Cars for Bargain Hunters

Now is the best time of the year to buy an automobile, if you don't mind getting a model no one else wants

by Jim Henry

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This is the time of year when car companies pull out all the stops, using big discounts to sell off leftover models. While they last—which might not be much longer—the deals on certain 2007 models can amount to nearly 30% off the sticker price, according to auto shopping site Edmunds.com.

"One of the first things you notice is that a list of the biggest discounts is SUV- and truck-heavy," says Jesse Toprak, executive director of industry analysis for edmunds.com. That's because shoppers these days are thinking twice before buying big, gas-guzzling trucks. Large domestic-brand sedans also are tending to sit on the lot. Therefore, those vehicles are priced to move. According to AutoData in Woodcliff Lake, N.J., sales of domestic-brand pickup trucks were down about 8% this year through September, to about 1.7 million vehicles. The midsize SUV segment, including such former top sellers as Chevrolet TrailBlazer and the Jeep Grand Cherokee, was down about 14% to 583,834, for the same period.

Many of the most heavily discounted cars also are models that were never popular with consumers. These include such also-rans as the Chrysler Aspen (businessweek.com, 9/28/06), Jeep Commander (businessweek.com, 12/27/06), and Isuzu Ascender. Expect many of these to disappear from the lots altogether very soon—whether they sell or not.

In addition, readers will notice that of the 20 most-discounted vehicles on the market, Chrysler products dominate. What's cause for concern, however, is not that the Aspen or the Commander are struggling as the fact that onetime top sellers such as the Jeep Grand Cherokee and Dodge Ram (businessweek.com 3/22/06) have fallen so hard.

With the exception of Saab's line, no European models are offering heavy discounts. Some people would argue that the vehicle in question, the Saab 9-7X (businessweek.com, 12/28/05), isn't really European at all, since it is built by General Motors (GM) in the U.S. and shares a platform with two other deeply discounted vehicles—the Chevy TrailBlazer and Isuzu Ascender. But the point is that BMW (BMWG), Mercedes (DAI), Volkswagen (VOWG), and others have not had to resort to such deep cuts.

No Toyota (TM), Honda (HMC), or Nissan (NSANY) products are among the 20 most heavily discounted cars, either. This isn't surprising, but it is one more indication of how Detroit's pricing strategies have been rejected by its top competitors.

20 Biggest Deals

Edmunds.com compiled a list for BusinessWeek of the auto industry's 20 biggest bargains, in percentage terms relative to the sticker price a shopper could theoretically expect to pay, including options.

For instance, edmunds.com says Ford's (F) Lincoln Div. is offering deals worth 25% off the sticker price of a typically equipped 2007 Lincoln Town Car. The aging Town Car, which is rumored to be heading toward eventual discontinuation, has a starting price of $42,175, but edmunds.com estimates that the average sticker price, with options, is $46,711.

Edmunds.com calculates the cash value of all incentives, including customer and dealer rebates, low-interest financing, and cut-rate lease deals—even though the value of those deals may be spread out over time.