If your clunker of a car is about to give out, you'll probably be able to get a good deal on a new one because of the miserable economy.
The reeling automotive industry is suffering from its worst sales in nearly 20 years. Car dealers are desperate for shoppers. And auto companies from Detroit to Tokyo are offering steep discounts and incentives to combat the slump.
But consumers, worried about the turbulent economy, are holding on to their older vehicles longer. And even if they're interested in buying, the recent credit crunch has made it more difficult to secure car loans.
Toyota and Ford are offering 0 percent financing and rebates worth several thousand dollars to lure people into showrooms. At used-car dealer Easterns Automotive Group, which has about a dozen locations in Maryland and Virginia, shoppers can nab a Cadillac Escalade for $10,000 cheaper than six months ago. General Motors, which recently ended a program where buyers could buy cars at employee discounts, launched a new campaign to tell consumers that loans are still available. The deals are expected to get even better as the year progresses and dealers make room for 2009 models.
"It's a supply-and-demand issue right now," said Peter Kitzmiller, president of the Maryland Automobile Dealers Association. "We don't have a large supply of customers right now, and there are a lot of vehicles."
Car sales began to slow this year as a result of the souring housing market and rising energy and food prices, which caused shoppers to cut back on discretionary spending. The problems escalated during the past month as Congress was forced to pass a bill to rescue the nation's failing financial institutions. While the credit crunch appears to be softening now, the economy continues to suffer from weak corporate earnings, rising job layoffs and stock market volatility.
Car dealers are facing shoppers who are scared to make a large financial commitment given their dwindling investments.
Loans also are difficult to secure. GMAC, the financing arm for General Motors, recently said it wouldn't give loans to people with a credit score lower than 700. That excludes 42 percent of consumers, analysts said.
But several car companies insist that consumers can get loans if they want them. And many dealers have launched campaigns to persuade buyers not to give up before trying.
