Signs Of A Rebound, Yet The Worst Auto Market Since The 1950s Page 3

September 2, 2010
2010 Ford Expedition

2010 Ford Expedition

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Toprak predicts that during September and October overall incentives spending will go down slightly, though of course based on the time of year, 2010 models will continue to become more deeply discounted. Right out the gate, though, manufacturers are being smarter with 2011 models, and more careful about creating an oversupply situation.

Schuster says that there are still better deals on some of the larger SUVs as many of them have a higher profit margin built in and automakers want to keep them moving. "Gas prices might also have something to do with it,"

So much pent-up demand: What gives?

And just as there was pent-up demand in the luxury sector, there might be some evidence of pent-up demand among family shoppers. While some will drag on for an extra couple of years or more with a second car or commuter vehicle, they'll only go so long before replacing a primary family vehicle.

Meanwhile, as we reported last week, auto lenders are warming up to lower credit ratings, which should help boost sales in the mass market.

It sounds like the perfect storm for sales to rebound: signs of a recovery, luxury sales already coming back, easier credit, and targeted incentives on the slow-selling models. But somehow it's not working yet.

Ultimately, the market seems to be paralleling what's happening in the housing market in some respects—a game of "chicken" in which hesitant would-be shoppers are waiting for another Cash for Clunkers fire sale.

The housing and auto markets work in tandem, said Schuster, ebbing and flowing with the economic cycle, and we won't see a full auto recovery until the housing market comes back. And they're both in a similar holding pattern, of deferred purchases, even for those who are ready and qualified to buy. "People are looking, but they haven't pulled the trigger on a purchase just yet."

Cash for Clunkers 2010? Of course they're trying

That's led some automakers to call for a new stimulus plan. Cash for Clunkers 2010? Bring it on!

In the meantime, we're approaching one of the best holiday weekends of the year for new-car shopping. Even if you're not quite sure, take a look at TrueCar's new Best Local Price shopping feature, which compares upfront pricing, locally, and helps find the best deal. Look, and you just might find.

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