Looking for a Car? Let's Make a Deal

WASHINGTON, June 1, 2009 -- How will the Big Three lure buyers? Let them count the ways.

With Chrysler and General Motors now both in bankruptcy and nearly 2,000 dealerships selling off their inventory before shutting down, bargains are expected on retail lots from coast to coast.

Some deals have already arrived, with dealerships adding incentives to those offered by the manufacturers. GMC's Memorial Day sale gave buyers 0 percent interest on car loans for 60 months or $5,000 off.

Some dealerships, like Schepel Cadillac Hummer in Merriville, Ind., have extended last months incentives through Wednesday.

"We anticipate showroom traffic to increase, pretty significant by this weekend," said Tom Van Prooyen, vice president of the Buick dealership at Schepel.

Grand Pontiac Buick & GMC in Denver was offering 0 percent financing for 72 months

"We sold a lot this weekend doing that," general manager Michael Malin said. "I would expect through the summer, there will be hefty rebates available, in order to trim the inventory."

The bargains are likely to get better as dealers wait for a newly bankrupt GM to outline its latest factory incentives.

"We don't know what they are," Tammy Darvish, vice president of Darcars in Maryland, said of the upcoming incentives. "Everybody is scrambling right now, no announcement has been made by GM."

Sales have been so slow that in recent months some car dealers really have been giving them away.

At University Dodge in Davie, Fla., people who bought a fully-loaded pickup could get a bare-bones model for free.

Darcars in Maryland has offered revolving incentives -- from buy-one-get-one-free to 40 percent off the sticker price.

Some cars have been advertised for as much as $10,000 off. A Ford dealer in Norwalk, Conn., offered 100 shares of Ford stock with every car sold.

Dealers being terminated by Chrysler have strong incentives to make deals, and that is likely to be the case for the 1,100 GM dealerships that are being phased out.

For the 789 Chrysler dealers nationwide that are losing their franchises, the day after they can no longer use the Chrysler name, which for many will be June 9, they will have to sell the cars as used. That means no Chrysler factory rebates -- worth $3,000 to $6,000 per car and a likely loss with each sale.

Car Dealerships Offering Deals

As the end date arrives, many of those dealers are likely to sell at a loss.

Cars sold 16 percent below the sticker price on average in April, according to automobile publisher Edmonds.com. The average incentive on a 2009 model, including rebates and low-interest financing, was $3,031, Edmonds reports.

Alternatives to car buying are helping to glut the market. As the economy -- and the Big Three Detroit automakers' declining fortunes -- have sent car sales spiraling, repair shops are seeing an influx in business from owners seeking to prolong the lives of their cars.

Zipcar, the national car-sharing company, now has 300,000 members.

In 2001 there were 0.76 cars sold per American driver. That number is now 0.4. For ailing Chrysler, sales plunged 46 percent from last year's level in the first four months of the year.

But Consumer Reports warned that just because the dealers are already offering more incentives doesn't mean buyers should ease up on negotiating.

"There is an intuitive logic around the idea that vehicles purchased from a bankrupt automaker must be a great deal," the magazine advised. "Consumers accepting this logic actually negotiate less aggressively and pricing trends up."