There’s never been a better time to buy a car. On the other hand, there’s never been a scarier or more confusing time, either.
There are big incentives out there and dealers are discounting like crazy as they try to get aging inventory off their lots.
But consumers are understandably worried about the financial health of the automakers they may be buying from, especially domestic manufacturers. So, is it worth taking the deal? Here are some points to consider.
The product: If it weren’t for all the financial trouble, this would be a great time buy a car from either General Motors or Ford.
GM has some really outstanding products, including the award-winning Chevrolet Malibu, new large three-row SUVs - the GMC Acadia, Buick Enclave, Saturn Outlook and Chevrolet Traverse - and the Cadillac CTS, a world-class mid-size luxury sedan.
Ford (F, Fortune 500), meanwhile, has successfully attacked its past quality problems. Now when you buy a Ford car or crossover you can expect the same kind of dependability that was once the hallmark of Japanese brands like Toyota and Honda, according to Consumer Reports.
Beyond dependability, vehicles like the Fusion mid-sized sedan, a new, more powerful 2009 Escape crossover and the Flex large crossover are just good cars that offer practicality, style and excellent fuel economy.
Meanwhile, Chrysler has been lagging its competitors in dependability and overall product quality. The new Dodge Ram truck, with a sharper design, nicer interior and better handling than competitors’ big rigs, is one product that’s arguably superior, if you’re looking for a truck that’s better looking and more enjoyable to drive.
The prices: Auto sales are forecast to stay low until at least the end of 2009.
And while some think car prices will continue to drop, they probably won’t. Manufacturers have been drastically cutting production. That means that inventories will get lower, manufacturers will have less need to pile on incentives and dealers won’t be as worried about getting cars off their lots quickly.
So, from a price perspective, this really is the best time to buy. On many Ford, Chrysler and GM models, you could even get below-wholesale prices, according to pricing data at AOL Autos.
The incentives: Right after GM’s financing partner, GMAC, got its own government aid package in late December, GM (GM, Fortune 500) announced it was offering 0% financing on selected products. Unfortunately for car shoppers, the deal is limited to just the Saab 9-3 and 9-5. For SUV shoppers, the 0% deal is limited to the Chevrolet Trailblazer and its variants, including the Saab 9-7X. These older truck-based designs are outclassed by competitors and even by GM’s own crossover vehicles.
Still, GM is offering low-rate financing on other, better vehicles that can still save you hundreds of dollars even it’s not 0%. Those rates could make it a good time to pick up one of those more attractive offerings like the CTS, Malibu or Traverse faxless cash advance. GM is also offering big rebates on many models.
For its part, Ford is offering its "Employee Pricing Plus" program and, in many cases, they’re adding big rebates on top of the price discounts.
The risks: Depreciation, the difference between what you pay for a car and what you can ultimately trade it in or sell it for, is the single biggest cost of car ownership.
And that could offset the savings if the resale value of your car takes a steep dive.
The financial troubles of America’s automakers have led to more than-than-usual uncertainty about that. Looking at Kelley Blue Book value data, once a car brand ceases production, the resale value of vehicles bearing that brand drops fast.
That’s true even if the manufacturer stays in business, as happened with GM’s Oldsmobile brand and Chrysler’s Plymouth. So if you’re looking at purchasing a Saturn or Saab, for instance, keep in mind that GM is reconsidering the future of those brands.
Then there’s the scary prospect that GM or Chrysler themselves might not survive the next couple of years. It’s probably a safe bet that they will, with government help, but no-one can say for sure.
If the very worst were to happen and these automakers were to completely go out of business, some of their brands would likely carry on. Chrysler’s Jeep brand, for instance, has already outlived several previous owners and no doubt would again. Some other company will pick up the business Even if GM were turn out all its lights, brands like Cadillac, with its unique luxury image, and Buick, which is a huge success in China, would probably carry on somehow.
Ford is the lone Detroit automaker not seeking immediate government assistance. So, from a business perspective, they seem like the safest bet for longevity. Certainly, the Ford brand itself has a secure future. Around the world, the Ford blue oval is a strong brand and Ford is putting even more emphasis on strengthening it.
For car buyers, buying the best cars from the strongest brands is always the best play, though. Ultimately, that’s not good news for any of the domestic manufacturers.
Despite suffering its first operating loss since 1950, no-one is questioning the long term viability of Toyota. Or that of Honda, either. Both companies also make reliable cars that are, at worst, competitive with Detroit offerings and they have better resale value, too. Both are also offering incentives like 0% financing.
Despite Detroit’s big improvements in all-around competitiveness and product quality, America’s financial crisis will drive even more consumers to buy Japanese cars even as the federal government to save America’s automakers.
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