When it comes to shopping for new cars, it's a buyer's market.
Consumers are shouldering shrinking equity, tightening credit, and rising prices on food, gas, power and other necessities. As a result, many are putting off car buying.
Vehicle sales this year are down about 10 percent over last year, according to estimates by Edmunds.com.
"And last year wasn't that great, either," says Jesse Toprak, executive director of industry analysis for the company. Many shoppers are sitting on the fence, but those who buy are choosing affordable models that go farther on a gallon of gas.
He projects that the industry will see its worst sales year since 1995.
"It's been brutal out there," says Jack Nerad, executive market analyst for Kelley Blue Book and KBB.com. The drop in sales from 2007 "is significant," he says. "The car industry is definitely in a recession."
While that's bad news for automakers and dealers, it's actually good news for consumers.
“It's been brutal out there. The car industry is definitely in a recession.”
"It means dealers are more cooperative than ever," says Nerad. "Also, makers are offering more incentives than ever."
Buyers are likely to see discounts, actual cash back and more attractive financing agreements.
"We're seeing all of the programs that have worked in the past coming back," says Paul Taylor, chief economist for the National Automobile Dealers Association. Two well-known strategies are employee-level discounts for buyers and zero-percent loans.
"We've seen some amazing financing deals," says Nerad. And a low- or no-interest loan "can save the typical buyer thousands of dollars," he says.
Factory cash-to-customer deals are a big trend in incentives now, says Nerad. So when you sign the deal, you walk out with the vehicle as well as a check.
"What this speaks to is a lot of customers are upside down in their (current) cars," he says. "This gets them out of that situation."
Deals on popular cars
Along with taking their time, consumers are gathering more information before they buy.
At her two Texas dealerships, Annette Sykora has seen sales follow the national trend, dropping about 10 percent from last year. But she's noticed another trend where consumers are making more conscious purchasing decisions, Sykora says. "They are asking a lot more questions," often about fuel economy. And that translates into their buying habits. "We're seeing a trend toward more fuel efficiency," she says.
"Usually, that means smaller cars," says Sykora.
Sales rates have stayed roughly the same as last year at Michelle Primm's dealership in Cuyahoga Falls, Ohio. "But the mix has changed," says Primm, managing partner of Cascade Auto Group and an at-large director with the dealers' organization. "There's definitely more attention to cars that are more efficient."
Some cars are actually selling better this year. Compact cars, compact SUVs, luxury sports cars and exotic cars are all moving off the lots in greater numbers than they were last year.