Searching for end-of-summer deals

Kiplinger's Personal Finance Magazine, Sept, 1998 by Ed Henry

Considering the aggressive price cutting that car manufacturers use to boost spring and summer sales and the squeeze on production brought on by the GM strike, you might think there would be slim pickings in model-year-end bargains this year. But you'd be wrong.

"The car companies have discovered that the only way to get people into the showroom is with a big discount deal," says Art Spinella of CNW Marketing/Research, in Bandon, Ore.

The GM strike has had a significant impact on supplies of its trucks in particular. But David Cole, who directs the Office for the Study of Automotive Transportation at the University of Michigan, reports that "there's still a lot to choose from in the heart of the market--small and mid-size cars." Nissan, for example, has been running high inventories all year.

This is not only the time to push '98s out the door, it is also the season when dealers compete for bragging rights for the year's best-selling automobiles. Such jockeying should produce interesting rivalries and enticing bargains, says George Peterson, president of AutoPacific, a marketing-consulting firm in Santa Ana, Cal. Although Ford has disavowed an expensive push to win best-seller rights for the Taurus, Peterson thinks that may change because the car is "within shooting distance of the Honda Accord and Toyota Camry."

Strong demand has traditionally protected Honda and Toyota from the need to dive headlong into the discounting wars. But while Honda seems to be holding fast on the Accord, Toyota has been dishing our rebates, cut-rate financing and special leases on its popular Camrys.

Barbara Sanders of Pacific Palisades, Cal., got a new Camry LE for $20,971 (taxes and tags included), $300 below invoice. "When we went out to pick up the car, we were wondering if this was too easy to be true," she says.

"It's unusual to see such bargains on the Camry," says Robert Ellis, director of operations for CarBargains, the car-buying service that lined up Sanders's deal. "Last year our customers were paying $500 over invoice for the car and now we're seeing bids of $100 below invoice with 300 to $700 below invoice sprinkled in."

LOOK-ALIKE BARGAINS. The prices listed here are Kiplinger's target prices for the base model of each line, with automatic transmission, air conditioning and destination charges included. Since rebates and dealer incentives come and go, prices do not reflect such discounts. Subtract such breaks from the Kiplinger's target price, not the sticker price, when you prepare to negotiate.

Remember that rebates are paid directly to customers; dealer incentives go to dealers, to be shared with customers or not--it may depend on how tough a bargainer you are. Dealers have a motive to be generous, says Dick Strauss, a former president of the National Automobile Dealers Association and owner of a dealership in Richmond, because they need to meet certain volume levels to qualify for future incentives.

Many 1999 models will remain virtually unchanged from their 1998 counterparts. By picking up a car at the end of the '98 production run, you have a good chance for a twofer: You could pocket a year-end discount and avoid whatever price hike the manufacturer slaps on for next year.

Among the minivans, Chevrolet's Venture (target price, $21,751)--which recently carried a $1,000 rebate in some parts of the country and an equal dealer incentive in others--and Mazda's MPV LX ($22,517) will be indistinguishable from next year's versions.

There are a number of deals on luxury cars that won't look dated in 1999. Lincoln's front-wheel-drive Continental ($35,682) recently carried a $1,000 rebate plus a $2,000 dealer incentive in some regions. Its rear-wheel-drive cousin, the Town Car ($35,771), had a $2,000 dealer discount, too. The Infiniti Q45 ($44,487) recently carried up to $3,500 in incentives. The Cadillac Catera ($29,825) offered dealers up to $3,500 in incentives, while the Oldsmobile Aurora ($33,759) offered $2,000 in rebates. Mercedes-Benz is offering dealers $10,000 worth of incentives on the '98 S600 sedan, making its $135,845 sticker price a little less daunting.

THE LAST OF A LINE. The best deals this time of year may be on discontinued models. Check out Nissan's 240SX ($18,947) and 200SX ($14,983)--both are slated for the tar pit. These cars recently carried hefty rebates or dealer incentives of up to $2,000.

In the minivan category, 1998 is the last year for the Ford Windstar ($19,632) and Honda Odyssey ($21,901) as we know them. With major redesigns slated, good buys are expected on leftover '98s. (By the way, Honda is ditching its swinging-door, minivan-for-folks-who-don't-want-a-minivan styling. Next year's model will have sliding rear doors.)

In the crowded sport-utility segment, Jeep is pushing its '98 Grand Cherokee ($24,316) to make room for its completely revamped 1999 model. And with a new, smaller SUV coming in '99, Suzuki has offered up to $1,000 in dealer incentives to move its '98 four-wheel-drive Sidekick Sport ($18,026). Its twin, the four-wheel-drive Chevrolet Tracker ($17,119), carries an even bigger rebate: $2,500.