Thinking of Buying? This Story Will Help - Best Deals

Kristen Gerencher, CBS.MarketWatch.com submitted this helpful story Aug. 13, 2002

SAN FRANCISCO (CBS.MW) - If you're shopping for late-summer discounts on 2002 model cars, automakers are eager to please this year, whether on the sporty Saab 9-3 or the Jeep Grand Cherokee sport-utility vehicle.

Zero-percent financing offers are fewer than last fall, but many carmakers are boosting interest-rate and cash-rebate incentives on select models to clear them off the lot ahead of the new 2003s, said David Littmann, chief economist at Comerica Bank in Detroit.

Though model changeovers happen more on a rolling basis now than in the past, many carmakers still choose autumn to introduce their flashy new models and discount last year's, he said. "Seasonally, it's extremely important. It becomes even more of a cutthroat business for the automakers."

Carmakers with inventories that stretch for two months or longer often lead the way in consumer-friendly deals, he said. "Those that have inventory levels at or above 65 days at this time of the year are almost certainly going to have some major discounting compared with others."

At Ford Motor (F: news, chart, profile), the average time a car sat in inventory was 60 days in July, a fairly routine benchmark, sales analysis manager George Pipas said. Still, most current lines beckon with cash or financing discounts.

"The Thunderbird is the only one I can think of that doesn't have a traditional strong year-end clearance sale with zero-percent financing or attractive cash rebate. Everything from the Focus all the way up through the Lincolns would have attractive offers at this time of the year."

Competition among Detroit's Big Three as well as Japanese and Korean brands are making discounts more plentiful, he said. "In this environment, you've got an incredible amount of surplus in global automotive capacity. Consumers are in the driver's seat as it relates to the selection of cars as well as the prices of cars."

Naming names

Even some popular SUVs will be marked down, though most of the discounts will be from domestic manufacturers because their products sell closer to their invoice prices instead of their sticker prices, said Gabriel Shenhar, a senior automotive test engineer at Consumer Reports.

"You're going to get discounts on Ford Explorers, Chevy Trailblazers. You're not going to get them on Honda Pilot or Toyota Highlander."

Because the '03 Honda (HMC: news, chart, profile) Accord arrives next month, consumers may expect discounts on the 2002 Accords, Shenhar said. GM's redesigned Saab 9-3 is also set to shake up prices. "You're likely to see discounts on the outgoing Saab 9-3."

The same is likely for Daimler Chrysler's (DCX: news, chart, profile) 2002 brands, he said. "With Jeep Grand Cherokees and Dodge Durangos, you're go to get discounts all day long. They are geared for certain capacity and they can't afford to be left with a surplus of inventory. They're not selling as quickly as they'd like them to."

Indeed, even Toyota (TM: news, chart, profile), known for minimal incentives, is making special offers available for two 2002 models in certain markets -- its Siena minivan and SUV Forerunner, spokeswoman Holly Ferris said. The 2003 Siena arrived at dealerships last month and the new Forerunner is coming out in the fall, she said.

General Motors (GM: news, chart, profile) raised its customer cash incentive to $4,000 from $3000 in July on full-size passenger vans such as the Pontiac Montana and Oldsmobile Silhouette, spokeswoman Elaine Redd said. It also applies to luxury cars Cadillac Deville, Seville and Eldorado, she said.

Last month, GM also announced offers ranging from $2,500 to $4,000 customer cash or zero-percent financing for most 2002 model Buick, Cadillac, Chevrolet, Oldsmobile, Pontiac-GMC cars and trucks through September 3rd.

GM's success last year with attracting customers to its Pontiac Aztec, for example, showed that once the offers raise demand for a vehicle, the friendlier pricing can fade quickly, Littmann said.

"At a certain point, the automakers get the message and cut production on those vs. other models that have been selling on their own really well without the large discounting."

Affordability rises

Overall car-buying incentives are running $2,500 on average, an amount that's risen steadily over the last four years, Littmann said. The typical new car sold in the U.S. now goes for $21,194 including incentives. That price has deflated 0.4 percent while personal income rose 2.8 percent compared with a year ago, he said.

Here are the five models with the biggest backlogs, according to WardsAuto.com's July tally:

GM's Cadillac Escalade EXT -- 99 days Ford's Lincoln Blackwood -- 118 days GM's Cadillac Seville -- 120 days Isuzu Rodeo -- 124 days Isuzu Axiom -- 126 days The five models WardsAuto.com found that stay on the lot for the least amount of time are:

Honda's Acura MDX -- 11 days Honda CRV -- 12 days Nissan 300ZX -- 13 days Honda Odyssey -- 13 days Nissan Infiniti G20 -- 15 days