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Car Incentives Are Terrible Right Now

May 5, 2011

Incentives on vehicles sold in April hit their lowest level since 2005, according to Edmunds.com, which estimates the average incentive paid by automakers was $2,118 per vehicle sold last month.

The reason incentives are so low right now is due to supply and demand issues.

Inventories of new vehicles are lower due to brisker consumer demand thanks to a strengthening economy, and shortages resulting from the recent Japan disaster.

As a result, automakers don’t need to offer rich incentives.

The decrease in incentive spending runs across the board by manufacturers regardless of country of origin, with the exception of Korean automakers Hyundai and Kia - least affected by the Japan disasters and clearly trying to capitalize on the situation.

Domestic automakers showed the largest decline in incentives from March, averaging $2,683 per vehicle sold in April, down $398 from March.

Japanese automakers had the second largest decline with $1,696 per vehicle, down $236 from March.

So what can you do as a car buyer? Should you wait a few months in hopes of getting a better deal? Not necessarily - these supply and demand issues are predicted to last until at least the end of summer and possibly until the end of the year.

We just have to get used to the fact that car deals are not as good as they used to be. However, that doesn't mean it's impossible to get a great deal - make sure to use our car buying formula when you're ready to start negotiations and you'll do fine.

See the lowest prices on a vehicle in your area (plus see the actual incentives you qualify for)
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My Recommendation for Car Shoppers

TrueCar No-Haggle, Edmunds Price Promise, and 1-800 Car Show are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really good. This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings.

California Residents - Important:

There is a new online car buying service called Roadster, available only to California residents, which I highly recommend you try - especially if you hate the stress of haggling with a car salesman. They provide an expert concierge who negotiates the price of the car and delivers it to your home with zero hassle - you never have to interact with a dealership. Here is my in-depth review of Roadster and why I recommend it.

- Gregg Fidan

Gregg Fidan

About: Gregg Fidan


Gregg Fidan + is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.

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