Summer car sales may be back in vogue

Economic recovery is pressuring automakers to boost car sales and grab market share. They're likely to offer cash discounts, low-interest financing, and other auto deals this summer.  

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David Zalubowski/AP/File
A low-interest rate banner hangs on the side of an unsold Toyota Corolla at a dealership in Lakewood, Colo., in 2010. Pressure is building on carmakers to once again offer cash discounts and other incentives to boost summer car sales.

After a few years of late-starting, lackluster deals, the summer auto sale may be back in full force.

Light vehicle sales were up 8.2 percent in May compared to the previous year, according to research firm Autodata Corp. Sales year-to-date are 7.3 percent higher than in 2012. That demand, paired with fairly lean inventory on lots, should have put automakers in the driver's seat as it did last year—which led to cash discounts, financing deals and other offers staying fairly flat.

But the recovering economy has put automakers under some pressure this year to keep up the momentum by increasing sales and gaining market share, said Lincoln Merrihew, vice president of transportation at market research firm Compete. "That can get pretty tough," he said.

At an American International Automobile Dealers Association meeting in May, executives for brands including Kia and Hyundai predicted a competitive summer with incentives that could limit profitability.

Adding to the push, dealerships also have a few more cars on the lot to clear for new models than they did last year. Earlier this month, automakers reported having a 57-day supply of vehicles, versus a 52-day supply a year ago.

Though improved, the summer sales aren't likely to be quite as big as those drivers might have seen before the recession, when automakers had even more supply, said Jeremy Acevedo, an analyst for Edmunds.com. Drivers are also likely to see more diverse deals than the all-cash offers of years past—financing offers, lease deals and unadvertised cash that brands give to dealerships are all on the table.

"For consumers who are getting back into the market, and haven't bought a new car recently, it might be a different experience," Acevedo said.

Better deals are often on less-popular models, and this year, that includes electric vehicles, said Alec Gutierrez, senior analyst at Kelley Blue Book. For example,General Motors currently offers as much as $5,000 cash toward the 2012 Chevrolet Volt; the 2013 model has an up-to $4,000 cash deal. Some models, including the 2013 Nissan Leaf, can be leased for as little as $199 per month.

Cash offers on large trucks—often heavily discounted in the summer—are also high. Many of the biggest are on models recently redesigned, including the Chevrolet Silverado and GMC Sierra, Acevedo said. 2012 models of both vehicles currently have up to $5,500 cash on most configurations, for drivers willing to overlook an older design.

Popular and luxury models are sporting offers, too. Some Cadillac models are available for zero percent financing, and BMW offers rates as low as 1.9 percent. "Even the [2013] Ford Fusion, they're pushing $500 to $1,000 cash," said Gutierrez—an unusually high amount, given that model year was redesigned.

With a variety of deals on the table, consumers should be careful to compare all their options to determine whether say, financing or cash is the better deal, said Acevedo. Offers may not be as enticing as they first appear. Or as transparent. Sites includingKBB.com andEdmunds.com often list unadvertised deals shoppers would need to know about and ask for.

Negotiate a trade-in value for your old vehicle before choosing a new one to buy, or a dealership to buy from, said Merrihew. "If I'm a dealer offering $1,000 in incentives, I can undervalue your trade-in by $1,200 and still come out ahead," he said.

If the summer proves as competitive as experts expect, shoppers should also pay attention to deadlines. Sales could shift swiftly. "It's a moving target, so if one brand does something that works, everyone will copy it," Merrihew said.

Drivers looking for rock-bottom prices may be better served waiting until August or even September, when dealerships are pushing the last of the 2012s and many 2013s out the door, Gutierrez said. Deals tend to be bigger then, although selection will have dwindled. It may not be possible to get the color or options desired.

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