In The Market for a New Car? Buy it NOW!!!!

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Buffalo, NY
How buying a car is going to change With Chrysler and GM in bankruptcy, a new auto-buying landscape is emerging. And if you're car shopping, act soon; the bargains won't last much longer. By U.S. News & World Report It's business as usual. That's what General Motors and Chrysler want car buyers to believe as each automaker charts its way through the biggest financial crisis in its history. It's also wishful thinking. As the two companies, which control nearly one-third of the U.S. car market, work through bankruptcy, they are undergoing profound disruption. Ford, Toyota and several other automakers are losing money and revamping their own operations. On top of that, the Obama administration is speeding up the pace at which car companies need to introduce new technology, cut tailpipe emissions and make major gains in the fuel efficiency of their fleets. With the whole U.S. economy in flux, in fact, there's probably no industry being transformed more rapidly than the car business. Here are some of the changes that will hit consumers over the next several years: Higher sticker prices. It's a buyer's market right now because sales are terrible and automakers are still building more cars than shellshocked shoppers worried about the recession can buy. There may even be some fire sales over the summer, as nearly 3,000 GM and Chrysler dealers slated for closing shut down and liquidate their inventories. But the sweet deals will probably dry up by the end of the year. Most automakers are aggressively cutting production to halt chronic overbuilding, and as inventories get leaner, prices will rise. Fewer GM and Chrysler dealerships means there will be less competition to drive down prices. And the administration's tougher mileage requirements will force automakers to adopt expensive new technology, such as direct-injection drivetrains and advanced transmissions, that will ratchet up the sticker price. For consumers who can afford it, the time to buy is now. (See "Fire-sale prices lift GM, Chrysler.")Cars in Aisle 6. Just about the only place to buy a car these days is a traditional dealership, thanks largely to powerful franchise laws in most states that keep other competitors at bay. But as automakers slash their retail networks, dealers are losing their clout. For new offerings such as minicars, and perhaps cheap Chinese imports, a big showroom with a dedicated sales staff might not even make sense. That could open the way for retailers like Costco or Wal-Mart to start selling cars. "A lot of new business models could emerge," says Craig Cather, the CEO of forecasting firm CSM Worldwide. "We could see some crazy things in the next few years." In Mexico, for instance, at least one retail outlet sells Chinese-made cars alongside other types of consumer products. There's no reason such a model couldn't migrate north. Toyota at the top. With the Detroit automakers trying to shrink their way back to profitability, it seems inevitable that Japan's Toyota will end up as the No. 1 seller of cars in the United States. GM has long been the market leader, with U.S. market share of about 19% today, compared with 17% for Toyota and 16% for Ford. CSM's projections show Toyota edging to the front of the pack by 2011, with Ford right behind and GM a close third. Those three automakers are likely to cluster at the top of an intensely competitive market for the foreseeable future. GM on the rebound. GM's sales are sure to dip for a year or two, as the sprawling automaker winds down four of its eight divisions, right-sizes its dealer network and struggles to retain skeptical customers. But GM could once again become a powerhouse -- and Chapter 11 could help. "GM's going to light it back up before long," says Gary Dilts of J.D. Power & Associates. "They have a pretty good product plan, and once they're out of bankruptcy they'll leave 10 years of debt on the side of the road." One suggestion from Dilts: Company executives should stop referring to "GM," which consumers associate with problems, and rely more on the company's Chevrolet and Cadillac brand names, which still have strong traction in buyers' minds. Saturns from overseas. GM's plan calls for unloading this money-losing division, but Saturn's not dead yet. This earnest brand for straight-talking folks has a number of assets that make it likely to draw a buyer: an expansive network of nearly 400 dealerships, modern facilities and a well-known and accepted brand name. Penske Automotive Group is one potential buyer, with a plan to stick the Saturn name on vehicles imported from South Korea. Chinese-made vehicles might even end up as Saturns. For the time being, GM will continue to provide vehicles for Saturn stores. But at some point, Saturns will morph into something altogether different. An endangered Chrysler. Company executives wax buoyant about Chrysler's prospects once it emerges from bankruptcy and finalizes a merger with Italian automaker Fiat. But it won't be nearly that simple. Even if it sheds debt and streamlines, Chrysler will still be a damaged brand that lacks competitive products until Fiat-built vehicles hit the company's lineup, which could take two or three years. Fiat doesn't plan even to invest money in Chrysler, and the government has capped its commitment at a very modest $6 billion. CSM forecasts that Chrysler's market share will fall from 11% today to less than 3% in 2012. For a mainstream brand that can't get away with premium pricing, that's close to the minimum threshold for survival. Which means the turmoil in Detroit is far from over. Link
 
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Bill in Utah

Staff member
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Yep, that is what you want to do in a bad economy where no one is buying cars... Raise the prices... So I'll pay more for a Government car? What a surprise.
 
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Spring HIll
 Originally Posted By: Bill in Utah
So I'll pay more for a Government car? What a surprise.
Komrade's Kars: "All the car you need to drive, none of the car you want to drive..."
 
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Sunny Calif
Prices have already risen. March 2009 was the absolute bottom. I saw new cars that were selling for $19.5k in Nov 2008, that were going for $16k in March 2009. Now they're going for almost $18k. The aggressive incentives expired in spring and the car makers replaced them with less aggressive incentives. Why? I don't know. Car sales continue to decline, unemployment continues to rise, you would think prices should fall more.
 
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I think the article is dead on correct. Too bad they didn't address the used car market; that too is in a state of flux. Regarding rising prices, you won't have a choice. Prices HAVE to go up. The automakers have to show a profit for each product sold. The old business model of "crank em out, sell em cheap, we'll make up the difference on volume!" is broken and failed. Once this market stabilizes a bit, you will never ever see prices like this again for domestic brands. Sure, China and Korea will crank out cheap cars, if price is all that matters to you, go for it. As for prices during a recession, it doesn't really matter. People are not buying at ANY price! It doesn't matter if the car is $5000 off, or $7500 off, or whatever.... people aren't buying. Most folks are afraid of losing their jobs. Home foreclosures are at all time highs. Who wants to take on more debt now? The big question moving forward is not price, its financing. It's been very difficult to get a loan for a new car. Bank financing seems to be getting a little better but it's nowhere near what it used to be. Make it easy for the average person with a decent job to buy a car, and you will see sales rise. Price doesn't matter at all if a person can't get a loan they can afford. Personally, I'm excited about all these changes. I think the car retailing business needed this enema. Once all the nastiness has been flushed down, it will be very interesting to see what happens next.
 
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La.
The "enema" you are talking about is the livelihood and life savings of many people. What it means is a loss of competition. No Chevy stores every couple of miles. Less competition means less discount. Of course being profitable is better than not, but guess who pays? The average GM customer is not the average Lexus customer. So higher profit per sale equals more money out of the average person's pocket.
 
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Pottstown, PA
Well, the party had to end someday. That day is today. In full blown American tradition, it didn't ease its way to some sensible equilibrium ..it crashed and burned. We appear to require such catastrophic events to effect change ...and it has it's carpetbaggers/profiteers on either end leaving us with unintended side effects.
 
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CarMax
I feel sorry for the folks who got caught up in this calamity, I really do. But... stuff happens. As Gary said, the party had to end someday and when that happened, people were going to get hurt. Whether it happened 25 years ago or 25 years from now, it needed to happen. And so it has. Hopefully those hurt by this massive sea-change will move on into bigger and better things. Get retrained. Finish their education, or take it to the next level. One door closes, another opens. Hopefully all of them can find the next open door and be better for it on the other side. I wish them good luck. As for competition, yeah, it won't be the same, but it couldn't sustain itself anyway. The days of the endless rebates had to come to a close sometime. The competition was eating itself to death, predominantly stealing sales from each other. Nobody wins in theater-wide thermonuclear war, where the living envy the dead. Fewer competitors may mean higher prices, but it also means more customers for everyone, more sales, more revenue, less infighting, less crossing-the-street-to-save-$100. And while the average GM customer ain't your average Lexus customer, I'll bet every GM dealer in the nation would sell their cute receptionist on e-bay if they could be as profitable as the average Lexus dealer. Is there a store that is more profitable than a Lexus one? Doubt it. Careful what you wish for.....
 
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Sudbury, ON, Canada
 Originally Posted By: tonycarguy
Prices have already risen. March 2009 was the absolute bottom. I saw new cars that were selling for $19.5k in Nov 2008, that were going for $16k in March 2009. Now they're going for almost $18k. The aggressive incentives expired in spring and the car makers replaced them with less aggressive incentives. Why? I don't know. Car sales continue to decline, unemployment continues to rise, you would think prices should fall more.
Answer: The feds are "quietly nudging" the manufacturers, to prevent deflation (IMO a worse situation compared to heavy inflation).
 
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Sunny Calif
 Originally Posted By: bretfraz
I think the article is dead on correct. Too bad they didn't address the used car market; that too is in a state of flux. As for prices during a recession, it doesn't really matter. People are not buying at ANY price! It doesn't matter if the car is $5000 off, or $7500 off, or whatever.... people aren't buying.
If people aren't buying, the price is too high. End of story. You're saying prices don't matter??? Since when? There's nothing that matters more than price.
 
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NY
Price is everything in a bad economy. But because GM and Chrysler are down people that are out looking for a car think they can get one for half off or more are wrong, it won't happen. As long as this recession looms, and people are out of work or in fear of getting laid off they aren't going to be spending money. I think more bad times are ahead, we aren't anywhere near being out of this mess yet.
 
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CarMax
 Originally Posted By: tonycarguy
 Originally Posted By: bretfraz
I think the article is dead on correct. Too bad they didn't address the used car market; that too is in a state of flux. As for prices during a recession, it doesn't really matter. People are not buying at ANY price! It doesn't matter if the car is $5000 off, or $7500 off, or whatever.... people aren't buying.
If people aren't buying, the price is too high. End of story. You're saying prices don't matter??? Since when? There's nothing that matters more than price.
People don't buy because they don't have any money, or are afraid to get deeper into debt., or can't get an affordable loan. A few thousand dollars either way does not make a difference if you don't have the money to begin with, or can't get the money from a bank. Using your logic, nobody would have bought Toyota Prius' last year when gas was skyrocketing because the price for the cars were going up. Dealers were charging sticker plus and getting it. Now with gas prices down to reasonable levels, dealers can't give away a Prius. There is A LOT that matters more than price.
 
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Saint Paul (ex-San Diego)
 Originally Posted By: firemachine69
Answer: The feds are "quietly nudging" the manufacturers, to prevent deflation (IMO a worse situation compared to heavy inflation).
Hoover and Franklin Roosevelt tried the same thing -- made the Great Depression worse. I think that Japan did following their property market crash in the late 1980s, and it took more than ten years for that economy to recover. The government needs to let the markets find their own level. Inflation (and deflation) result from changes in the money supply. It should be much more concerned with inflation, resulting from the tremendous growth in the money supply in the last 12-18 months.
 
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Canada
 Originally Posted By: hone eagle
Annual sales this year will be 9.9 million,hardly "nobody buying"
I wouldn't count on that number. Employers are still slashing people by the hundreds of thousands every month, this May alone down by around 350k. These are really adding up and although the cuts have slowed a bit they haven't shown any sign of reversing in the near future. I would bet that sales will be much much worse this yr than last, and 2010 will be even worse unfortunately. Credit is still hard to come by for all but the most qualified buyers. I think in the near future the market for very basic cars in the USA will be the most active one for years to come. Not because folks want it that way, they will simply have no choice. Not only that but the jobs that remain are with stagnant or even falling wages and this shows no sign of relief either. Simply put car prices are still too high with all those factors included into the equation.
 
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