This winter may be a good time to buy a new car.

[randomness]

Winter is usually a slow time for car dealers, so it's often a good time for a buyer to drive a hard bargain. This winter looks like it'll be even better than usual, because those dealers are lean and hungry.

From http://bigpicture.typepad.com/comments/2008/10/auto-sales-tank.html:

Auto sales, which were weak over the past 11 months, simply went into freefall in September:

• Ford Motor posted a 34% drop. Their truck and van sales fell 39%, SUV sales plummeted 57% and F-series truck sales dropped 42%.


• Honda reported a 24% decline in sales;


• Toyota U.S. Sept. sales drop 32.3%, light truck sales dropped 38%


• Lexus sales -- Toyota's luxury nameplate -- fell 37.7%;


• Chrysler U.S. September sales fall 33%


• Volvo sales slumped 51.8%;


• Porsche tumbled 45%;


• General Motors sales down 15.6% (better than the expectations of -26%)

According to the Detroit Free Press, the seasonally adjusted annual SAAR for the past decade has ranged between 14 million and 17 million vehicles. Since December, the SAAR has been in a free-fall, and September now looks like its going to hit 13 million annualized sales. Edmonds.com noted that the last time fewer than 1 million new vehicles were sold in a month was February 1993.

In a related Reuters story, a new study says that nearly 1 in 5 car dealerships could fail.

Comments

[maggiebex.livejournal.com]

In my family, we always buy new cars, for cash. Then we take excellent care of them and drive them as long as possible. Instead of paying car loans, we put aside money for the next car to buy for cash, and we only buy what we can afford to pay for.

I got a '91 Honda Civic for my college graduation. Not an expensive, flashy car, mind you, but a good solid car that I knew would last. We just donated it to charity a month ago, 17 years later, and it still drove like a dream. We'd been putting off donating it for two years, we just could not bear to part with it. Now we're buying another Civic.

Yes, I realize that this plan requires initial capital, but if you can start on the path of buying cars for cash, you'll always be ahead of the game.

[meepodeekin.livejournal.com]

I completely agree with this plan. We have two cars. We bought them both new (a Subaru and a Honda) and have no intention of trading either one until it is absolutely ancient. We looked into used cars, but we didn't want an old used car and the discount on late model used versus new just didn't seem enough to be worth it. I intend to always buy new and then drive them into the ground.

That said, it's a pretty hard road to insist on buying for cash. We moved down here with one car (a gift from the 'rents) and had a week to find a second before a dire commuting emergency occurred. We were both in our first jobs and had minimal cash reserves. Then we paid off the 5 year loan, which had a perfectly reasonable interest rate, in about 18 months.

I just don't think this sort of situation is uncommon. I hope when the time comes we'll have cash for the next car loan, but with interests rates as they are we do a lot better on our money paying down our existing mortgage than saving cash for the next loan. That's basic financial sense. And what cash we do save often has to go to much more pressing needs than hypothetical future cars which could be as much as 10 years in the future. So while I approve in principle of paying with cash, in practice even with a pretty good income if you want new cars I don't really think it pays to store up the cash for a hypothetical car.