Car buyers offered fewer deals
DETROIT — For years, Americans shopping for cars were treated to all sorts of deals and incentives, especially at the end of summer. Think Cash for Clunkers, which paid up to $4,500, or promotions that offered employee discounts to everyone.
Those days are over.
Deals are getting more scarce because automakers, newly lean and profitable, are holding the line on those profit-eating promotions. In July, they offered $1,000 less in incentives per car than a year earlier, according to Edmunds.com.
"This may be as good as it gets, and get used to it," says Jeff Schuster of J.D. Power and Associates.
As a result, U.S. auto sales are at a standstill, with potential buyers waiting for more deals but automakers resisting. The industry expects this to be the worst August in 18 years, with sales barely over 1 million cars and trucks. Sales are expected to fall 3 percent from July, according to car-pricing website Truecar.com.
August usually sees strong sales as automakers offer deals to clear out the lots for new models. In August 2007, before the recession, automakers sold nearly 1.5 million new cars and trucks. Last August, the government's Cash for Clunkers program boosted sales by about a third to 1.2 million.
But this year, the government is on the sidelines, and so are many buyers.
The standoff between buyers and car makers could continue through the rest of the year unless companies sweeten deals or there's some sort of government intervention, says Jesse Toprak, TrueCar's vice president of industry trends and analysis.
Others say a healthier economy — not incentives — is the only real driver for higher sales.
"Just lowering prices is not going to solve the problem," says George Pipas, Ford's top U.S. sales analyst. "The key is an improved consumer outlook."
In the last few years, Detroit automakers — and, to a lesser extent, their foreign rivals — have closed plants, cut tens of thousands of workers and aligned production with demand. Because they're producing fewer vehicles, they don't need to offer discounts to get rid of excess cars and trucks.
