Saturn, Pontiac, Chrysler: Fire sale time?
Last week, General Motors announced it will phase out the Pontiac brand in 2010 and that it will stop building Saturns at the end of this model year. A few days later, Chrysler LLC, which includes the Chrysler, Jeep and Dodge brands, filed for Chapter 11 bankruptcy.
While the news had the media buzzing about the fate of the auto industry, car shoppers were left wondering if there were incredible deals to be had. There are, in fact, great deals on cars right now, but the deals on these nameplates are no better than they were a couple of weeks ago — and in some cases, several months ago.
The fact is, this is a great time to buy a car, just about any car. Simply put, sales are slow, and dealers are more willing to negotiate downward, starting with the invoice price, or what they paid for the car, versus the sticker price.
Still, don’t expect to see prices slashed dramatically on a Pontiac, Saturn, Chrysler, Jeep or Dodge just because their demise is known or their lives are in question, at least not right now.
Prices are already so low that many cars are being sold with little or no profit margin. So with a bit of advance research to determine the invoice price, negotiating for a car right down to its color, trim and other options has never been this straightforward.
Keep in mind that the so-called “profit” a dealer makes from selling a car is used to pay the dealer’s expenses, such as employee salaries and utilities. These days, that profit is not padding the bank account — it’s what is keeping the business afloat. Dealers can’t really afford to reduce car prices any further, not if they want to stay in business.
So is this a good time to buy a Pontiac, Saturn, Chrysler, Jeep or Dodge? Absolutely, if you’ve had your eye on one. But you’d better be sure about your purchase. If the car is discontinued versus being produced later under another automaker, the resale value will most likely be lower than it would have been if the car had stayed in production.
Still, many of these cars are worth a second look. For example, the Pontiac G8 sports sedan and the Saturn Sky convertible have received rave reviews recently, while many entries from these brands have garnered major awards over the years. Cars purchased from these nameplates will be covered under their full warranty by the automaker or its new parent company. The warranties also will be backed by the U.S. government if the automaker cannot keep its warranty guarantee.
With production slowing or stopping altogether on these nameplates, you may not have another opportunity to get the car you want in the right color and trim, and the best options. Yes, even as supply dwindles, prices may drop more in the form of rebates and incentives.
And there are already some substantial rebates — up to $6,000 on Chrysler brands and up to $3,500 on GM brands — being offered on many models.
But that’s likely to lead to the time when only the cars with the least popular colors and options are left on the lot.
Read more Driving for Dollars columns.