Cars most affordable since 1980
To coax buyers back to the new car lot and to prompt sales, carmakers are lowering their prices, reviving old incentives and coming up with ways to combat today's record gasoline bills. One example is Chrysler's offer of giving gas cards to guarantee buyers of their cars will pay no more than $2.99 for a gallon of gas for three years.
"They are trying to roll the clock back for car buyers, and that seems to be working well for them," he says.
“A lot of people bought the big behemoths in recent ears and now they can't get rid of them. Dealers who are accepting them are doing so at deep discounts.”
With gas prices piercing the $4 mark and beyond, it isn't surprising to see that sales of small fuel-efficient cars are actually up 11 percent from a year ago, while sales of SUVs are down more than 31 percent from last year.
"Small is selling well. Fuel efficiency makes it that much more attractive, and when you add inexpensive, you are really seeing strong numbers," Reed says.
That's not to say that car sales are beating truck and SUV sales across the board, though.
"Surprisingly in June, cars as a whole were down more than trucks as a whole," Koropeckyj points out.
She says the segment numbers are misleading without the proper context because small crossover SUVs that burn less gas and cost less are selling relatively well, while large sedans, which don't enjoy the fuel efficiency of their smaller counterparts, are not selling well at all.
And while it may seem logical that $100 tanks of gas are putting people in a downsizing mood, SUV owners are caught between a rock and a hard place. When they attempt to trade in the SUV on a smaller car, they find dealers are only offering a fraction of the Kelley Blue Book value for their gas-guzzlers, if anything at all.
"A lot of people bought the big behemoths in recent ears and now they can't get rid of them," Koropeckyj says. "Dealers who are accepting them are doing so at deep discounts."
Traded in SUVs are likely to sit unsold on the dealer's lot for months. And SUV owners often can't accept a low-ball offer, which often is less than what they owe on the vehicle. To make matters even worse for current SUV owners, dealers are in no hurry to offer incentives or cut the price on the small fuel-efficient cars because they are the lone bright spot on the showroom floor.
"What you would end up doing is selling your gas guzzler at the worst time (and) buying an efficient car at the worst time because demand is so high," Reed says.
But, assuming you are in a position to buy, can get a loan and don't need to unload a gas-guzzler, things look good on the car lot. Even economists are attracted by the values.
"I just bought a new car myself, so, yeah, I'd say this is a great time to be buying," Koropeckyj says
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