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Auto Deals Expected After June

DETROIT (AP) -- After U.S. auto sales plunged to a near-six-year low in June, automakers again are expected to beef up costly cash-back and financing offers to clear out bloated inventories, analysts say.

The industry's seasonally adjusted annual selling rate of 15.4 million units last month was the lowest since August 1998. Leading the spiral downward were General Motors Corp. and Ford Motor Co., the nation's two largest automakers, both of which posted double-digit losses from a year ago.

Analysts say June's results, reported Thursday, were a payback for better-than-expected sales in May and no reason to panic - but they predict higher incentives and possibly production cuts to help move inflated inventories.

Consumers already can get $4,000 or more in cash rebates on some models.

Collectively, Detroit's Big Three automakers saw their market share fall to 59 percent in June, down from 60.6 percent for the first six months of 2003, according to Autodata Corp. Chrysler, helped by the introduction of several new vehicles, has eked out a small gain in U.S. market share so far this year, while GM and Ford are both lagging year-ago figures.

GM and Ford are hopeful new vehicle launches scheduled in the second half of the year will spur business. Ford's offerings will include the new Five-Hundred sedan and redesigned Mustang. GM will add the Chevy Cobalt, a replacement for the high-volume Cavalier, and the Pontiac G6, which replaces the Grand Am.

Meanwhile, Asian automakers have increased their share of the U.S. market from 32.4 percent last June to 34.3 percent through the end of last month, according to Autodata.

Neither GM nor Ford has announced revisions to their third-quarter production schedules, but analysts say they may be forced to do so if an expected flurry of incentives doesn't lift sales.

A production cut is significant because automakers consider a vehicle sold when it's shipped from the manufacturing plant to a dealer, not when the dealer reaches an agreement with a buyer. As such, diminishing production can reduce the automaker's bottom line.

Ceraso said Big Three dealer stock levels grew by nearly 100,000 units in June to about 2.9 million units, which he estimates is roughly 400,000 above normal for this time of the year.

The Big Three's traditional two-week summer shutdown, which begins this week, should help lower the levels.

Article Here

 

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can anyone explain incentives to me? i realise i don't actually know how they work. do i go in, choose the model and options i want, and then find out what the msrp is? is it after that that this cash back rebates are subtracted? are they hidden... do you have to ask for them? are they automatically included on the starting price of the vehicle before i sit down and start dealing? are they always the same for a vehicle, or does the dealer offer what he thinks is needed to make the deal up to the allowable amount (ie $4000)? will a dealer show you a chart with the rebates offered on their models, or do you just have to trust what they say?
 

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Some of our dealer friends may have to chime in here, but here's how it basically works. You go in, pick out a car and negotiate your best price. Then you automatically get the rebate amount taken off of that. There may also another "hidden" rebate that goes directly to the dealer. It's up to the dealer's discretion whether or not to share this with you.

You should do your homework on the rebates before going in. There are some (not all) dealers who may take advantage of any ignorance on the customer's part.
 

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Consumer Cash rebates and/or Bonus Cash MUST be given to the customer; they cannot be kept by the dealer as profit. Dealer Cash incentives are another story...

Basically, pick your car, negotiate your price, tax it, then subtract all eligible rebates.
 

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What I don't understand is the idea of rebates and incentives. I mean why should GM offer so much money back on models? If they can afford to, why not just lower the MSRP?? Otherwise, I would think that people would lose trust in the value of a vehicle. It's like putting somethin on clearance. Many people think that there's something wrong with it so they want to just get rid of it asap.
 

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Some dealers try to use the incentives as your "deal". Remember that GM reimburses the dealer whatever the rebate amount is. Don't be shy in haggling. Haggle the price you want as if there were no rebates. Then when you get your 2,500 or 4,000 rebate on top of that you will truly have a great deal. This also applies to trade-ins. Try not to complicate the bargaining process too much and you will come out happy.
 

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It's pretty easy, say you are looking at a 2004 Chevrolet Malibu, 4 cylinder with an MSRP of $19,935.

You want to trade in your 1998 Chevrolet Malibu with 98,000 miles.

You go to John Smith Chevrolet and find a salesman, select and test drive the Malibu that you want to purchase.

Let's say that you bought your 1998 Malibu new, and financed the purchase for 5 years, so your car is paid off and you have the title for the Malibu. Your Malibu is a typical 6 year old car, a little rough around the edges, but it has never been in an accident and is mechanichally sound, so lets say its worth $2500, for arguments sake, and since you bought the car new, you are eligible for the GM owner loyalty rebate of $2000, you should have recieved a letter in the mail.

After you have selected and test drove the Malibu that you would like to own, go inside with the salesman, have your trade in apraised, you saw that John Smith Chevrolet has about 30 Malibus on the lot, and you know that they are ready to deal, so you offer 2% over invoice.

Invoice on the Malibu is $18,128 and 2% over is $362.56

$18,128.00 + $362.56 = $18,490.56

$18,490.56 - $2500(1998 Malibu) = $15,990.56

To that you have to add your taxes and tags and whatever other fees that may aply, lets say that there are an additional $2000, in taxes and other fees.

$15,990.56 + $2000.00 = $17,990.56

To that you have to subtract your rebates, the rabates have to be subtracted after the taxes have been paid on the price of the car,

$17,990.56 - $2000.00(GM owner loyalty rebate) - $2000 (Manufacturers rebate)

= $13,990.56 for your new Malibu!
 
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