• Aug 4, 2012
Automakers are cutting back on incentive programs (Cred... Automakers are cutting back on incentive programs (Credit: dailyinvention, Flickr).
If you're buying a new vehicle, you're likely going to pay more for it than you would have if you had bought it in recent months.

With an economy that continues to limp toward recovery, and sharply increased consumer demand for new vehicles, auto companies have started scaling back their cash incentives in favor of better deals on financing and leasing.

What does this mean for buyers? August is always a brisk time to buy a car, SUV or truck, as automakers run sales to try and clear out the last of their 2012 model-year inventory. But the reality is that the deals aren't as good as they were a year ago.

According to TrueCar.com, some automakers-- notably Volkswagen, Honda and Nissan -- are, in fact, offering bigger incentives right now than they did in 2011. But, overall, the industry decreased incentive spending by 3.7%, which, of course, translates to higher final selling prices to consumers.

Why can most automakers afford to cut back on cash-back offers? Because so many buyers delayed their purchases between 2009 and 2011 after the great financial meltdown of 2008 and 2009 and so many jobs were lost, they have been coming back as their finances have stabilized and their cars have gotten older. The average age of cars and trucks on the road today is over ten years.

At the same time, when General Motors and Chrysler were going through bankruptcies in 2009, they closed some of their production lines. Ford did as well. So, while demand is up, the suply of vehicles is lower than it was. Without gluts of cars to sell, Detroit automakers especially don't have to offer rebates as big as they used to move the metal.

A shortage of supply has helped Korean automakers Hyundai and Kia as well. Those companies vehicles are in big demand and they are having trouble building some of the popular vehicles fast enough. That's a nice problem to have.



So, what are the numbers? TrueCar says the average rebate in July was $2,480. Meantime, the average price for a new vehicle was $30,369 last month. J.D. Power puts the average price of a new vehicle last year at $28,337. The higher price is due to not only smaller rebates, but also a surge in luxury car sales and people opting for pricier packages like those that connect your smart-phone to your car.

"Just because the prices are rising and the rebates are falling doesn't mean there aren't bargains to be had," says AOL Autos editor-in-chief David Kiley. "For one thing, consumers will be surprised if they really start looking that vehicles and brands they might not have considered before are fantastic deals compared with the vehicle they might have been focused on."

Examples? Kiley says if you were focused on a a mid-sized sedan such as a Toyota Camry or Ford Fusion, and the transaction prices are higher than you thought, you would do well to look at a Hyundai Elantra sedan, which is a few thousand less with hardly any real-world sacrifice on room. AOL Autos picked the 2012 Elantra as "Best Car Under $20,000."

But while the numbers don't seem to be in your favor right now for finding a bargain, we can help. Check out our innovative new car shopping tools to ensure that you're getting the best deal on the car of your dreams. Click the link below to get started!




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  • 21 Comments
      edzackly
      • 2 Years Ago
      If everyone sticks together and just don't purchase a new vehicle at this time the manufacturers will have to give incentives to unload the inventory. This could be a waiting game and see who blinks first. MY bet is if nobody, I mean nobody purchased a new vehicle the manufacturer would blink and it wouldn't take long.
      oakspondman
      • 2 Years Ago
      Car prices are way too much. Prices are jumping up so high, that I will not buy a new car, until mine will not go anymore. Why does every car, have every gadget available in them. What happened to the cars that were not loaded with things many people do not want. After all, its a body, engine and transmission. Then they start to add everything under the sun. I do not need any of the even basic power options, let alone all of the computer controlled items. Cars today have very high repair costs. Let them keep them! I will stick to my old car, that I can still repair on my own.
      Chad
      • 2 Years Ago
      As their finances have stabilized????? LMAO...toeing the Obama line till the end I see. Things are bad...and getting worse...not better.
      RMS
      • 2 Years Ago
      Why would you buy a new car when it plunges in value by as much as 30% the day you take delivery? I'm very happy with my ten year old car with 70,000 miles on it. I bought it two years ago, and it's paid for, no car payments thank you!
        danwat1234
        • 2 Years Ago
        @RMS
        Same here, 1999 Civic, bought it in 2007 for around $4,500. It now has 227,000 miles going strong with the automatic transmission. Cheap insurance, cheap to drive and maintain and fun around the corners with a rear sway bar.
      john
      • 2 Years Ago
      more people would buy new cars if the sales tax was cut in half (NJ is 8%) or just excluded !
      JoseyWales
      • 2 Years Ago
      These editors are so wrong I have bought many new cars in my life.The best time to buy is the end of the year.Car lots will be dropping prices on 2012 models to make room for 2013 models. Secondly winter sales on vehilces are typically lower than spring and summer. Spring and summer are peak sales season for most car lots.I know it may sound ridiculous but it's in fact true the same vehicle at the end of the year will generaly be a few thousand less than it would be during the summer.
      • 2 Years Ago
      New cars are actually a better bargain than the used right now. Incentives are not going to vary much over the next few months anyway and manufactures know that the public will clean out their 2012 inventory, so don't look for bigger breaks because compared to the 2013 models, the 2012s are still a better bargain. PS - edzackly is an idiot
      scottee
      • 2 Years Ago
      because GM is owned by the government? and they are more expensive than imports?
      LL
      • 2 Years Ago
      We were hit with a $500 insurance increase for my wife's Honda. Both of us have a perfect driving record with no claims ever. Shocked by this increase I went online to get some quotes for her car. The two sites I first visited were actually more expensive than our new rate, but then I found ( http://bit.ly/SaveonInsurance ) I got a quote within minutes and ended up saving over $300 on our car insurance!
      papam11
      • 2 Years Ago
      Makes no sense. No rebates on 2012's now, might as well wait until the 2013's come out.
      toddisit
      • 2 Years Ago
      Upgrading is not worth it. Drive it until it dies, that is my motto.
      Welcome Garners
      • 2 Years Ago
      Why do authors, the media and others continue to say things like America's '...economy ... continues to limp toward recovery ...' ? That is BS put out by the current Admin and it minions in the press and academia. The US is in a pile of doodoo that the gov't is best staying out of.
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