Perhaps No Better Time to Buy a Car

Despite the woes of GM and Chrysler, they are obviously not alone, as all car manufacturers are suffering from steep sales drops. Probably the best performer in North America is Hyundai, as they have taken a calculated risk in the US by offering to buy back your new Hyundai if you lose your job. But there are now acres of unsold new cars sitting in dealer car lots and also offshore tankers.

The deals on cars were very good a few months ago, but have now become almost irresistable. The automakers have sweetened the deals so much so, that anyone who is in the market for a new car, may not find a better deal again. As an example, in Canada, Hyundai was selling the base model Accent for $9,995 which was a reduction of $3,500 off the MSRP (Manufacturer's Suggested Retail Price). At the time, this price was only available if you paid cash or arranged your own financing. Now, Hyundai is offering a price of $9,995 AND zero percent financing for 36 months. In theory, someone with cash could invest the money for 3 years, and then buy the car and hopefully, any return from interest, dividends or capital gains would offset som eof the cost of the car.

Likewise, GM was recently offering a Chevy Uplander minivan for $15,995. Now, the price has gone down to $14,995 and has the added incentive of 3 years of free maintenance, 2 years of On-Star and 2 years of XM satellite radio. Despite an entry-level price, the car itself has upmarket features such as Stability Control, Air Conditioning, 7 passenger seating, Traction Control, power windows and door locks, four wheel disc brakes and ABS. Some dealerships are selling it for as low as $13,999!

My brother-in-law recently (in late April/early May) bought a brand new Mazda 5 minivan, paying a price of $19,995 for the basic model (before adding on any options). He was ecstatic, as his friend paid almost $25,000 for the same car. Last week, I noticed that Mazda was advertising the same car - this time for $17,995!

Considering that in 1992, I paid $12,500 for a base model Honda Civic 2-door with manual transmission, crank windows, no radio and no air conditioning, I am tempted to buy a new car. Short of the government providing a rebate or a tax-break on the purchase of a new car, it's hard to see the prices going much lower, but then, I've said that before.