Newspaper article St Louis Post-Dispatch (MO)

Let's Make a Deal Car Shoppers Should Find Bargains in Some Models This Summer

Newspaper article St Louis Post-Dispatch (MO)

Let's Make a Deal Car Shoppers Should Find Bargains in Some Models This Summer

Article excerpt

Listen up, bargain hunters: A confluence of circumstances this summer has put the buyer in the driver's seat - at least for now.

So if you're planning to buy a new car this year, you might want to start looking now to get the best selection of colors, models and options.

Here's what is making this summer a hot one for buyers:

- Auto sales are down for the first five months of the year. Analysts say that is mostly because of higher interest rates. The Federal Reserve Board has increased its rate seven times in 18 months to slow the economy and keep inflation at bay. As a result, many manufacturers' inventories are bloated, and they are offering big rebates and cut-rate financing to attract buyers. Before the sales slowdown, automakers were weaning themselves from rebates and incentives.

- Several popular models, such as Ford's Taurus and Mercury Sable and the Chrysler minivans Dodge Caravan, Plymouth Voyager and Chrysler Town & Country, are being replaced with new versions for the 1996 model year. Automakers want to clear out the old models so that dealers will order plenty of new ones. That means there should be lots of room to negotiate on these popular vehicles, said auto analyst Eric Hood of the Dohring Co., a market-research firm in Detroit.

- Trade negotiations have stalled between the United States and Japan, and 100 percent tariffs are looming over 13 models of Japanese luxury cars. The tariff is scheduled to take effect Wednesday if negotiations fail.

This is a complicated issue, with all sorts of implications for luxury-car buyers, whether they prefer domestics or imports.

One thing appears certain: Prices of all brands of luxury cars likely won't be any lower in the future than they are right now. Price flexibility on Japanese luxury cars is apt to disappear as inventories of pre-tariff cars (those that were in the United States by May 20) shrink.

Because Lexus and Infiniti have pledged to absorb the tariff initially, it is unclear how prices at dealerships might be affected in the long term.

Also, prices on competing American and European luxury cars could very well firm up because there will be less competition once the effects of the Japanese tariff are felt.

It's hard to know how prices will be affected, said David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan in Ann Arbor.

"If it's a long-term issue, it could have an impact," he said. "The tariff levels are such that it will make it difficult to sell a Japanese luxury car here. The thing that will not happen will be either Cadillac or Lincoln raising their prices. But it is fairly likely that rebates (on those cars) will go away if demand increases."

As for the rest of the new-car market, here's how Hood, of Dohring, thinks things may play out this summer:

"It still looks like a buyer's market. . . . Automakers are under pressure to sell some cars and deplete some inventory. The only way to do it is with rebates. But I don't think they are going to give away any more metal.

"They are not going to come out with bigger rebates. May sales were up a bit. I think the market will heat up on its own."

Hood said the real deals can be found by consumers who know what to look for and how to find it.

One savvy way to find a good deal is to look at the manufacturer's inventory of cars that are built and ready for sale. This information doesn't generally find its way to the public, but you can easily get it. …

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