's financing rates are still as much as 1.5% higher than competing commercial banks.

If you're thinking of buying a GM vehicle, don't rely on getting a loan through GMAC. Read our Guide to Car Financing to see all your options.

Car Buying Report Archives:

  Week of June 18, 2009

  Week of June 11, 2009

  Week of June 4, 2009

  Week of May 28, 2009

  Week of May 21, 2009

  Week of May 14, 2009

  Week of May 6, 2009

  Week of April 30, 2009

  Week of April 23, 2009

  Week of April 16, 2009

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