Personal Business: AUTOS
BUYING A CAR? TAKE A SPIN ON THE NET
When Buick recently doubled the rebates on its Riviera, to $3,000, Jim Harper hoped he would see lots of new shoppers in the Van Nuys (Calif.) showroom of Craig Buick, where he's sales manager. No such luck. "I haven't gotten anybody out who has heard of the rebate," Harper reports.
As midsummer arrives, the competition to catch consumers' eyes with rebates and other come-ons is heating up even as car sales have cooled. Despite fair sales of its flagship Taurus, Ford, for example, recently boosted its rebate by $500, to $1,500. "The deals on automobiles right now are much greater than a year ago," says Ron Pinelli, president of Autodata Corp., an industry consultant based in Woodcliff Lake, N.J., that tracks prices and rebates.
CUTTING THROUGH. For car shoppers, that spells opportunity. But nice as the deals may be, rebates and cut-rate loans hardly make it easy to find the best values. "Some of these programs are so confusing that dealers don't understand them," says Pinelli.
To help you cut through the clutter, BUSINESS WEEK asked Autodata and auto-information publisher Edmund's Publishing Corp. to gather key price information on 16 of the nation's best-selling vehicles (table).
Actual prices of the 16 models may vary among regions, reflecting local supply and demand. And the table focuses only on the nation's most popular models as they're commonly equipped. Just the same, with these data, plus more available on the Web or via a toll-free call, you'll be well on your way toward getting a good price on a new car.
It's no surprise that you'll find the best deals on cars "that are overpriced or aren't selling," says Edmund's Editor-in-Chief Christian Wardlaw. Some of these are the older-design Mercury Villager minivan ($2,000 cash back) and the Chrysler LHS ($1,500). Next to foreign carmakers, who are enjoying stronger volume, domestic makers are eager to deal, particularly Chrysler and Ford.
The most painless way to start your hunt for a car is on the Internet, which allows you to narrow the field before you start taking test drives and battling dealers. Microsoft's CarPoint site (carpoint.msn.com) is a good place to start. It presents in neat and stylish form the basic dope on engines, options, crash performance, and fuel economy. One unusual feature: videos that display vehicle interiors.
PRIMARY NUMBER. Before setting off for a showroom, you need a pretty good idea of how much you should pay for the one or two models you're considering, equipped the way you want. For that, head for some other Web sites, each of which has different strengths.
Kelley Blue Book (www.kbb.com) can give you an authoritative read on the primary number you need: the dealer invoice price (including destination charges, which aren't negotiable), or what the dealer paid for the basic car wholesale. To that, add the invoice prices of optional equipment you want, all of which are available at the Kelley site. We checked out a Cadillac DeVille with California-approved emissions equipment, a moon roof, and top-end stereo system, and found an invoice price of $39,340--nearly 10% below the $43,170 sticker price, or MSRP (manufacturer's suggested retail price).
But don't stop there. Dealers usually receive further discounts in one form or another from the auto makers. That's how car lots can advertise prices "below invoice," and it gives you more room to bargain. These discounts are commonly called "holdbacks," and usually they're a percentage of the sticker price (not including the freight charge). The DeVille, for example, would have brought the dealer a holdback payment from Cadillac of about $1,275, or 3% of the MSRP. Take that amount off the invoice price to find a dealer's true break-even point, and from there also deduct any rebates offered to consumers by the carmakers.
The Edmund's Web site (www.edmunds.com) lists holdback rates for most manufacturers and also offers an easy-to-understand description of how to use the information. Edmund's suggests that once you find the dealer's actual cost, add perhaps 5% for other expenses such as local advertising that dealers must pay, not to mention a profit. "Your goal should be to pay 2% to 5% over the dealer invoice," Edmund's advises, "not the 8% to 10% the dealer wants you to."
ALL THE FIGURES. Using advice and data from these sites, Orange County (Calif.) car shopper Jan Aven recently set out in search of a burgundy Jeep Grand Cherokee with leather seats and gray trim, a compact-disk player, and antilock brakes. "I could tell you right down to the penny" how much the car had cost wholesale, she says. The sticker price was nearly $30,000, but she was intent on getting it at her target price of no more than $27,000.
First, Aven tried her nearest Jeep dealer. "But he was thinking I was dumb," and wouldn't acknowledge that "I had all the figures." Next, she tried a buying service available through a discount retailer and got a reasonable first quote of $500 over the invoice. But Aven hoped to do better. So she pointed her Web browser at Auto-By-Tel (www.autobytel.com), which has signed up some 1,900 dealers in North America. The dealers agree to pass along some of their savings on marketing expenses to consumers who use Auto-By-Tel. It delivers dealers serious buyers at a small cost.
Late one evening, Aven filled out a form at the Auto-By-Tel Web site, specifying the options she wanted on the Grand Cherokee. Then she clicked "Send." Early the next day, she says, a nearby Jeep dealer telephoned with a firm quote on the car near her target price, and she went ahead and closed the deal.
AutoVantage (www.auto vantage.com) offers a comparable service that it formerly reserved for members of its buyer's club. It can also be reached by phone (800 288-6826), making it a good alternative for the computerless. Still not available on the Web--and another option for people without computers--is Consumer Reports' auto pricing service (800 395-4400). It delivers reports by mail or fax for $12 each, and consolidates all the key information you'd have to hunt for at several Web sites. But by fall, says Paige Amidon, manager of the service, Consumer Reports will have a Web page, too.
NO EXCUSE? The Internet also has helpful tools to explore your financing options. CarPoint provides a loan calculator that allows you to point your cursor at a graph and drag around variables--monthly payment amount, interest rate, loan term--to see how changing one or more affects the others. That's helpful if you're trying to decide whether it's cheaper to take, say, the $5,000 cash rebate Lincoln is offering on its Town Car or borrow from Lincoln at just 1%.
If you're interested in leasing, IntelliChoice (www. intellichoice.com) compiles current leasing deals on most models, and has a good primer on what all that leasing gobbledygook means. AutoSite (www.autosite.com) offers a swift and very handy lease calculator.
With all the information around, there's no longer much excuse for getting burned when buying a new car. Because dealers are wising up, too, you can now strike a fair deal faster than ever.Robert Barker EDITED BY AMY DUNKINReturn to top